Potential liability for holiday pay for commission only workers
Regular readers will be aware that there have been lots of employment tribunal cases about the specific details of annual leave and how payment for that leave should be calculated – e.g. taking into account bonuses or commission etc. But a recent case (King v Sash Window Workshop) has resulted in The European Court of Justice publishing an opinion about liability for untaken leave. If followed, the opinion of the Advocate General would mean that workers (not just employees) would be allowed to carry holiday forward if they are unable to take it for “reasons beyond their control.”
It has already been established in an earlier case (KHS vs Schult) that if an individual has not been able to take their leave due to illness, he or she must take it within 15 months or it could lawfully be forfeited.
However, this case is not about illness, but about being prevented from taking the leave for other reasons – in this case as a result of a dispute between the business and the worker over whether the leave should be paid or not. The advocate general’s opinion means that a UK salesman, Mr King, could be entitled to claim compensation after he was unable to take his full holiday entitlement over a 13-year period.
Mr King had worked as a salesman for the Sash Window Workshop since 1999. He was paid on commission and his contract with the company did not mention paid leave. Although he did take time off during his time with the company, usually a couple of weeks a year, he was not paid during his holiday.
The Sash Window Workshop had offered King an employee contract, but he chose to stay self-employed and continued to do so until he was dismissed by the business in October 2012, on his 65th birthday. He then brought a case to an employment tribunal about his dismissal, including a complaint that he was entitled to be paid for holiday he had not taken. The tribunal determined that King had worker status and as a worker, he would be entitled to paid holiday under the EU’s Working Time Directive. King had claimed that he was prevented from taking all his annual leave entitlement because he could not afford to do so. The case was ultimately ended up at the UK’s Court of Appeal and then referred to the ECJ.
This latest opinion from the Advocate General is not binding. However, it could be used by the ECJ’s judges, who are now deliberating their decision and will give their ruling at a later date. The case will then return to the UK’s Court of Appeal, which will decide what should be done in King’s case, taking the ECJ’s decision into account.
This particular case is unlikely to affect most businesses, but if you engage people on a commission-only basis, or have people engaged as self-employed, but who might actually be classified as workers, and do not give them paid holiday, you could be liable for that unpaid annual leave. If you have any queries about this, please get in touch for advice.
Posted on 13 Jun 2017