Have a Break, Have 13 years’ worth of untaken holiday!
Do you hire self-employed staff? If your staff are classed as ‘self-employed’ but it is found that they are in fact ‘workers’ – as increasing numbers of ‘gig-economy’ companies are realising – you may be at risk of a large holiday pay bill dating back 20 years, as staff may be entitled to all their back dated holiday pay and unused annual leave.
The European Court of Justice has ruled that Mr King, who worked as a commission based salesman between 1999 and 2012, was incorrectly classed as ‘self-employed’ rather than a ‘worker’. ‘Workers’ are entitled to a number of employment rights including holiday pay, the national minimum wage, and sick pay.
The Court determined that an employer that does not allow a worker to exercise his right to paid annual leave must bear the consequences. In practice, the effect of this ruling is that a worker could claim for the period from 1996, (when the original Working Time Directive came into force) until they leave the company, assuming he or she was a worker for the duration of that period.
This case also clarifies that workers who are denied their entitlement under the Working Time Regulations to paid annual leave do not have to take a period of unpaid leave first before taking legal action to receive pay for that leave.
There will be more clarity on the extent of employers’ holiday pay obligations when the case returns to the Court of Appeal, however, companies operating within the ‘gig-economy’ must carefully review their existing arrangements. With such a potentially significant payment on the table, the incentive for staff to question their employment status will now be much larger. If you have any doubt as to the status of your staff and are concerned about potential liabilities, contact Rhona.firstname.lastname@example.org.