Decision Has Big Financial Implications For Gig Economy

The European Court of Justice (ECJ) will deliver its verdict on Wednesday 29th November 2017 in a long-running legal dispute involving a window salesman who didn’t receive paid holiday for 13 years.

The case of The Sash Window Workshop Ltd v King is considered to be one of the most significant employment law cases of the year and could have wider implications for other businesses – particularly those operating in the gig economy.

Mr King worked as a commission-based salesman for The Sash Window Workshop for 13 years. He was dismissed when he reached the age of 65 and in order to bring a claim of age discrimination, he had to argue that he was a ‘worker’ rather than being self-employed. 

As a worker, he argued he was entitled to receive payment for previously taken unpaid leave. He also claimed for all holiday that had accrued from the start of his employment back in 2001 which, he argued, he had not been able to take because the company did not provide any pay during periods of leave. 

The Sash Window Workshop agreed that if Mr King was a ‘worker’, rather than being self-employed, he was entitled to receive a payment for accrued holiday pay in the current holiday year - but not for previous years as these were time barred.

Mr King was initially successful at the Employment Tribunal. However, Sash successfully appealed to the EAT who overturned the original decision. 

Mr King appealed to the Court of Appeal and the matter was referred to the ECJ. The CoA wanted clarification on whether paid leave can be carried over indefinitely in circumstances where a worker has not exercised his rights because his employer has not provided the facilities to receive paid leave. It also sought clarification on whether a worker has to physically take unpaid leave before they can establish whether they are entitled to be paid for it.

In June the Advocate General, which provides a non-binding impartial opinion to the ECJ (albeit this is usually followed), said Mr King should be compensated for all untaken leave that had accrued during his work for Sash Windows. 

The current rules are that statutory holiday entitlement under the Working Time Directive expires at the end of each leave year and is lost if not taken. Currently the only exception to this is if at the end of a leave year, a worker who is off sick has been unable to take planned annual leave due to sickness absence. If, however, the ECJ decides on Wednesday that workers should be entitled to carry holiday over to the next year where they are unable to take holiday for reasons beyond their control, such as not knowing they could take this with pay, it is likely that the Court of Appeal will interpret the Working Time Regulations accordingly.

Expert Opinion

“This is a crucial ruling and will no doubt be one that businesses will be keeping a close eye on.

“If the ECJ reaches the same decision as the Advocate General, businesses will potentially face huge financial liabilities for holiday pay if they are engaging individuals on self-employed contracts, in circumstances where they later, when this status is successfully challenged then transpire to be ‘workers’.

“Uber, for example, has a ‘self-employed’ workforce of over 40,000 in the UK. Several of their drivers have already successfully claimed that they are workers rather than self-employed. Many more drivers, and indeed other gig economy workers, might be tempted to claim worker status if it opens the doors to holiday pay claims going back to the start of their engagements.”
Glenn Hayes - Partner & National Head of Employment Law

If you or a loved one need help understanding your rights with regards to employment disputes, find out how Irwin Mitchell can help you today.