National legislation cannot hinder a self-employed worker reclassified as a worker from securing ex-poste compensation for all untaken holiday periods (ECJ)
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National legislation cannot hinder a self-employed worker reclassified as a worker from securing ex-poste compensation for all untaken holiday periods (ECJ)

On 29 November, the CJEU ruled that a worker must be able to carry over and accumulate unexercised rights to paid annual leave when an employer does not put that worker in a position in which he is able to exercise his right to paid annual leave. This principle was particularly striking in so far as it was affirmed within the context of the self-employed worker who was considered as a salaried worker at the end of his professional career. National legislation (in this case UK legislation) that intends for annual paid holiday rights to expire if they are not taken up, when ‘false’ self-employed workers are not in a position to actually taken them up, runs counter to EU law.

Facts of the case. The complainant in this case worked for a company on the basis of a ‘self-employed commission-only contract’ from 1999 until he retired in 2012. Under that contract, the worker was paid on a commission-only basis. When he took annual leave, it was unpaid. Upon termination of his employment relationship, the worker sought to recover payment for his annual leave — taken and not paid, as well as not taken — for the entire period of his engagement. The company rejected the claim made and the worker then made a claim to the competent Employment Tribunal, which considered the worker to be a ‘worker’. However UK law does not intend for compensation for untaken holidays during the reference period. As such the worker had to claim that he had been unable to take up his holiday leave entitlements and then presented this to the Luxembourg court that in turn had to rule in accordance with EU law and with respect in particular to EU Directive 2003/88 on working time, which does include the right to rest time.

Lack of effective recourse. In its 29 November ruling, the CJEU affirmed that ‘a worker faced with circumstances liable to give rise to uncertainty during the leave period as to the remuneration owed to him, (Ed note: in this case the uncertainty related to the worker’s false ‘self-employed’ category) would not be able to fully benefit from that leave as a period of relaxation and leisure,’ and in addition requiring the worker to take unpaid leave, then introduce subsequent recourse for securing payment for that holiday deprives the worker of effective recourse to express his rights for holidays, which runs counter to EU law.

Rights are not extinguished when a worker cannot take up holiday entitlement. More striking still, the CJEU concluded that national law cannot hinder a worker from carrying over or accumulating, until termination of his employment relationship, paid annual leave rights not exercised in respect of several consecutive reference periods as a result of his employer refusing to remunerate that leave, because ‘extinguishing workers’ rights to annual paid leave would amount to validating conduct by which an employer was unjustly enriched to the detriment of the very purpose of that directive, which is that there should be due regard for workers’ health.’ In fact according to the CJEU, ‘It follows that an employer that does not allow a worker to exercise his right to paid annual leave must bear the consequences.’

CJEU 29 November C-214/16 King

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