Springhouse Solicitors

Holiday pay: new case

Could a commission-only worker claim that not paying him for annual leave effectively prevented him from taking it, and that he should be compensated?

Potentially yes, said the EAT in the recent case of the Sash Window Workshop Limited v. King.

Background

Mr King had his commission-only contract with the Sash Window Workshop terminated on his 65th birthday. He brought a claim for age discrimination, but also a claim for the holiday he said he had not been able to take during his contract. He said that he had effectively been prevented from taking the holiday because he would not have been paid for it.

The situation where holiday cannot be taken because of sickness was the subject of a long-running litigation in the Pereda v. Madrid Mobilidad SA cases. Here, the Court of Appeal held that where a worker is unable or unwilling to take holiday because he/she was on sick leave, they should have the right to carry this over into the next leave year and/or be paid for it.

Mr King was still paid whilst not taking holiday, so the Appeal Tribunal in this case found that he could not claim for deductions from his wages. However, this would not rule out compensation for denial of the leave, and the award of a compensatory payment for any carried-over leave untaken on termination.

The Appeal Tribunal did, in principle, suggest that Mr King may have been prevented “by reasons beyond his control” from taking his holiday, but sent the case back to the Tribunal because they had not provided a proper factual basis to support such a finding in this case.

Implications

Two significant principles flow from this decision:

  1. The scope of potential claims relating to untaken leave is now extended beyond sickness, and may cover any situation where workers have been unable or unwilling to take annual leave, for instance because they would not have been paid.
  2. Even where a worker would have been paid whilst not taking holiday, they may have future claims for carry-over on termination, and have a free-standing claim for compensation because, although they did not lose pay, they lost health and welfare benefits of taking annual leave.

We recently reported that commission payments need to be taken into account when calculating annual leave here.

This adds further to the complications for employers paying commission. To add to their woes, there may now be an argument that even where a basic salary is payable during leave, staff have effectively been prevented from taking it.

It constantly surprises us at Springhouse how an apparently simple piece of legislation entitling workers to paid annual leave has given rise to such enormous complications and headaches for employers and employees alike.