On 8 June 2017, The Advocate General gave his Opinion about the case of The Sash Window Workshop v King, which the Court of Appeal has referred to the European Court of Justice (ECJ) to determine certain questions.
The question at issue is, where individuals are found to be workers with holiday rights, how far back can they claim?
If the ECJ follows the Advocate General’s Opinion, such claims could backdate several years to the date the independent contractor first started work for the employer.
Furthermore, independent contractors in the gig economy may have the right to claim holiday pay in respect of all untaken annual leave up to the point such leave is/was made available or, if such leave is not made available, up to termination of their employment.
Current UK Law
Current UK law confirms that independent contractors classed as workers may make holiday claims as a series of deductions from wages with a backdate limited to two years (see The Unlawful Deductions from Wages (Limitation) Regulations 2014).
A further amendment by the government to the Working Time Regulations 1998 confirms that such claims may not be brought as a breach of contract claim (which would have meant a 6 year backstop).
The Employment Appeal Tribunal’s (EAT) latest ruling in Bear Scotland v Fulton 2017 confirms that a gap of three months’ or more in any under payment of holiday pay will break the series of deductions for unlawful deduction claims, and it will not therefore be possible to claim for holiday pay in respect the period before the break in the series. See Springhouse blog of 12 May 2017 Holiday Pay – new decision
A ruling by the European Court of Justice
The Advocate General’s Opinion states that if employers do not make ‘adequate facilities’ available to workers to exercise their right to paid holiday leave then workers may make a claim for payment in respect of annual leave up to the earlier of the point that such facilities are made available or the termination of employment. The Advocate General states that adequate facilities might take the form of:
- specific contractual terms conferring the right to paid leave, or
- the establishment of a legally enforceable administrative procedure through which an application can be made to employers by workers for paid annual leave.
The Advocate General’s Opinion is not binding and the ECJ may or may not follow the Advocate General’s Opinion when it determines the questions referred to it by the Court of Appeal in The Sash Window Workshop v King. However, if it does, then where an employer has never offered ‘adequate facilities’ to its workers to permit annual leave, the UK’s legislation limiting holiday pay claims to backdated of two years may be unlawful. However, as per Bear Scotland v Fulton 2017, such claims will still be subject to a three-month time limit to bring the claim crystallising either from the date of the last failure to pay holiday or the termination of employment and the claim will be limited to the EU’s minimum statutory holiday entitlement of 20 days’ a year.
Implications for employers and independent contractors in the UK
This gives rise to a potentially straight contradiction between the ECJ’s ruling and UK legislation. If the ECJ follows the Advocate General’s opinion, it remains to be seen how the Employment Tribunals will deal with the issue. However, if the UK’s two-year cap is incompatible with EU law, then in order to seek redress for unpaid holiday backdated more than two years, a worker may have to challenge the UK’s domestic legislation, ultimately in the European Court of Justice.
Whilst workers/independent contractors could apply to the Employment Tribunals now and seek leave stay their claims pending the decision of the ECJ in The Sash Window Workshop v King, it will be interesting to see what redress independent contractors will have against any UK law being incompatible with any more generous EU law concerning holiday pay after BREXIT.