Companies that routinely use staff on self-employed contracts need to be aware of a landmark holiday pay ruling made by Europe’s highest court which could have huge implications in the UK.
British window salesman, Conley King, worked on a self-employed basis but was found by the court to have workers’ rights meaning that his claim for £27,000 of backdated holiday pay was upheld.
The European Court of Justice also stated that the right to paid holiday was a “particularly important principle of EU social law.”
The decision could have massive implications for the so-called ‘gig economy’ which includes couriers and ride hailing cab drivers classed as independent contractors with no protection against unfair dismissal and no entitlement to paid holiday or sickness pay.
Businesses using workers in this way could face huge bills if thousands of people now claim for unpaid annual leave.
Facts of the case
Conley King worked as a salesman on commission for the Sash Window Workshop for 13 years. He was considered self-employed and therefore not entitled to paid leave.
He was dismissed when he reached 65 and brought employment tribunal proceedings against the company for age discrimination and unlawful deductions from wages in relation to holiday pay for leave accrued but not taken.
The employment tribunal found that Mr King was ‘employed’ as defined by the Equality Act and that his dismissal had been an act of unlawful age discrimination. It also found that he was a ‘worker’ as defined by the Employment Rights Act meaning he was entitled to paid leave.
On the other hand, The Sash Window Workshop said Mr King had worked “as a self-employed salesman under an arrangement that suited him” reiterating that he was never prevented from taking time off for holiday or otherwise as “there was no requirement for him to request it or for us to agree to it.”
When the Sash Window Workshop successfully appealed the employment tribunal decision, Mr King appealed to the Court of Appeal which sent the case to the EU court for a ruling on whether unpaid leave can be carried over indefinitely when a worker has not exercised his rights because an employer had not provided paid leave.
Bearing the consequences?
The European Court decided there was no time limit to Mr King’s claim, and that EU law allowed him to claim payment for the entire length of his employment. The ruling stated: “An employer that does not allow a worker to exercise his right to paid annual leave must bear the consequences”.
The case will return to the UK Court of Appeal for a further ruling on the circumstances of Mr King’s case.
What does it all mean?
The decision is of huge importance to companies that routinely use staff on self-employed contracts who could face huge liabilities if that status is ever challenged, especially as the court decided there was no time limit for Mr King’s claim.
The decision binds UK tribunals when deciding similar cases as, in its current form, the Brexit withdrawal bill maintains European judgements made before the UK’s exit from the EU.
This is just the latest case to affect the gig economy and adds yet another layer of complexity to UK employment law making it important for firms who think they may be affected to review contracts, holiday pay arrangements and assess the risk of a claim from those who are no longer engaged by the business.
Wards Solicitors have written several articles on this legal issue:
For help and advice about legal employment issues please contact our specialist Employment Law team or pop into one of our 11 local offices.