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Right to paid annual leave carries over indefinitely where employer refuses leave

Mr King worked for The Sash Window Workshop Ltd (SWW) as a commission-only salesman for 13 years. He received no salary, and was never paid for any holidays or periods of sickness absence.

Mr King argued that he had not taken his full annual leave entitlement each year because it would have been unpaid.

An employment tribunal decided that Mr King was a worker under the Working Time Regulations. It awarded him holiday pay in respect of:

  • Leave accrued in the final leave year but untaken at the date of termination.
  • Leave requested and taken as unpaid leave in previous years, claimed as a series of unlawful deductions from wages.
  • Leave accrued but untaken in previous years.

SWW appealed against the decision to award payment in respect of leave accrued but untaken in previous years (the third bullet point). The other points were no longer in dispute.

The Employment Appeal Tribunal upheld the appeal on the ground that Mr King had not been prevented by reasons beyond his control from taking annual leave.

Mr King appealed to the Court of Appeal who referred the matter to the ECJ.

Decision

The European Court of Justice upheld Mr King's arguments. In their opinion, employers must provide adequate facilities for workers to take paid annual leave. If a worker has not taken some or all of their annual leave entitlement because their employer refuses to pay them for it, the worker is entitled to say that they have been prevented from exercising their right to paid leave. If this is the case, the leave is carried over until the worker has the opportunity to exercise that right, or until termination.

Furthermore, since the existence of the right to paid leave cannot be subject to any preconditions whatsoever, it was irrelevant whether or not Mr King had actually put in requests for paid leave over the years.

The ECJ therefore held that, where a worker has not exercised their right to paid holiday over several years because their employer wrongly failed to provide holiday pay, the Directive requires that the worker be allowed to carry over their paid holiday rights until the termination of employment.

Comment

This decision will have significant implications for those whose status has been misclassified as genuinely self-employed rather than worker, and has increased the already high stakes in the "gig economy" status cases currently going through the courts and tribunals.

Employers could be required to pay large amounts to workers on termination, not only for the unpaid holiday they have taken, but also, following this case, for the holiday they have been discouraged from taking because it would have been unpaid.

Even if employers start offering paid holiday going forward, liability for the past untaken holiday would remain until termination.

The matter will now return to the Court of Appeal for a final decision.

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