Ed Stacey: Holiday pay for workers could place them in a better position than employees


This month saw the anticipated ruling from the European Court of Justice in the case of King vs Sash Windows Workshop. The key question in the case was whether a worker who fails to take paid annual holiday, due to their employer refusing to meet their obligation to provide it, can carry forward that entitlement to paid holiday into a subsequent holiday year.

The ECJ ruling followed the earlier Attorney General opinion on the issue and confirmed that if a worker is prevented from taking their paid holiday, albeit only the four weeks entitlement to the European Union’s (EU) prescribed holiday rather than the 5.6 weeks provided for under UK law, because the employer will not grant the paid holiday, they can carry their entitlement forward. Further, it stated that the entitlement to carry forward goes back to 1996, the date of the Working Time Directive, giving those affected by the decision a potential 20-year clawback period.

The impact of this decision will be very significant to those employers which have treated workers as self-employed contractors and whose status has been successfully challenged. Alongside claims for the national minimum wage, the bill for holiday pay could prove very significant given the ability to go back 20 years.

It also places these workers in a potentially better position than employees who have been unable to take their holiday entitlement because of maternity leave or sickness who are routinely allowed to carry forward the holiday to a subsequent year but who must abide by shorter time limits in which they are required to take that holiday after they return to work.

Making employees and workers more aware of their holiday pay entitlements was a key recommendation of The Good Work: The Taylor Review of Modern Working Practices report published earlier this year. While the report’s recommendations will take time to implement, this latest judgment from the ECJ will ensure that holiday pay remains on the radar for many employers in the coming months.

Ed Stacey is partner and head of legal and employment law at PricewaterhouseCoopers (PWC)