King v. Sash Windows judgment leaves employers vulnerable to backdated holiday claims

In King v. Sash Windows, the European Court of Justice (ECJ) has held that anyone deemed to have “worker” status is entitled to carry over paid annual holiday in circumstances where they have not had the opportunity to take it.
In this case, Mr King was deemed as “self-employed” by his employer, Sash Window Workshop (Sash Windows) from the time he began working for the company in 1999 until he left in 2012. A tribunal subsequently held that Mr King had worker status and was therefore entitled to paid annual leave. Sash Windows sought to limit its liability in arguing that the Working Time Regulations 1998 provide that paid holiday cannot carry over into a new leave year.
In this landmark decision, the ECJ disagreed with Sash Windows’ argument and held that Mr King had been prevented from exercising his EU rights in accordance with the Working Time Directive. Mr King could not be prevented from bringing a claim just because a new holiday year had started. The ECJ went on to say that, insofar as the UK Regulations are incompatible with EU law, they must be disregarded and that an employer who fails to grant paid holiday should not be entitled to the benefits of the normal limits on how much can be carried over.
Last week’s decision could be very significant for employers who engage individuals on a self-employed / contractor basis, who may now be liable for years of backdated holiday pay claims.