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Holiday pay compensation post-Brexit

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Disputes relating to holiday pay have generated some quite controversial decisions in the European Court of Justice (ECJ) over the last few years, some of which have led to the UK courts making amendments to UK law – writing in new words - in order to be compliant with the ECJ decisions.

Take for example changes written into the legislation that allowed for employees to carry-over their holiday entitlement following long-term sick leave and others made to ensure that overtime and allowances were included in the calculation of an employee's holiday pay. 

More recently, the ECJ have ruled in the case of King v Sash Window Workshop that limitations on compensation remedies where no facility has been provided to take paid leave may not be compatible. This has prompted questions regarding the validity of the current rules that restrict claims in the UK to two years' compensation. 

It had been hoped that the Court of Appeal would clarify that point when the Sash Windows case returned from the ECJ. However as the parties settled days before the hearing the question whether current UK law is compatible with the EU decision remains outstanding. 

The uncertainty is not ideal for businesses that like Sash Windows engage 'self-employed' individuals who they would never consider would be entitled to paid holiday. The risk is that they might be found to be 'workers' and could potentially face claims for compensation that stretch back a lot longer than two years.

Will Brexit now help those businesses by removing the risk?

The UK government have ratified the “Withdrawal Agreement” which will shape the way that UK courts consider EU law and case law going forward. This essentially states that EU legislation, including case law that is operative on the day immediately before 29 March 2019 will form part of the UK domestic law. It is described as the ‘retained EU law’.

That would suggest that the UK courts and tribunals will generally have to follow the ECJ decisions determined prior to the UK leaving the EU. However will the courts then write in further changes to the UK laws in order to make them compatible with EU law? Or will that be seen as a step too far by some as it could be regarded as the EU still creating further red tape for employers even after Brexit. It  is clear is that after Brexit UK law does not have to be changed to comply with EU law. 

The fact that Sash Windows was the subject of an ECJ decision but was not concluded when the case came before the Court of Appeal leaves open the question of its status. However didn’t someone promise all workers’ rights will be protected? 

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