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Victoria Regan

Partner - Brighton & Hove

1st March 2018

Employers facing claims for unlimited backdated holiday pay

The European Court of Justice has ruled that “workers” should be able to obtain backdated holiday pay in respect of the entire duration of their engagement by an employer.

It is becoming more commonplace for concerns to be raised about the potential risk of contractor or self-employed individuals claiming that they are in fact ‘employees’.

The method and payment of tax can no longer be definitive of employment or self-employment status. Furthermore, to muddy the water a little further, it is now the case that an individual can in fact be self-employed for tax purposes but be entitled to claim “workerstatus”.

If deemed a “worker” an individual can be attributed many rights that have previously only been afforded to an “employee”, such as national minimum wage, paid holiday and pension. This new “worker” status has been brought to the public’s attention following the much publicised “Pimlico Plummers” case or those concerning the gig economy, such as Uber drivers.

However, in a recent case seen in the European Court of Justice CJEU, the stakes have once again been raised significantly. The case involved a commission based “self-employed” salesman who was found in fact to be a “worker”. In the light of his perceived “self-employed” status, he had never received holiday, nor had he asked for it. However, he was successful in claiming that his holiday entitlement had in fact accrued throughout the entirety of the period that he had worked for the company, namely 13 years, and as such was entitled to payment for untaken leave for this period.

This was a staggering decision, given that previous cases relating to back dated holiday pay had been capped to two years. This potentially will also open up the floodgates for individuals who have not taken their annual leave during the holiday year. It will further make companies who have contractors or self-employed individuals, more vulnerable to claims, which potentially may extend back several years.

For more information on this and to discuss any issues you may have, please e-mail Victoria Regan at: victoriaregan@rixandkay.co.uk.

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