Employers who operate a ‘use it or lose it’ holiday policy are being warned that the term could be void in light of recent case law.
Law firm Clarke Willmott LLP is warning that the right to carry holiday over could be extended beyond sick leave, which could mean additional unforeseen expense for all employers.
Kate Gardner, Employment Partner at Clarke Willmott, is urging businesses to ensure their Contracts of Employment and Terms of Engagement fully incorporate the up-to-date law on holiday and all other associated elements.
Kate, who acts for a wide range of employers, said: “In the recent case of Sash Window Workshop Ltd – v – King, Mr King was a commission-only sales person who was purportedly self-employed.
“Because his annual leave was unpaid, he limited the holidays he took so that his earnings were not severely curtailed.
“When his work ended with the company, be brought an Employment Tribunal Claim, stating that he was employed, or at least should be termed a worker, and therefore should be entitled to holiday pay.
“The Employment Tribunal agreed with him. But how much holiday pay could he claim? Could this include ‘rolling over’ holiday from the years he had not taken leave, for fear of losing commission?
“The Employment Tribunal has agreed in theory that sick leave may not be the only circumstances that would prevent a worker from taking annual leave.
“This would mean that a commission-only sales person could be entitled to claim rollover of holiday from one year to the next.”
Kate added: “If any worker is unable to take annual leave due to sickness, that individual is entitled to carry over their holiday entitlement to the following holiday year. If they then leave, employers need to pay for all of that accrued, but untaken, holiday.
“This could be a large sum if they have ‘rolled over’ holiday from previous years. But in the light of this case, the right to carry over holiday may be extended beyond sick leave.
“The decision has now gone to the European Court and we await the Judgment. But it is likely they will reinforce the decision of the Employment Tribunal, which could mean greater holiday costs for all employers.”
