In the recent case, King v Sash Windows, referred to the ECJ by the UK Court of Appeal, the ECJ has held that where a worker is discouraged from taking annual leave because it would have been unpaid, the worker is entitled to be paid on termination of employment for the accrued leave. There was no limit on the amount of leave that could accrue in this way.
Mr King claimed that he had been unable to take his full holiday entitlement because it was unpaid and his circumstances meant that he was unable to afford the time off. Mr King was considered to be self-employed and at one point was offered an employment contract with the company – which he refused. In litigation following the termination of his employment, the tribunal held that Mr King was a worker and therefore entitled to holiday pay. This appeal concerned leave which had accrued throughout his 13 years of service, but which had not been taken.
The ECJ held that Mr King’s untaken leave had continued to accrue and he was entitled to payment in respect of it. Whether or not he had put in requests for paid leave was irrelevant, as was the fact that the employer had thought he was self-employed (and therefore not entitled to holiday pay). It will now be for the Court of Appeal to decide whether the Working Time Regulations 1998 can be read consistently with the ECJ’s interpretation of the Working Time Directive.
As it stands at the moment, UK law limits the backdating of holiday claims to two years, and within that period if there is a break of 3 months or more between any period of holiday taken (4 weeks per year as provided in the Working Time Directive) the series is broken and it is only possible to backdate the claim in respect of the unbroken period.
On the basis of this decision, it now appears that there may be a further argument that the 3 month break is unlawful for the purpose of calculating a series of deductions in respect of holiday pay, and that the limit of two years for backdating such claims is also unlawful. That said, the decision in King only relates to the situation where a worker did not take holiday because they believed it would be unpaid – so it is likely that we will see further litigation on these points.
The potential implication of this decision that employees and workers might be able to backdate holiday pay claims to 1998. This raises the stakes in the current gig economy / worker litigation considerably.