Under the law, a worker off sick for an entire leave year and unable to take their leave during that year can carry over their entitlement and still be paid for it. The Employment Appeal Tribunal (EAT) has held in The Sash Window Workshop Ltd and Anor v King that workers may also carry over their leave if they were prevented from taking it because of reasons beyond their control.
Mr King worked as a commission-only salesman for the Sash Window Workshop from 1999 until 2012 when he reached the age of 65 and his contract was terminated.
During that time, he was not paid for holidays or when he was off sick, although he had to give the company notice when he wanted to go on holiday. Generally he only took a couple of weeks off every year because if he did not work, he did not get any commission.
Until he received advice, Mr King believed that he was a self-employed contractor. He said that, if he had known that he was entitled to paid holiday, he would have taken more. Mr King brought claims of unpaid holiday pay and unlawful age discrimination when his employment was terminated.
The tribunal held that as Mr King was a worker (rather than an employee or a self-employed contractor) under section 230(3) of the Employment Rights Act 1996 and the Working Time Regulations 1998 (WTR), he was entitled to bring a complaint of unpaid annual leave under the WTR for the holiday he had not taken as a series of unlawful deductions from wages on a continuing basis, going back to the start of his employment in 1999. The tribunal also held that Mr King should receive £3,000 for injury to feelings for unlawful age discrimination.
The company appealed, as did Mr King because the tribunal did not uplift his award for injury to feelings by 10 per cent as set out by the Court of Appeal in Simmons v Castle.
The EAT allowed both appeals. In relation to the holiday pay issues, the EAT held that the tribunal failed to make relevant factual findings on whether Mr King was prevented from taking annual leave for reasons beyond his control. This was crucial for a proper understanding of Mr King’s right to pay in lieu of annual leave due on the termination of his employment.
As he had worked and was paid wages for times he would otherwise have taken as annual leave, he could not also be entitled to holiday pay for the same periods as that would amount to double recovery. The EAT was also concerned that the tribunal had not properly addressed whether the claimed holiday pay was in fact “wages” when all Mr King had lost was the health and welfare benefits of taking annual leave.
Finally, the EAT determined that the tribunal failed to properly address whether Mr King could claim that he suffered a “series of deductions” for the period of holiday pay in light of the approach and guidance set out in Bear Scotland (weekly LELR 397). The EAT remitted the case to the tribunal for reconsideration in light of its findings on these points.
In relation to the award for injury to feelings, the EAT did not agree that the guidance on inflationary rises to injury to feelings awards in Da’Bell v NSPCC prevented an additional 10 per cent increase to Mr King’s award due to the reforms set out in Simmons v Castle. Importantly, the EAT explained there was no basis for limiting the increase to claims of unlawful discrimination. As the EAT was remitting the holiday pay point for further consideration, it also decided to remit the question of Mr King’s entitlement for injury to feelings suffered from the unlawful discrimination as well.
This case addresses two important points in different areas of employment law and highlights how recent changes should be considered. Firstly, the correct approach for outstanding holiday pay on termination of employment, which was originally decided to the advantage of the employee on an incorrect basis. Secondly, the correct approach for calculating injury to feelings, which was originally decided to the disadvantage of the employee on an incorrect basis. The unforgiving pace of change and complexity in employment law continues.