Holiday pay and EU law – a continuing saga

There has been an important decision by the European Court of Justice (ECJ) which will potentially have a significant impact upon organisations who rely upon self-employed staff.

In the majority of cases, such self-employed staff will be ‘workers’ for the purposes of the Working Time Regulations 1998, and therefore entitled to paid annual leave.  However, it is by no means uncommon for organisations not to recognise such rights, with the result that those working under such arrangements do not receive payment for any holiday taken. 

The ECJ has decided that in such cases, if no paid leave is allowed, the worker will be able to carry over and accumulate paid annual leave rights until the termination of his or her employment; and this will include circumstances where the employer has permitted the worker to take leave, but has refused to remunerate that leave. 

In practice therefore, self-employed contractors who have not been correctly classified as workers may be able to claim back-pay in respect of unpaid annual leave going back many years when ‘worker’ status was established.  It may also be inferred from the ECJ decision that the steps taken by the UK Government in 2014 to limit back-pay claims to two years (introduced in the wake of the inclusion of overtime in some calculations of holiday pay), may be incompatible with EU Law – a potential extra sting in the tail.

For further advice on this topic, or other employment issues, please contact Jane Laidler, Senior Partner and Chairman, at GRM Law: