Holiday: carry-over and payment in lieu on termination

An advocate general (AG) of the Court of Justice of the European Union (ECJ) has opined that, if a worker fails to take holiday, because any holiday would be unpaid due to a mistake as to the worker’s status, the untaken holiday continues to carry over for the duration of employment and must be paid in lieu on termination.

The AG’s opinion was given in the long running Sash Windows case, after a referral by the Court of Appeal. The worker, K, started working as a salesman for the Sash Window Workshop Ltd (Sash Windows) in 1999. He was paid by commission based on the sales that he brought in. He was not paid for leave taken and his contract was silent on the question of paid leave. In 2008, Sash Windows offered K an employee contract which he refused because he wished to remain self-employed. K worked continuously for Sash Windows until he was dismissed in October 2012. K brought claims in respect of his dismissal. The tribunal held that K was a ‘worker’ for the purposes of the Working Time Regulations 1998 and that, following termination, K was entitled to a payment in lieu of holiday that he had not taken during previous leave years, on the basis that he had been prevented from taking holiday by the fact that it was unpaid. An appeal by Sash Windows was upheld by the EAT (on the basis that the tribunal had made insufficient findings of fact). The Court of Appeal referred preliminary questions to the ECJ. An advocate general of the ECJ has since opined that untaken holiday continues to carry over for the duration of employment.

In the AG’s view:

• Employers must provide adequate facilities to workers for the exercise of their entitlement to paid holiday - for example, include a specific contractual term concerning paid annual leave in the contract, or a legally enforceable holidays policy
• It would be inconsistent with the directive to require workers to make an application to a court or another body to compel their employer to create an adequate facility for the exercise of the right to paid annual leave
• If no facility has been provided by the employer to take leave, the worker may rely on the directive to secure payment in lieu of untaken leave when no facility has been made available by the employer for exercise of the right to paid annual leave
• If a worker does not take all or some of the annual leave to which he is entitled in the leave year, because the leave will be unpaid, the worker can claim that he is prevented from exercising his right to paid leave such that the right carries over until he has had such opportunity to exercise it
• Upon termination of the employment relationship, a worker is entitled to an allowance in lieu of paid annual leave that has not been taken up until the date on which the employer made available to the worker an adequate facility for the exercise of the right to paid annual leave

The AG’s opinion is not binding upon the full court and they do not always follow the opinion of the AG.

King -v- The Sash Window Workshop Ltd and another C-214/16