Holiday Pay Accrues Indefinitely

Article

18 July, 2017

Following the case of King v. The Sash Window Workshop Ltd., the ECJ's Advocate General has announced that the right to paid leave accrues throughout an employment relationship if the employer does not provide 'adequate facility' for the employee to take paid leave.

In this case, Mr King was treated as self-employed for 13 years. He was in fact a worker and was therefore entitled to paid annual leave. When he was dismissed, he claimed that he was entitled to compensation for:

  • Accrued and unpaid leave in the final year of employment;
  • Leave taken but unpaid during the previous 13 years; and
  • Leave accrued but not taken during the previous 13 years.

The third element of Mr King's claim was on the basis that the company was never prepared to pay for it so it continually rolled over until the final year of employment and was payable on dismissal. As we know, leave can be carried forward where an employee is prevented from taking it in the relevant holiday year because of sickness, for example. The question of whether Mr King's leave could be carried forward if he had not attempted to take it was referred to the ECJ.

The Advocate General considered that an employer refusing to pay for annual leave was preventing the employee from taking it. Therefore, as with leave not taken because of sickness, leave not taken because of this refusal could be carried forward. It was not necessary for an employee to actually have requested, and had refused, paid leave before the right to carry it forward applied.

More concerning is the length of time for which leave can be carried forward. Where sickness prevents the employee taking leave, that accrued leave must be taken within 18 months of the end of the leave year in which it was accrued. No such limitation was imposed in this case. If the employer does not provide adequate facility for the exercise of paid annual leave, an expiry of leave that had accrued would be incompatible with the European Working Time Directive.

This is a decision that, on the back of the 'gig economy' decisions should cause businesses to review their casual working/sub-contracting arrangements.

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