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In the recent case of King v The Sash Window Workshop Ltd the European Court of Justice (ECJ) held that any workers who have been wrongly classified as self-employed contractors have the right to claim backdated holiday pay in respect of their entire duration of employment.
In this case, the claimant had continued to work as a commission based salesperson for 13 years. During this time he did not receive a salary nor was he paid for holidays or sickness absence. At Tribunal, the claimant had established a ‘worker’ status and the ECJ held that where a worker had not exercised their right to holiday pay any untaken leave would accrue and be carried over until their employment was terminated.
The decision in this case is inconsistent with previous UK rulings whereby employers could impose a two-year “backstop” to limit backdated holiday pay.
This case highlights the need to correctly classify employees at the outset of their employment. The ECJ’s prohibition on holiday pay backstops may mean that employers are more susceptible to substantial claims for historic holiday pay which may have potentially damaging implications on businesses if claims are successful.