Holiday pay: use it or (don’t) lose it

The latest edition in the saga of holiday pay has looked at the principle of when holiday may be “rolled over” in the event it is not taken.

Historically, holiday has been dealt with on a “use it or lose it” principle, save for where the worker or employee could not take the holiday due to maternity leave or long-term sick, and always subject to a maximum time cap.

However, the recent case of King v The Sash Window Workshop Ltd has turned this on its head. Mr King had been treated as a self-employed commission-only salesman throughout his period of engagement from June 1999 to October 2012. Mr King argued that he was actually a “worker” and therefore entitled to holiday pay for the entirety of his contract. Sash Windows responded that Mr King had not suffered any deductions from wages as he had always been paid, could not roll holiday over each year, and also that he was not prevented from taking his leave entitlement – he did take some leave and therefore chose simply not to take the remainder.

The matter was referred to the Court of Justice for the European Union who determined that in every situation where, for no fault of their own, a worker has been denied the opportunityto take their leave, holiday will roll over indefinitely until the worker can take it or until termination. This does only extend to the first 20 days of holiday.

In the current climate with a heavy focus on the gig economy and employment status, the likelihood is that this decision will have the most significance for individuals that had always been treated as self-employed contractors, but, upon termination of their contracts, claim that they have worker or employed status, that they were prevented from taking paid holiday and therefore being able to claim such holiday pay for the entirety of their contracts.

The case may have implications for the limitations on claims for historical non-payment of holiday pay, as set out in earlier case law as well as Deduction from Wages (Limitation) Regulations 2014. However, how far this decision will extend remains to be seen and the case returns to the Court of Appeal in November 2018. Watch this space.