Holiday Pay

The European Court of Justice has recently made an important ruling in an English case referred to it concerning holiday pay.  It is a decision which will have important and far reaching implications for Uber drivers and others in a similar situation.

The question for the Court was whether a worker who does not take paid annual holiday because the employer refuses to pay holiday pay carries over his entitlement to paid holiday or loses it at the end of each holiday year.

In a nutshell, it carries over in those circumstances.  The employer took the view that the worker was self-employed and therefore not entitled to holiday pay.  The worker was actually working on a self-employed commission only contract from the 1 June 1999 until he retired on the 6 October 2012.  When he took annual leave it was unpaid.  On retiring he sought to recover payment for his annual leave – both taken and untaken – for the entire period of his engagement.  The employer argued that under the UK Working Time Regulations if paid holiday is not taken in a leave year it is lost.

The European Court decided that, if the worker is prevented from taking their paid holiday because the employer won’t allow paid holiday, then the worker is being prevented from exercising his EU right to statutory holiday and cannot be stopped from bringing a claim simply because a new holiday year has started.  The Working Time Regulations that says a worker loses his right to carry over is incompatible with EU law and, what is more, the back pay claim could go all the way back to 1996 when the European Working Time Directive came into force.

Judgement

Therefore employers, whose self-employed contractors are now deemed to be “workers”, could face substantial claims dating back 20 years.  The only consolation for employers is that this only applies to 4 weeks’ holiday a year (rather than 5.6 weeks allowed in the UK) as that is the EU minimum holiday entitlement.  Nevertheless, if a worker has been engaged that long, the bill for an employer could be 20 years x 4 weeks = 80 weeks’ pay per worker.

For further information and advice, please contact Geoff Lamb at our office.

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