Compensation for Holidays

Compensation claims inevitable as the ECJ (European Court of Justice) has ruled that self-employed workers may be able to carry leave over to subsequent years.

This is likely to mean that anyone with worker status will be able to carry leave over to subsequent years if they are unable to take it for reasons beyond their control. It will almost certainly lead to large and potentially uncapped compensation for businesses whose workforces may be able to argue that they should be recognised as workers, including many in the gig economy.

The court decided that Mr King, a commission-based salesman working for Sash Windows, who did not receive holiday pay for 13 years and took numerous unpaid holidays during this period, was due compensation for his time off.

Current regulations state that statutory holiday entitlement under the Working Time Directive expires at the end of each leave year, and is lost if not taken. The only exception to this is if, at the end of a leave year, a worker who is off sick has been unable to take planned annual leave because of sickness absence.

Those who are seen as self-employed by businesses, who are in fact workers, could be given the right to claim a lump sum of holiday pay from the businesses they work for. This could allow workers who haven’t been allowed to take paid holiday to file claims against the business.

Employers need to be sure they understand their workers’ employment status and ensure they have the right contracts in place, in order to reduce the risk of any self-employed contractors being able to claim that they are workers and are entitled to holiday pay.

Any business that deliberately states workers are self-employed in order to deny them employment rights will no longer have a significant competitive advantage.

This process will not be affected by Brexit, as British law is expected to be consistent with previous ECJ decisions going forward.

If you need help with the employment status of your people contact Nichola Coulthard 07946541606, nichola@coulthardhr.co.uk. www.coulthardhr.com

Coulthard Human Resources helping businesses become great employers