Decision Has Big Financial Implications For Gig Economy

A window salesman who didn’t receive paid holiday for 13 years has today won his legal battle at the European Court of Justice (ECJ).

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 according to lawyers at Irwin Mitchell, today’s ruling 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 and was awarded compensation for all of his untaken holiday. 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. 

Currently, 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.

Today the ECJ has said Mr King should, in principle, be compensated for all untaken leave that had accrued during his work for Sash Windows.  It reiterated that paid holiday is an important health and safety initiative which is necessary for workers to recover from the demands of working.  Workers should not be dissuaded from taking it and must be paid.

The matter will now be referred back to the Court of Appeal to determine whether the Working Time Regulations can be interpreted in this way.  Currently, the WTR’s only provide a remedy to a worker to receive holiday pay for leave that he has already taken if it was unpaid. If it gets over this hurdle, workers will be able to carry holiday over to subsequent holiday years where they are unable to take holiday for reasons beyond their control, such as not knowing they could take this with pay.

This important decision might encourage those currently regarded as self-employed to challenge their status.

Expert Opinion

“The ECJ made it clear that previous cases involving sickness which imposed limits on how far back holiday could accrue should not be followed. Here the employer was not faced with periods of absence which could have led to difficulties in the organisation of work, but instead was able to benefit from the fact that Mr King did not interrupt his professional activity in its service in order to take paid annual leave. This means that workers like Mr King should be able to recover all untaken holiday although that will be limited to 20 days rather than all additional holiday.

“Following today’s ruling, businesses with workforces of uncertain or marginal employment status could be facing huge financial liabilities for holiday pay. The European Court has made clear its forthright position by stating, ‘an employer that does not allow a worker to exercise his right to annual leave must bear the consequences.’ Gig-economy employers in particular will be affected hugely by the decision.”
Alan Lewis - Partner