Worker Status Takes An Expensive Turn...
Published: 1 December 2017
Until yesterday, there were only a handful of “worker” cases. As an eminent employment QC has just stated about the case of King –v- Sash Windows in the press, this may be the decision to turn that trickle of cases into a flood.
The CJEU has just handed down its decision in the aforementioned case which is likely to have enormous ramifications in a legal landscape where employment status confusion already abounds.
The central question of this case was whether a worker was entitled to carry over his entitlement to paid holiday at the end of the year, where his employer refused to pay him for it. Or, was the position as we understood it from the Working Time Regulations 1998 (“WTR”), actually a case of “use it or lose it”?
The CJEU decided that Mr King was entitled to carry over his statutory entitlement to paid holiday.
The rub of this case was that his “employer” believed Mr King to be self-employed; an employment status under which the individual is not entitled to paid holiday. Accordingly, it didn’t give him any. Unfortunately, an Employment Tribunal disagreed, said he was a worker and was entitled to 5.6 weeks paid holiday a year. The employer tried the WTR argument….and failed, as the loss of entitlement at the end of a holiday year point is a domestic take on the EU WTR directive and was found to be incompatible with it, so was disregarded.
Whilst Sash Windows did not in reality “refuse” Mr King’s holiday, he was, technically, “prevented” from taking it, and so exercising his EU rights. CJEU considered the position on Sash Windows belief of Mr King’s status to be “irrelevant”, even though it had offered to make him an employee in 2008, which offer he had declined in favour of remaining self-employed. Their position was definitive; an employer who does not allow a worker to take annual leave must take the consequences.
Oh, and what consequences…..there was worse to come from this decision. Since the CJEU also considered that an employer who had failed to grant paid holiday to a worker should (also) not benefit from the limits on back pay (as “a worker is entitled to accumulate and carry over such leave until the end of the employment relationship”) their decision, therefore means that holiday pay claims of this kind can be made going back to the implementation of the EU Working Time Directive in 1996 - some 20 years. Whilst this only applies to the minimum “4 weeks leave” under the EU directive, ultimately employers of “workers” could face holiday pay claims of up to 80 weeks’ pay.
The decision of the EAT, a lesser court, in the Bear Scotland case (which is the case which said if there is a 3 month+ gap between holidays, the holiday pay claim is subject to time limitation and can therefore relate only to those holidays prior to that gap) is unlikely to have any positive impact on this situation whatsoever.
Clearly, the financial implications for cases on employment status presently in the courts such as Pimlico Plumbers, Uber and Deliveroo have been significantly “upped”, as they have for the thousands of employers who may – or indeed have - workers on their staff of which they are not entirely aware.
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