An earlier employment status case (King v The Sash Window Workshop Limited) was brought by a claimant who had worked as a salesman under a self-employed, commission-only contract. He was found to be a worker, but his argument was that his employer's failure to pay him holiday pay had prevented him from taking his full annual leave entitlement.

Regulation 13(9) of the Working Time Regulations 1998 (WTR) states that workers cannot carry forward leave – it has to be taken within the relevant holiday year, otherwise it is lost. The issue in this case was whether or not the claimant was entitled to pay in lieu of accrued but untaken leave entitlement throughout the whole period of his employment.

His employer argued that he was not and any claim for payment in lieu of annual leave not taken in the years in question, was time barred as it was outside of the 3 month time limit. The Claimant claimed that he did have the right to pursue his claim where the reason for not taking leave during that period was that his employer had refused to pay him.

The Court of Appeal referred questions regarding entitlement to paid holiday leave to the Court of Justice of the European Union (CJEU).

The CJEU ruled that Article 7 of the Working Time Directive (WTD), which the WTR implement into UK law, must be interpreted in such a way that in situations where a worker has not exercised their right to paid annual leave because their employer refused to remunerate them, the right to that leave carries over until the worker does have the opportunity of exercising it. When the employment comes to an end, the worker is entitled to payment in lieu of all leave that is still outstanding.

Furthermore, the CJEU found that an employer's ignorance regarding a worker's true employment status is no defence for not paying them holiday pay. Whether or not the employer believed that the claimant was not entitled to paid annual leave was 'irrelevant'. It is for the employer 'to seek all information regarding his obligations in that regard'.

However, the case was settled out of court, which left a number of unanswered questions as to whether the WTR are fully compliant with the WTD?

We will keep you informed of developments on this topic as this may be pertinent to a number of employers out there.

for help or advice on this or other employment law matter, please speak to Emma-Louise Hewitt on 0808 166 8860 or email

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