In 2017, the cases on what should be included in holiday pay calculations fell away, to the relief of many employers. However, whilst one headache receded another in the form of annual leave carry-over is developing fast.
Last year, the European Court of Justice (ECJ) ruled in Sash Window Workshop Ltd that a worker must be able to carry over an unused holiday when the employer does not put that worker in a position to exercise the right to take paid annual leave. In Sash Window, a salesperson on commission only claimed 13 years’ unpaid holiday pay.
The ECJ’s decision now brings into doubt:
- Restrictions on claims for historical non-payment of holiday pay in UK case law (the Employment Appeal Tribunal previously barring unlawful deductions claims where more than three months have passed between successive underpayments of holiday pay); and
- The 2 year limitation period on most unlawful deductions from wages claims.
The decision of the Court of Appeal this year could have huge implications for ACE members with self-employed staff whose status may, in fact, be worker rather than self-employed, following recent case law. If this is the case, those employers could be required to pay large amounts to workers on termination in lieu of both the unpaid holiday they have taken and the holiday they have been discouraged from taking because it would have been unpaid. Even if they start offering paid holiday going forward, liability for the past breaches would remain, according to the logic of this case, until termination (unless the employers permitted the workers to take their full accrued entitlement to paid leave before then).