Attorney General's opinion could mean large historic liabilities for gig economy workers' holiday pay

Attorney Generals opinion could mean large historic liabilities for Gig economy workers holiday pay

The Attorney General (“AG”) has recently given his opinion in the case of King v Sash Window Workshop Ltd. His opinion states that employers must provide an ‘adequate facility’ for workers to exercise their right to paid holiday.  In this case Mr King’s contract made no reference to paid holiday and so the AG was of the view that the employer had failed to provide adequate facility for him.  In these circumstances the AG considered that a worker would be entitled to be paid in lieu of untaken holiday on termination in respect of the whole period of his engagement, rather than then just in respect of the current holiday year.  If the European Court of Justice follows this opinion, this could significantly affect gig economy workers and companies engaging them. 

 Background

Mr King had worked for Sash Windows for 13 years as a commission only salesman. He did not receive a guaranteed salary and was never paid for holidays. After nine years, Sash Windows offered Mr King an employment contract, with the right to paid holiday. He refused this offer and continued to work as before. On the termination of his engagement, Mr King brought a claim for payment in lieu of accrued but untaken holiday. The case went to the Court of Appeal who referred it to the European Court of Justice (“ECJ”).

Attorney General’s opinion

The AG said that employers must provide an ‘adequate facility’ to allow workers to exercise their right to paid holiday. If a worker has not taken holiday because the company refuses to pay for it, this amounts to a failure by the company to provide an adequate facility. In such a case, the worker is entitled on termination of their work to be paid for all unpaid holiday pay covering the entire period of their engagement.

The AG considered that in Mr King’s case it was possible that the offer of the employment contract with the right to paid holiday could constitute ‘adequate facility’. If this was the case, Mr King would only be entitled to a payment in respect of unpaid holiday up until the time such offer was made. If not, he could claim for the entire 13 years of unpaid holiday.

The AG also said that the UK could not restrict the carry-over of holiday unless adequate facility for paid holiday had been provided. This means that the limit on carry-over in the UK of 18 months after the end of the leave year (which applies for those on long term sick who have been unable to take holiday) cannot be applied in these circumstances.

Comment

It is not certain that the ECJ will follow the AG’s opinion. However, if it does, this case will have a significant impact on employers and workers in the gig economy. Recent case law has highlighted how many workers have been misclassified as self-employed (with no right to paid holiday) when in reality they are workers and are entitled to paid holiday. Where such people have not taken holiday because the company made no provision for them to take it, they may be entitled on termination to a payment in lieu of holiday covering the entire period of their engagement.

It should be noted that this appeal case is specifically about a worker’s untaken holiday where no facility had been provided to exercise the right to holiday. It does not deal with the situation where a worker has actually taken unpaid holiday. Mr King had in fact taken some holiday which was unpaid and had won his claim in the employment tribunal for a series of unlawful deductions from wages. This was not subject to appeal. Such claims for holiday that has been taken, but underpaid, are subject to a number of limitations in UK legislation and case law and back pay is limited to two years.  

If the AG’s opinion is followed, it is likely that employers will not be able to limit liability for historic holiday pay where the worker has not taken holiday due to lack of adequate facility. This is because, even if the employer starts paying holiday pay correctly going forwards, the historic claims still remain to be paid on termination.

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Kerry Garcia

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