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The European Court of Justice rules unlimited back pay for unpaid holiday

Employees and workers are entitled to paid holiday but the self-employed are not. 

If you are self-employed you are expected to charge the organisations that you work for an hourly or daily rate. This will allow you to cover your expenses, pay tax and National Insurance and take time off.

Sometimes people are incorrectly labelled self-employed when they are not and have been denied holiday pay which they should have received.

The European Court of Justice (ECJ) has just ruled in a case called King v Sash Windows that people who have been described as self-employed but are in reality workers or employees are entitled to unlimited back pay for unpaid holiday when they leave their employment even if they have not taken any days off.

Normally a person can only claim unpaid holiday going back two years. With this in mind, the decision will come as a huge boost to many people working in the gig economy.  The ECJ has found that a person need not have taken the annual leave to be entitled to be paid for it.

Potentially huge pay outs

A person working full-time and earning £20 an hour who has not been paid for holiday for 5 years and is found by an Employment Tribunal to be a worker or an employee may have a claim worth almost £15,000. 

Massive increase expected in Employment Tribunal cases

The potential for increased back pay coupled with the fact that Employment Tribunal fees have recently been abolished will be prove highly attractive to many.   We are likely to see a huge increase in the numbers of people challenging their employment status (arguing that they were employees and workers rather than self-employed).

Employers discouraged from incorrectly labelling their staff as self-employed

In the face of potentially sizeable unpaid holiday pay claims, organisations will need to think more carefully about the way they categorize the people that work for them.  Companies who seek to avoid recognising the employment rights of their staff will need to be particularly careful. 

How to calculate what you are owed

Employees and workers are entitled to 5.6 weeks paid holiday a year under English law. However under European Law they are only entitled to 20 days. 

Since the ruling concerns European law, you can only claim for 20 days holiday per year.  Work out your average daily rate and then multiply it by 20.

For example, your average daily rate of pay is £150 and you have been working for a company for 10 years. Your calculation would be as follows:

£150.oo x 20 days = £3000.00 per year

£3000.00 x 10 years = £30,000

TOTAL OWED £30,000

If you are self-employed but think you might really be an employee or a worker then keep reading

Employment Tribunals often find that although a person is described as self-employed on paper, the reality of the way that they work means that they should be considered to be an employee or a worker.

Employees have far greater employment rights and should be paid holiday pay. Even where there is paperwork states that a person is self-employed. Or, for instance, if a person pays tax through a tax return to HMRC rather than via PAYE. This could still mean that they are considered an employee. 

Please look at the checklist of signs that you are really a worker or an employee below. 

If you answer no to most or all of the list below you may be an employee or a worker. You may have a valuable claim for unpaid holiday pay and you may be entitled to increased employment rights (such as the right not to be unfairly dismissed).

Checklist

  • If I cannot attend work I can send a substitute (someone else of equal qualification, skill and experience) to replace me.
  • If I cannot attend work, the company that I work for does not find a replacement.
  • I can choose my start and finish times
  • I take breaks when I choose
  • I provide my own tools and materials
  • I do not wear uniform
  • I supply my own Personal Safety Equipment (Hard hat, high viz vest etc.)
  • I pay for any training I need myself (apart from very basic health and safety or site safety inductions)
  • I do not attend staff functions such as the Christmas party, fundraising events, conferences or meetings
  • I have not been and cannot be subjected to disciplinary sanctions such as verbal and written warnings
  • I decide how I work and how work gets done
  • I do not have to request when to take holiday or complete any holiday request paperwork
  • If I make a mistake I have to remedy the situation myself at my own cost
  • I undertake work for more than one company
  • If I need an assistant or helper I find that person myself, the company will not employ someone.
  • The organisation does not and has not moved me to different work or tasks than the one I was hired to do
  • I choose where I work if this is possible

If you feel you are owed holiday pay from you employer, please contact us now and we will be able to assist.