Yet another ruling that decides self-employed contractor was actually an employee!
Businesses with self-employed workforces are highly likely to have to compensate many of their “workers” for previously unpaid holiday, after the European Court of Justice (ECJ) ruled in favour of a worker in a long-running and eagerly awaited case.
The court decided that a commission-based salesman who did not receive holiday pay for 13 years and took numerous unpaid holidays during this period – was due compensation for his time off. This is because the court determined that he was actually classed as a “worker” in the employment law definition rather than a self-employed contractor.
The salesman’s initial contract with the company did not mention paid leave, and when he did take time off– typically a couple of weeks annually – he was not paid.
In 2008, the company (Sash Window Workshop) offered the salesman an employee contract, but he opted to remain self-employed and continued to do so until he was dismissed in October 2012 – on his 65th birthday. He brought a case regarding his dismissal in December 2012.
He argued that he was entitled to receive payment for previously taken unpaid leave, and claimed for all holiday he had accrued since the beginning of his employment with the business in 1999. He also said he had not been able to take this leave because the business did not provide pay during leave.
Although he was initially successful at the employment tribunal, his former employer overturned the decision through an appeal to the Employment Appeal Tribunal. The salesman then appealed to the Court of Appeal, which ruled in his favour.
Current regulations state that statutory holiday entitlement under the Working Time Directive expires at the end of each leave year, and is lost if not taken. The only exception to this is if, at the end of a leave year, a worker who is off sick has been unable to take planned annual leave because of sickness absence. The Sash Windows ruling means other workers could be given the right to accumulate unexercised rights to paid annual leave when their employer does not put them in a position in which they were able to exercise it.
Those who are seen as self-employed by businesses, but who are, in fact, workers could be given the right to claim a lump sum of holiday pay from the businesses they work for. This could allow workers who haven’t been allowed to take paid holiday to file claims against the employer.
Employers must regularise the positions and contracts of so called “self-employed contractors” as soon as they can, to reduce the risk of their self-employed contractors being able to claim that they are in fact workers entitled to holiday pay. This case is of great significance to workers wrongly categorised by their employers as self-employed.