The courts have struck another blow to the gig economy, in a ruling on unpaid holiday pay.
Handing down judgment in King v The Sash Window Workshop Ltd & Richard Dollar (Case C‑214/16), this week, the European Court of Justice (ECJ) held that a worker does not have to take unpaid leave in order to later claim that he should have received holiday pay.
The case, which was referred to the Luxembourg court by the Court of Appeal, is likely to have an impact on ‘gig economy’ workers or those who have been wrongly classified as self-employed, lawyers say.
King was hired as a windows salesman on a self-employed basis by Sash Window Workshop from 1999 until he retired in 2012. From 2000 onwards, he took unpaid leave of three to four weeks each year. Once he retired, he raised a claim for unpaid holiday pay for the whole 13 years on the basis he was a worker and therefore entitled to holidays under the Working Time Regulations 1998 (WTR). The question of whether he was entitled to payment for holiday accrued but not taken was one of the questions referred to the ECJ.
Clare Gilroy-Scott, partner at Goodman Derrick, who represents King, said: ‘This case is of importance in clarifying that workers who are denied their entitlement under the Working Time Regulations to paid annual leave do not have to take a period of unpaid leave first before taking legal action to receive pay for that leave.
‘This would otherwise have left a worker (who was without protection from unfair dismissal and reliant upon continued work) with the unattractive prospect of having to suffer a detrimental impact on his remuneration by taking unpaid leave. The court has confirmed that a worker may carry over and make a claim for untaken leave entitlement on the termination of the engagement in these circumstances.’
James Williams, barrister at Henderson Chambers, who represents King, said the decision would be ‘of great significance to many workers wrongly categorised by their employers as self-employed.
‘In the short term they should now be able to bring, on termination of their engagement, a claim for all the holiday pay that they should have been paid during the working relationship. In the longer term, the decision should reduce the financial incentive for employers to deny that their staff are entitled to holiday pay—since if the employer gets this wrong, it must compensate the worker accordingly.
‘This means that companies who deliberately categorise their staff as self-employed to deny them basic employment rights should no longer gain such a significant competitive advantage.’
