‘Historic’ holiday pay claims back on the agenda

Until the recent case of King v Sash Window Workshop Ltd, we had hoped that at least some of the uncertainties concerning the calculation of holiday pay had gone away.  Clearly, we spoke to soon. As a result of this European Court of Justice decision, we are once again having to contemplate the prospect of workers being able to claim years’ worth of holiday pay, if their entitlements have been calculated incorrectly.

King v Sash Window - the facts

Throughout his time with Sash Window Workshop Ltd, Mr King was treated as if he was self-employed.  As a result, he did not receive any holiday pay when he took time off work.  After his engagement with the company came to an end, Mr King claimed that he should have been categorised as a ‘worker’ for legal purposes.  As a consequence, he argued that he was entitled to holiday pay for each of 13 years he had previously worked for the company.

The decision

Mr King was successful in arguing that he was a ‘worker’ of Sash Window.  So the question then arose as to how much holiday pay he was due.  Was he entitled to receive holiday pay only in respect of the holiday year in which his engagement terminated or for each of 13 years he worked for the company?

The European Court of Justice concluded that workers who have been prevented from enjoying their right to paid leave should not be prevented from bringing a claim in respect of their full entitlement simply because the relevant holiday year has come to an end.  Given the ECJ’s decision, it would appear that Mr King is entitled to claim at least 4 weeks’ holiday pay for each of his 13 years of service.

So what?

Recent case law had suggested that workers could only claim unpaid holiday pay where each occasion of underpayment is not more than 3 months from the last.  Any break of more than 3 months was understood to be fatal to the ongoing claim.  What’s more, the government introduced legislation back in 2015, aimed at limiting workers to a claim for a maximum of 2 years’ holiday pay in cases such as these.  Whilst the King v Sash Window case concerns non-payment of holiday pay, commentators have suggested that its principles should be applied to both non-payment and underpayment cases.  If this is right, recent UK case law and indeed the 2015 regulations may be incompatible with European law.  As a result, despite what we previously thought, workers may be able to claim for non-payment or underpayment of holiday pay going right back to the beginning of their engagement or 1996, whichever is the later.  It will be interesting to see what our domestic courts and tribunals make of this judgment.

If you are still struggling with issues relating to holiday pay and need some input from us, please get in touch.