An employee or not?
This is a recurring issue and we have seen much written about Uber and Pimlico Plumbers on this subject. Whether an individual is a worker as opposed to a contractor can make a big difference to their rights; for example being able to claim unfair dismissal or National Minimum Wage.
Paid annual leave is a basic employment right for workers and employees and is the main difference to being in employment, compared to self-employed or a contractor or freelancers. However when an individual previously viewed as self-employed is found to actually be an employee or worker, this creates an issue of backdated holiday entitlement.
In a case dating back to 2016 (King v Sash Window Workshop) the employer told the worker (who it believed to be self-employed) that they could only take unpaid leave. As a result, they were discouraged from taking any leave for fear of missing out on pay. As this had been going on for several years, a decision had to be made by the tribunal as to whether or not they should be paid for all of the unpaid holiday pay or just that which was accrued in the current leave year, as is permitted under the WTR when an employee leaves during an annual leave year. The European Court of Justice found that the only fair answer to this was to treat the holiday entitlement as having been carried over for all of the employee’s years of work so that all holiday pay accrued throughout the employment was due to the worker.
As a result of this (and other subsequent cases) the position is a clearer as to what happens to unpaid holiday pay when employers get the question of employment status wrong: it must be paid in its entirety.
It is always a good idea to review the working arrangements of sub contractors and freelancers to determine if they are in fact, employees. For assistance with this, contact us on email@example.com