Does a worker who does not take paid annual holiday, because the employer refuses to pay, carry over his entitlement to paid holiday or is it lost at the end of each holiday year?
It carries over, held the CJEU in King v Sash Windows.
Mr King was believed to be self-employed, and his 'employer' therefore did not give him paid holiday. But a tribunal held he was a worker and thus entitled to 5.6 weeks' paid annual leave. The employer argued that the Working Time Regulations 1998 provide that if paid holiday is not taken in a leave year, then it is lost.
The CJEU, in an important judgment, disagreed. It held that if a worker is prevented from taking their paid holiday because the 'employer' won't grant the paid holiday, they are being prevented from exercising EU rights. As such, they cannot be stopped from bringing a claim just because a new holiday year starts, and insofar as the UK Regulations say that the worker loses the right, they are incompatible with EU law and must be disregarded.
More fundamentally, the CJEU held that an employer who fails to grant paid holiday to workers should not be entitled to the benefits of the normal limits on how much can be carried over (as set out in Plumb v Duncan Print). In fact, the backpay claim can go all the way back to 1996, when the original Working Time Directive came into force (the Working Time Regulations 1998 were implemented two years late).
The practical ramifications are that employers whose 'self employed' contractors turn out to be 'workers' (Uber, Pimlico Plumbers, CitySprint etc) may find themselves facing very substantial holiday pay bills, dating back 20 years. Since this ruling only applies to 4 weeks' EU holiday (rather than all 5.6 weeks of UK holiday), the bill could be 20 years x 4 weeks = 80 weeks' pay per worker.
There must also be very considerable doubt over whether the EAT's decision in Bear Scotland v Fulton, which held that tribunals cannot award backpay for unpaid holiday leave beyond any 3 month break in unpaid EU holiday leave, can survive this CJEU decision.
For an excellent summary of the case and its ramifications, see this blogpost by Caspar Glyn QC.
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