EU lawyer's views on holiday pay could have implications for 'gig economy' workers, says expert

Employment law expert Sue Gilchrist of Pinsent Masons, the law firm behind Out-Law.com, was commenting on an opinion from EU advocate general Tanchev, involving a self-employed salesman who was later found to have been a worker. The salesman, a Mr King, was never paid for holiday time during his 13 years working for The Sash Window Workshop Ltd (SWWL), as the company considered that he was self-employed and not entitled to paid holiday.

King is currently pursuing SWWL in the English courts for age discrimination and unpaid holiday pay, following his dismissal by the company at the age of 65. The Court of Appeal is seeking guidance from the Court of Justice of the EU (CJEU) on King's right to payment in lieu of holidays to which he was legally entitled while employed by SWWL, but which he did not take on the mistaken belief that he was self-employed.

Advocate general Tanchev has now said that, in his view, a worker's right to paid leave carries over until that worker has the opportunity to exercise it. If the employment is terminated before the worker can do so, as in King's case, the worker instead has the right to payment in lieu of any outstanding leave.

Opinions of advocate generals are not binding on the CJEU, but are followed in the majority of cases.

Holiday pay is governed by the EU's Working Time Directive (WTD). This requires employers to give workers a minimum of four weeks of paid annual leave each year, calculated with reference to the worker's "normal" remuneration. Self-employed people have no legal rights to paid holiday.

While working for SWWL, King had been paid entirely on commission. He took varying amounts of holiday each year, but did not take the full four weeks because he was not paid for this time. His contract was silent on whether he was entitled to paid leave. In 2008, SWWL offered King a full contract of employment. However, he opted to remain self-employed. He continued to work for SWWL until his dismissal with effect from his 65th birthday in October 2012.

In December 2012, King began UK employment tribunal proceedings against SWWL. As part of these proceedings, the tribunal found that King was a 'worker' for the purposes of UK law, and so entitled to paid leave under the WTD. SWWL has appealed one of King's claims to paid leave, relating to the leave to which he was entitled but opted not to take.

In his opinion, advocate general Tanchev said that it was the responsibility of the employer to provide "adequate facilities" to workers allowing them to exercise their right to paid leave. This could take the form of specific contractual terms conferring the right to paid leave, or setting up a legally enforceable administrative procedure through which a worker could request paid annual leave.

Whether the 2008 offer of an employment contract by SWWL was enough to satisfy the 'adequate facility' requirement was a question for the national court, according to the advocate general. However, the law "removes any doubt on whether it is the employer or the worker who should bear the risk of non-compliance with the right to paid annual leave, at least with respect to which of them is to create the facility for its exercise", he said.

In circumstances where a worker was prevented from exercising his right to paid leave, the right would carry over until such time as he was able to do so. If the employment was terminated the worker would be entitled to an allowance in lieu of paid annual leave, potentially covering the full period of the employment relationship, he said.

"What is perhaps most interesting about this opinion, if followed by the court, is its potential impact on the series of worker/employment status cases arising from the 'gig economy'," said employment law expert Sue Gilchrist. "If, as Mr King was, an individual is 're-categorised' as a worker and is then able to establish that they were 'prevented from taking leave', the resonance of this case could be that they would be able to claim for all unpaid and untaken holiday over the entire period of their engagement."

"However, that doesn't fit well with the UK position, which limits holiday pay claims made after 1 July 2015 for unlawful deductions from wages to the last two years, following a change made by parliament. Where a break in the 'chain of deductions' is established, the limit is the last three months," she said.

The UK's employment appeal tribunal (EAT) limited underpayment claims in respect of its 2014 ruling that regular payments for non-guaranteed compulsory overtime and travel time be reflected in holiday pay calculations to three months, unless the failure formed part of a 'series of deductions' ending within that three month period. Subsequent UK regulations placed a two-year limit on all claims