Thousands of workers in the so-called gig economy may now claim for unpaid annual leave after a landmark European ruling yesterday.
Conley King, a window salesman, has won a ruling at the Court of Justice of the EU that he is entitled to claim for up to £27,000 for holiday pay that he was denied between 1999 and 2012.
The ruling means potentially huge bills for businesses that employ workers in the gig economy, such as taxi or delivery firms, and deny them paid holiday leave.
The EU highest court said that a worker such as King was entitled to be reimbursed for his leave, adding that the right to paid holiday was a “particularly important principle of EU social law”.
King worked as a salesman on commission for the Sash Window Workshop for 13 years before being dismissed when he reached the age of 65.
To bring a claim of age discrimination, he had to argue that he was a worker rather than being self-employed, and was therefore entitled to receive payment for previously taken unpaid leave.
He also claimed for all holiday that had accrued from the start of his employment 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 King were 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 because these were time-barred.
King was initially successful at the employment tribunal and awarded compensation for all his untaken holiday. However, his employer successfully appealed.
The salesman then appealed to the Court of Appeal, which sent the case to the EU court for a ruling on whether paid leave can be carried over indefinitely when a worker has not exercised his rights because his employer has not provided paid leave.
Statutory holiday entitlement under the EU working time directive expires at the end of each leave year and is lost if not taken unless the reason is sickness.
Yesterday, the European court said that King should, in principle, be compensated for all untaken leave accrued during his work for Sash Windows. The case now returns to the Court of Appeal for a ruling on the circumstances of King’s case.
James Potts, head of legal at the Manchester law firm Peninsula, which represented the company, said: “Employers with self-employed individuals, whether these number in single figures or the thousands, need to seek advice on the real status of their workforce.
“This decision binds UK tribunals when deciding similar cases. In its current form, the Brexit withdrawal bill maintains European judgments made before the UK’s exit from the EU.
“However, it does give the Supreme Court the right to depart from these decisions where it is right to do so. As such, this decision will remain binding post-exit unless a future case proceeds through the domestic courts to the Supreme Court, where this decision could be departed from.”
Nick Chronias, a partner at the City of London law firm DAC Beachcroft, said that the decision “expands the scope of the right to carry over holiday to situations where individuals are prevented from taking their leave for reasons other than sickness absence.
“It means that if an individual is found to be a worker and can say he or she would have retrospectively taken more holidays had he or she been paid for them, then the worker would be entitled to carry over the holidays until he or she is paid for them on termination.”