Should a worker who is unable to take holiday due to reasons beyond their control be allowed to carry over holiday and be paid in lieu on termination of employment for all of their untaken holiday?

Yes, according to the King v Sash Window judgement of the Court of Justice of the European Union.

The judgement is of particular interest following the recent high-profile worker status cases of Uber and Deliveroo.

Case Facts

Mr King worked for Sash Windows for 13 years on a self-employed basis as a commission-only salesman (from 1999 until his dismissal in 2012).

He was offered employment during that period, but refused the offer.

Mr King had taken time off from work each year, but he was not paid for this time off, as he was self-employed, and as such was not entitled to annual paid leave (which he would have been entitled to if he had been an employee or a "worker" under the Working Time Regulations).

He also did not take off the full annual leave entitlement every year to which he would have been entitled if he had been an employee or a worker (on the basis that he would have taken more time off if he had been paid for his leave).

Following the termination of Mr King's contract, Mr King brought a claim in the ET for:

  • Pay for holiday he had taken, for which he had not been paid; and
  • Pay for the annual leave to which he claimed to be entitled, and which he had not taken for reasons beyond his control (ie the lack of pay).

On a reference from the Court of Appeal, the CJEU found that Mr King was a worker, and also found that he was entitled to be paid for the annual leave he had taken, and the annual leave he had not taken, during his entire working relationship with Sash Window.

The decision is not yet binding on UK private sector employers, as the case will go back to the Court of Appeal who will consider whether the Working Time Regulations (WTR) can be interpreted in line with the CJEU's decision.

Implications

  • The judgement has potentially expanded the scope of the right to carry over holiday to successive holiday years to circumstances where the worker is not able to take time off for reasons other than sickness absence, such as where they are prevented from taking that leave for reasons beyond their control (this is an exception to the rule that holiday entitlement expires at the end of the leave year);
  • The CJEU has said that there should not be a time limit on holiday carry-over claims, which appears to conflict with the Deductions from Wages (Limitation) Regulations 2014, under which claims for holiday pay can look back two years only, and a gap of more than three months between periods of holiday breaks the chain of the holiday periods for which a claim for holiday pay can be made; and
  • This decision could create further challenges for the 'gig economy', where the status of alleged self-employed people is being challenged.

More information will follow once the Court of Appeal has considered this judgment.