Employment law solicitor Richard Grogan of Richard Grogan & Associates writes on an important European court judgment concerning holiday pay for self-employed contractors.

Case C-214/16, being a case of Conley King and the Sash Window Workshop Limited, is a decision of the European Court of Justice.

If any case has created uproar in the employment field recently, it most definitely is this case where the Judgment issued on the 29th November.

The case is important for reminding those involved that Directive 2003/88 being the Working Time Directive provides that accounts should be taken of the principles of the International Labour Organisation. That provides that the uninterrupted part of the Annual Holiday with pay referred to in Article 8, Paragraph 2 of the Convention to have been granted and taken not later than 1 year and the remainder of the Annual Holiday with pay not later than 18 months from the end of the year in respect of which the holiday entitlement has arisen. Article 7 of the Directive provides that Member States shall take the necessary measures to ensure that every worker is entitled to paid Annual Leave of at least 4 week in accordance with the conditions for entitlement 2 and the granting of such Leave laid down by National Legislation.

Article 17 of the Directive provides that Member States may derogate from certain of the provisions. However, no derogation is allowed in respect of Article 7 of the Directive.

As will be seen later there is actually a serious issue as to whether our legislation is in line with the Directive. The employee in question worked on a self-employment commission only contract. It was subsequently accepted by the EAT in England that the employee was in fact an employee. When the employment relationship ended, Mr Kean sought to recover payment of his Annual Leave taken and not paid as well as not taken for the entire period of his engagement from June 1999 to the October 2012. This was upheld. This is very significant.

It may be seen that we are going in relation to this. This is a substantial period of time and way in excess of the provisions of the Irish Legislation.

The UK Legislation does not allow Annual Leave to be carried over beyond the Leave Year for which it was granted. The Irish Legislation does but only for a relatively short period of time.

The Court in its decision made it clear that, from the wording of Article 7 of the Directive, there is no derogation permitted from that Directive and every worker is entitled to paid Annual Leave of at least 4 weeks.

While it is not covered in this particular case, this issue of the 4 weeks is going to cause the problem. Many employers will take 4 weeks as meaning 20 days. It does not. It means 4 weeks. A week is not defined in the Organisation of Working Time Act but is defined in the Interpretation Act. A week is a period from Midnight on Saturday, being effectively Sunday, to the following midnight on Saturday. Some employees will take days. The Directive uses the word “weeks” and a week is a period of 7 days. Therefore the entitlement is to 28 days holidays but only 20 of them need to be paid presuming an employee worked a 5 day week. In addition, it would appear that because it says 4 weeks that the Leave must be taken in a tranche of a week at a time. That is an interesting issue that is going to have to be determined under Irish Law. This was a case in the Labour Court in a case DWT 1677. This matter subsequently went to the High Court but never proceeded for hearing. This case now has significantly opened up this whole issue as to what the periods must be particularly as there can be no derogation from Article 7 and the WRC or the Labour Court must read the Irish Legislation only in line with Article 7.

The Court has pointed out that no preconditions can be set for taking that Leave and referred to the case of C-350/06 and C-520/06 referred to as the Schultz - Hoff and others cases.

The Court has also stated that the right to Annual Leave and to the payment of that account are two aspects of a single right and the purpose of the requirement that the Leave be paid is to put the worker during such Leave in a position which is, as regards salary, comparable to periods of work. The Court referred to the Judgment in C-539/12.

While this is not relevant, this particular case is going again to be relevant in Irish Law. The Irish Legislation specifically excludes overtime payments other than regular rostered overtime. This decision appears to throw that jurisprudence completely on its head. While the Court recognises that it is for Member States to lay down the conditions for the exercise of the right to paid Annual Leave it cannot be subject to preconditions. The Labour Court has consistently and properly applied the Irish Legislation as it currently is. However, it would now appear that because of this ruling that there is no derogation from Article 7 and the ruling as to what pay is that this is an issue where, at a minimum, there may well be an issue of a claim against the State, unless the Legislation is properly dealt with to be in line with the Directive.

The Court has held that the employee must be able to benefit from the remuneration to which he is entitled under Article 7 of the Directive. The Court has taken the view, in line with the European Commission notes, that a worker faced with circumstances liable to give right to uncertainty during the Leave period as to the remuneration owed to him would not be able to fully benefit from that Leave as a period of relaxation and later in accordance with Article 7 of the Directive. This puts the Irish Legislation seriously contrary to the Directive. The Directive has no provision for judicial remedies to enforce the right to paid Leave. However, the Court has pointed out that Member States must in the context ensure compliance with the right to effective remedy as enshrined in Article 47 of the Charter of Fundamental Rights of the European Union which is now part of Irish Law.

The Court has pointed out that in a situation in which the employer grants only unpaid Leave to the worker the requirement of an employee to be forced to take Leave without pay in the first place and then bring a claim to claim payment for it would be incompatible with Article 7 of the Directive. The Court pointed out that, if the national remedies are interpreted in a restrictive way, the worker would get no effective remedy. The Court determined that an employee does not have to take the Leave as a requirement to establishing that he has a right to paid Leave.

The Court has also held that, effectively, the right to paid Annual Leave cannot be interpreted restrictively. The Court held that Article 7 must be interpreted as precluding national provisions or practices that prevent a worker from carrying over and where appropriate accumulating until termination of his employment relationship paid Annual Leave rights no exercised in respect of several consecutive reference periods because his employer refused to remunerate that Leave.

For anyone interested in Employment Law and in particular the issue of Holiday pay this is a very important decision to read.