The case of King v Sash Windows has been settled following several years of debate over the rights of workers to recover holiday pay where they were wrongly treated as being ‘self-employed’.
In December last year, the Court of Justice of the European Union (CJEU) ruled that workers who have not taken paid leave because they were wrongly classified as self-employed contractors can obtain compensation for accrued holiday. It found that employers are obliged to determine employment status and if they get it wrong, they are liable for the consequences.
Following the decision, the case was sent back to the Court of Appeal for it to determine if the Working Time Regulations (WTR) can give effect to this decision and, if so, how much compensation to award King. However, the case never reached the Court of Appeal as Sash Windows settled with King.
Writing for Lexology, Joanne Moseley, associate solicitor at Irwin Mitchell LLP, explained that since the case has been settled, employers are left without authoritative guidance to help them calculate the holiday pay of workers who haven’t taken leave in a scenario such as this.
“It is relatively straightforward to work out how much holiday pay someone should have received if they actually took unpaid leave,” she said. “But, it is more difficult to work this out for someone who has worked and not taken any holiday.”
She added that there were also questions around whether you pay at the normal rate of pay, or you pay ‘compensation’ to reflect the loss of enjoyment and welfare – and if so, how is that valued?
Moseley points out that the UK’s WTR only provide workers with a remedy if they have taken leave which has not been paid at the correct rate, or at all.
“This is incompatible with the [Working Time] Directive which makes it clear that workers should be able to bring claims even if they haven’t taken leave,” she added.
Sash Window’s argument would have been that it could not read words into the WTR to give effect to the CJEU’s judgment. However, given recent case law from the CJEU, it has been made clear that domestic courts and tribunals must interpret their laws to give effect to the EU Charter on Fundamental Rights.
“This means that even if our own laws are incompatible with the Charter, workers can bring claims against both public and private employers based on this right,” explained Moseley.
However, in light of Brexit, the UK’s Withdrawal Act makes it clear that the EU Charter will not form part of UK law once we leave the EU. As such, workers will not be able to bring claims based on it or use it to disapply domestic legislation, added Moseley.