You allow all your staff paid annual leave, and you advise them of this right in advance.
However, you don’t grant self-employed individuals holiday. Why would you? You’re simply their customer. They’re free to have other customers and to run their business as they see fit.
But what happens if you’ve made a mistake? What if you contracted with someone as a self-employed contractor, but on examining the facts it appears to an employment tribunal that they work in the manner of an employee or worker? For example, they work only for your business, under your control and may not substitute someone else to do the work.
In that scenario, the tribunal will grant the worker/employee all the rights to which they were in reality entitled. And when it comes to annual leave, this could be costly.
This is illustrated in a case that is currently before the European Court of Justice (ECJ): King v The Sash Windows. Mr King worked for the company for 13 years. His contract said he’s self-employed. When his contract ended, he claimed a substantial sum of money for unpaid annual leave.
The employment tribunal upheld Mr King’s claim, and accepted that as there’d been no policy facilitating paid annual leave, he hadn’t been able to take paid annual leave. The Employment Appeal Tribunal (EAT) disagreed, saying that insufficient facts had been found to show that Mr King had been prevented from taking the leave. The Court of Appeal referred the case to the ECJ – we don’t yet have the ECJ’s judgment, but we have the opinion of the Advocate General (AG), which is often followed. What the AG said is that if there is no facility for taking paid annual leave, that is tantamount to preventing leave from being taken – many workers are unlikely to take leave if they fear not being paid.
If you get everything right in the first place, this case doesn’t alter anything for you. However, it does raise the stakes – if you classify a worker as self-employed incorrectly, it could be quite costly.
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A worker, like Mr King, may rely on [EU law] to secure payment in lieu of untaken leave, when no facility has been made available by the employer, for exercise of the right to paid annual leave ... Upon termination of the employment relationship a worker is entitled to an allowance in lieu of paid annual leave that has not been taken up.