If your self employed person is a ‘worker’….how much holiday pay will you owe?
Potentially quite a lot following the very important case of King Vs Sash Windows at the European Court of Justice – a decision that will influence domestic decisions. The central theme here of course is to make absolutely sure that your ‘self employed’ people are really that – we’ve reported on numerous cases when the courts said they weren’t (Uber, Pimlico Plumbers etc.) This case highlights just how expensive a decision along these lines could be. Forewarned is forearmed, read our briefing for more (and what you should do next.)
Potentially quite a lot following the very important case of King Vs Sash Windows at the European Court of Justice – a decision that will influence domestic decisions. The central theme here of course is to make absolutely sure that your ‘self employed’ people are really that – we’ve reported on numerous cases when the courts said they weren’t (Uber, Pimlico Plumbers etc.) This case highlights just how expensive a decision along these lines could be.
Mr King was a salesman, and some years ago his employer offered him an employment contract. He declined and preferred to stay self employed, receiving commission only and no paid holiday. The relationship between Mr King and Sash Windows came off the rails and Mr King left, bringing a tribunal claim subsequently for 13 years of unpaid holiday pay.
The case trundled its way through our domestic court system and was eventually referred to the European Court of Justice to rule on the holiday pay issue. It had already been established that Mr King was not in fact self employed, but was actually a worker and therefore entitled to holiday pay. Sash Windows claimed that the holiday he was entitled to would only relate to the current holiday year, because previously accrued holiday pay would have been lost at the end of preceding holiday years in line with their rules. In the alternative it may have been believed that any back pay for unpaid holiday should be limited to 2 years, a standard adopted in the UK following a string of holiday pay cases in the last few years.
The ECJ though ruled that Mr King should be entitled to back pay for each of the 13 years of his employment. Indeed had Mr King been employed in 1996 when the working time holiday regulations were introduced (he wasn’t) his claim for underpayment of holiday could have stretched back the full 21 years.
The fundamental issue here is not about paid holiday but is again down to his employer’s failure to recognise that Mr King should not have been working under a self employed contract when he was clearly performing services personally for one employer to whom he answered. Nevertheless the ramifications could be huge. The UK Government has tried to limit the damage of non payment of holiday to 2 years, but that position now looks shaky. Imagine a scenario where a business employs 5 ‘self employed’ sales people all of whom were employed in 1996 (when the working time regulations came about.) The back pay could be 5 X 21 X 4 weeks, or 420 weeks of holiday pay owing across all 5 workers.
For a reminder about how paid holiday works with respect to employees and ‘workers’ please click here.
The other significant thing about this case is that Mr King made no objections to his status in the 13 years he worked for Sash Windows. He waited until after his employment ended to bring his claim. We might think that our self employed worker is perfectly content with the arrangement, but as we can see from this case, that really isn’t the point. Sash Windows will be wondering whether it should have forced the issue back in 2008 when it offered Mr King an employment contract (which he refused.) For the avoidance of all doubt, yes, it should have done.
For probably the last time in 2017 we appeal to any employer who has self-employed contractors on their books to challenge whether those people are really self employed. Act now, don’t wait for the next case to be about you. Contact myHRdept for assistance with determining employment status.
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