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Carry over of untaken holiday
  • Published:
    10 July
  • Area of Law:
    Employment

Carry over of untaken holiday

Can workers carry over holiday entitlement to the following holiday year if they are prevented from taking it because the employer will not pay them for any holiday they take?  

This is the issue which the Advocate General was asked to consider in Sash Window Workshop Ltd v King.

Facts of the case

Mr King worked for Sash Windows as a salesman for 13 years.  He was paid on a commission-only basis and received no holiday or sick pay. 

Mr King was dismissed when he reached 65.  He brought a claim for a number of things, including:

  • Unpaid holiday pay relating to periods of holiday taken during his time with Sash Windows.
  • A payment in lieu of all untaken holiday accrued throughout the duration of his working relationship with Sash Windows.  He alleged that he had been dissuaded from taking such holiday because Sash would not have paid him during any holiday taken. 

The Employment Tribunal held that he was a worker and awarded him appropriate sums in relation to these elements of holiday pay.    

The Employment Appeal Tribunal (EAT) overturned the decision regarding payment for untaken holiday. Mr King had not produced any evidence to prove that he had been prevented from taking holiday. On the contrary, the EAT concluded that he had not actually asked to take the leave. 

Mr King appealed to the Court of Appeal who referred the issue to the European Court.  The European Court has referred it to the Advocate General (“AG”) for an opinion. 

The AG’s decision

The AG held that any practice which acts as a disincentive to a worker exercising their right to take holiday (for example not paying the worker holiday pay) is in breach of the Working Time Regulations. 

In this type of situation, the worker is “prevented from taking their annual leave for a reason beyond their control”. The AG concluded that such leave should be carried over to the next holiday year, or until such time as the worker has the opportunity to actually take that leave.  If the worker is not given the opportunity to take it at any time during their working relationship, they should receive a payment in lieu of any accrued but untaken holiday upon termination of the relationship.

Comment

If the AG’s opinion is followed by the European Court, this will be of particular concern to many employers, including those in the gig economy.  

Workers in the gig economy will not traditionally have been paid holiday because it was thought that, as they were not workers, they were not eligible for such pay. Recent cases however, such as Aslam and others v Uber, determine that they are in fact workers.

These workers could argue they were also prevented from taking annual leave because they would not have been paid while taking it. If successful, workers could potentially be entitled to backdated holiday pay for all holiday spanning the entirety of their working relationship.

Steps to consider taking

There are steps businesses can take now to limit the impact, in the event the AG’s decision is upheld by the European Court:

  • Firstly, employers in the gig economy, or those who engage large numbers of self employed consultants, should be carrying out audits to determine the extent of their potential exposure to worker status claims.
  • Secondly, employers should put measures in place to ensure that workers are now taking their full annual leave entitlement each year and are being paid for the same. This may act as a “break line” in respect of any potential claims.  
  • All employers should ensure they are more proactive about encouraging workers to take their full entitlement to paid annual leave each year. If a worker is encouraged to take holiday, but simply chooses not to, they would not be entitled to carry forward that leave into following years.  

For more information on the issues raised above or any other employment related matter, please contact a member of the Employment Team.

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