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‘Self employed contractor’ salesman entitled to 13 years unpaid holiday entitlement.

While we reported last year on the case of King Vs Sash Windows (if you haven’t read the report yet we would encourage you to do so) the case has taken an expensive twist as the European Court of Justice drew a conclusion on how much holiday pay Sash Windows owed to Mr King. Mr King was a salesman employed since 1999 engaged on a self employed contract (with no entitlement to holiday pay) but who was ruled to have been an employee by an earlier decision of the UK courts.

While we reported last year on the case of King Vs Sash Windows (if you haven’t read the report yet we would encourage you to do so) the case has taken an expensive twist as the European Court of Justice drew a conclusion on how much holiday pay Sash Windows owed to Mr King. Mr King was a salesman employed since 1999 engaged on a self employed contract (with no entitlement to holiday pay) but who was ruled to have been an employee by an earlier decision of the UK courts.

At an earlier stage of the process the UK Court of Appeal asked the ECJ to look at the issue of holiday back pay, and prior to Christmas the initial decision expressed by the Advocate General was that Mr King should be compensated for missing out on holiday pay all the way back to the start of his engagement with Sash Windows in 1999. The ECJ has now confirmed that position – Mr King will be compensated for all of the paid holidays he would have received had he been correctly classed as an employee, rather than incorrectly classed as a self employed person. In this case that amounts to 13 years of holiday pay.

Would it have made any difference if Sash Windows had earlier offered Mr King an employed contract which he then refused? No, because that is what did indeed happen. We can picture the scenario, Mr King’s boss saying to him "Now look King, you really ought to be on an employed contract you know, if I have one drawn up will you sign it?" And Mr King replies "No, I’m quite happy that our working arrangements are fine for us both – let’s leave things as they are." A casual bystander may be forgiven for thinking that surely Sash Windows were in the clear as it was King himself who didn’t want to bring his employment onto a proper footing? Well no, and there’s an important lesson here for all employers (actually two):

  • just because your ‘self employed’ person wants to maintain an incorrect relationship doesn’t mean that it’s ok. If a self employed person is really an employee (or worker), the onus to fix it is on the employer (whether the employee likes it or not.)

Another lesson:

  • what is ok for someone today may not be ok tomorrow. Mr King was quite happy until his employer ‘retired’ him at 65. Then he litigated.

For a reminder about how paid holiday works with respect to employees and ‘workers’ please click here.

Ironically the process of converting self employed people to proper contracts is not difficult – myHRdept can help you a) risk assess your self employed contracts and, if they are suspect b) convert the contract to an employed or ‘worker’ (less employment rights than an employee) footing. In the light of the King case this might not make the threat of underpaid holiday from the past go away completely, but it will certainly reduce the chances of litigation, or at the very least provide plenty of time to correct underpayments.

Act now, don’t wait for the next case to be about you. Contact us for assistance with employment status.

If you're thinking of outsourcing your HR why not contact myhrdept.co.uk. With HR Outsource packages from only £140 per month (and from as little as £80 per month for start-ups) and support for HR Projects available for one-off issues, we believe we offer the best combination of quality and price available in the UK. Call us on 01628 820515 to discuss your requirements contact us and we’ll call you back.

 

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