King v The Sash Window Workshop Ltd and anor [2017]

"It follows from the above that, unlike in a situation of accumulation of entitlement to paid annual leave by a worker who was unfit for work due to sickness [and who has a limited period of carry-over in which to take unused annual leave], an employer that does not allow a worker to exercise his right to paid annual leave must bear the consequences."

So found the CJEU in a case that will send shudders through many an employer's bank balance. As the CIPD put it in their review of this important case, "This is likely to mean that anyone with worker status will be able to carry leave over to subsequent years if they are unable to take it for reasons beyond their control. More significantly, it will almost certainly lead to large and potentially uncapped compensation for businesses whose workforces may be able to argue that they should be recognised as workers, including many in the gig economy."

This case was referred to the European Court of Justice by the Court of Appeal and concerned entitlement of workers to holiday pay and whether they had to take leave in order to claim it. The case also concerned the time limits for taking claims against employers and the employment status of people who work, albeit they may be referred to as contractors, rather than employees or workers.

Mr King worked for Sash Windows under a self-employment contract as a commission-only salesman. Whenever he took time off he was not paid. He had been offered an employment contract in 2008 but remained self-employed. Upon termination of his contract in 2012, Mr King argued he was entitled to back pay on holidays going back to 1999 because, having been wrongly categorised as self-employed, he had not had an opportunity to take paid leave - his contract didn't allow for paid leave. Further, any rule which stated that he had to first take unpaid leave and then try to claim back holiday pay would be unlawful under the Working Time Directive. Since he was effectively denied the lawful right to take annual leave under the Directive, the 'normal' rules on carry over of annual leave (and any subsequent 3-month time limits for taking claims for back pay in UK law) should be set aside. The CJEU has agreed with Mr King. 

" ...as is clear from the very wording of Article 7(1) of Directive 2003/88, a provision from which no derogation is permitted by that directive, every worker is entitled to paid annual leave of at least four weeks. That right to paid annual leave must be regarded as a particularly important principle of EU social law, the implementation of which by the competent national authorities must be confined within the limits expressly laid down by Directive 2003/88 itself ... the right to paid annual leave is expressly set out in Article 31(2) of the Charter, which Article 6(1) TEU recognises as having the same legal value as the Treaties ... although it is for the Member States to lay down the conditions for the exercise and implementation of the right to paid annual leave, they must not make the very existence of that right, which derives directly from that directive, subject to any preconditions whatsoever ... Directive 2003/88 treats the right to annual leave and to a payment on that account as being two aspects of a single right. 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 ... It follows from the foregoing that, when taking his annual leave, the worker must be able to benefit from the remuneration to which he is entitled under Article 7(1) of Directive 2003/88... The very purpose of the right to paid annual leave is to enable the worker to rest and to enjoy a period of relaxation and leisure ... a worker faced with circumstances liable to give rise 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 leisure, in accordance with Article 7 of Directive 2003/88... Similarly, such circumstances are liable to dissuade the worker from taking his annual leave. In that regard, it must be noted that any practice or omission of an employer that may potentially deter a worker from taking his annual leave is equally incompatible with the purpose of the right to paid annual leave..."

This very incompatibility brings with it additional costs - the caveats which might in lawful circumstances have limited the liability for payment for annual leave cannot apply. The leave owed carries over until the termination of the contract.
http://curia.europa.eu/juris/document/document.jsf?text=&docid=197263&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=844502