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The great holiday pay debate

10th December, 2014

Should employees be entitled to payment in lieu where they are prevented from taking paid leave (because only unpaid leave is offered)?

In the recent case of The Sash Window Workshop Ltd and another v King UKEAT/0057/14, the Employment Appeal Tribunal has allowed an appeal against an Employment Tribunal decision that a worker was entitled to a payment in lieu of holiday that had not been taken even though the holiday was only offered unpaid.

Mr King had been employed by The Sash Window Workshop as a commission-only salesman for a period of approximately 13 years. When Mr King’s employment was terminated on him reaching 65, he brought claims of age discrimination and unpaid holiday. The Employment Tribunal held that Mr King had been discriminated against because of his age, but the most interesting part of this case was related to the holiday pay claim.

Mr King had, at no point during his employment, been paid for holidays or sickness absence. Mr King was able to show the Tribunal exactly how much holiday he had taken each year and how much of his “holiday entitlement” remained untaken.

The Tribunal made findings in respect of the amount of holiday accrued but untaken at the date of termination for the current leave year and ordered the company to pay Mr King for leave requested and taken in previous years which were held to be a series of unlawful deductions. However, it was the Tribunal’s third finding which gave rise to the Company’s appeal.

The Tribunal awarded pay in lieu of untaken leave that Mr King had accrued in previous leave years. In making this award, the Tribunal considered the approach taken in earlier case law where individuals who are prevented from taking holiday because of sickness are entitled to payment in lieu of holiday accrued during the previous leave year. Applying the same principle, that Mr King had been unable to take leave through the Company’s refusal to grant paid leave, the Tribunal made the award.

On appeal by the Company it was submitted that Mr King was not unable to take annual leave as he was not prevented from doing so by circumstances beyond his control. Mr King took (unpaid) holiday each year, and the Tribunal had made no fnding of fact which suggested that the Company prevented him from doing so. The Company therefore argued that the principles of earlier case law did not apply to Mr King.

Mr King also appealed against the level of compensation awarded in respect of the age discrimination. It was held that the Tribunal had taken irrelevant factors into account in making its award, namely that Mr King was content with his self-employed status.

The Employment Appeal Tribunal allowed both appeals and remitted this case to a fresh Tribunal. We will await the decision.

For further information and advice in relation to holiday pay and entitlement, please contact Susie Allen on 01244 405598 or send an email to [email protected].

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