Dr Maria Tzanakopoulou, Teaching Fellow, King’s College London and University College London

BACKGROUND

The expanding gig economy is sparking debates about working conditions, including issues like working hours, pay, parental leave, and the crucial classification of gig workers. The case of King is the first time the Court of Justice of the European Union (CJEU) has ruled on business conduct and worker rights in this sector. The CJEU upheld the right of self-employed individuals to retain unused paid leave indefinitely and affirmed Mr. King’s right to legal recourse. The Court’s later Uber decision, which classified the company as a transportation provider rather than a mere intermediary, ignited further discussion and potentially paves the way for broader gig worker protections. Despite a history of sometimes downplaying labor rights, the CJEU is demonstrating a reluctance to leave the gig economy unregulated.

In the Uber case, the Court’s classification subjects Uber to national regulations and implies greater responsibilities toward its drivers. The King case directly addresses paid leave, with significant implications for workers. While hailed as a victory for gig workers, the true extent of its impact on their employment rights remains to be seen.

FACTS

Mr. King, classified as self-employed, worked as a commission-based salesman for a door and window installation company (SWWL) from 1999 to 2012, when he was dismissed on his 65th birthday. His contract lacked clarity on paid leave. According to Advocate General Tanchev’s opinion, Mr. King declined an offer of employee status with its associated protections, opting to remain self-employed. (Mr. King later disputed the AG’s understanding of this event, but the Court did not deem it necessary to revisit the issue.)

Following his dismissal, Mr. King successfully argued before the Employment Tribunal that his dismissal was age-related and that he met the definition of a “worker” under UK law, granting him certain rights including paid leave. The Tribunal awarded him compensation for unpaid leave from his final year and for unpaid leave accumulated throughout his 13 years of employment.

SWWL disputed the finding that Mr. King was entitled to payment for all untaken leave, leading to an appeal. The Employment Appeal Tribunal (EAT) sided with SWWL, arguing that Mr. King needed to take unpaid leave first and then claim payment, based on their interpretation of UK regulations. According to the EAT, a complaint of unpaid leave could only be made after such leave was taken, and strict time limits for filing complaints applied.

Mr. King maintained that his inability to take leave stemmed from his employer’s refusal to pay for it, thereby allowing his leave to accrue until his termination. He believed his claim was filed within the allowed timeframe.

The Court of Appeal subsequently referred five questions to the CJEU, centering on whether the UK regulations’ “use it or lose it” approach to paid leave, as interpreted by the EAT, infringed upon the right to an effective remedy. Additionally, they questioned if the right to paid leave could be carried over indefinitely in situations where an employer’s refusal to pay prevented the worker from taking leave.

THE COURT

The CJEU underscored the social importance of paid leave, referencing Article 31(2) of the EU Charter of Fundamental Rights. They asserted that Directive 2003/88, interpreted in conjunction with the Charter, aimed to provide workers with paid annual leave comparable to their regular working conditions, free from any preconditions. Any uncertainty about this right, caused by an employer’s actions, undermines its essence.

Consequently, the CJEU rejected the EAT’s interpretation of the UK regulations as incompatible with the Directive, stating that such an interpretation would deny workers like Mr. King an effective way to claim compensation for untaken leave. They clarified that a complaint should be possible even without the employer first refusing to pay for leave already taken. This right to a remedy, while not explicitly outlined in the Directive, is enshrined in Article 47 of the Charter.

Addressing the carry-over of paid leave, the Court recognized that Mr. King’s inability to take leave was outside of his control. The CJEU, prioritizing the worker’s existing status, deemed the offer of employee status irrelevant. Citing established case law on sick leave, the Court affirmed the availability of payment in lieu of leave for those unable to take it for reasons beyond their control. They suggested a carry-over limit of fifteen months to balance worker rights with potential employer burdens arising from extended employee absences. The Court then assessed whether Mr. King’s situation was comparable to absence due to sickness.

The Court observed that safeguarding the employer’s interests seemed unnecessary, particularly in light of the need for a broad interpretation of the right to paid leave:

“It is important to note that assessing the right to paid annual leave for a worker like Mr. King doesn’t involve situations where the employer faced disruptions caused by absences, such as extended sick leave. On the contrary, the employer benefited from Mr. King’s continuous work until his retirement because he didn’t take paid annual leave.”

The Court concluded that employers who obstruct a worker’s right to paid leave must face the consequences, in this instance, paying Mr. King for all his untaken leave.

COMMENT

King is a landmark case, reinforcing the significance of paid leave as a crucial employment right. The Court demonstrated a strong stance in favor of workers’ rights, going to great lengths to interpret the right to paid leave broadly and holding the employer accountable. The CJEU’s language suggests a firm commitment to upholding “EU social law” over employer interests.

While the Court’s reliance on the Charter to support its broad interpretation is notable, it might not have been strictly necessary. A purposive interpretation, as employed by the Court, prioritizes intent over literal text. The outcome could have been similar without invoking the Charter. Nonetheless, the decision sends a clear message to businesses employing freelancers or those without traditional employee status.

However, the overall impact of King on gig worker rights should not be overstated. While individual workers may achieve victories in court, the CJEU appears hesitant to grant comprehensive protection.

Mr. King’s worker status was never in question, simplifying the CJEU’s task. The Court didn’t need to address whether gig workers generally qualify for paid leave. As the Advocate General noted, the case focused on the nature of the right itself, not its applicability. This suggests the Court’s priority was interpreting the existing right, with protecting the gig economy worker as a secondary concern. While the ruling has significant implications for many gig workers, their access to these rights remains dependent on their specific employment classification.

A comparison with the Court’s handling of collective labor rights for gig workers presents a less optimistic outlook.

The CJEU has consistently ruled that groups representing self-employed workers are engaged in economic activity, subjecting them to competition law constraints. The Court maintains this stance even when acknowledging the social aims of such groups, as seen in the Pavlov case. The implications of Pavlov extend beyond the specific case details, demonstrating the Court’s reluctance to afford self-employed worker groups the same level of protection as traditional employer-employee collective bargaining agreements.

Furthermore, the Court has stated that the Treaty lacks provisions promoting collective bargaining for self-employed workers. More concerning is the FNW Kunsten case, where the CJEU explicitly categorized organizations representing self-employed workers during negotiations as “associations of undertakings,” subjecting them to competition law.

The Court’s approach appears contradictory: acknowledging the social value of paid leave for individual freelancers while neglecting their collective bargaining rights.

One potential path forward involves the Court continuing to address individual rights incrementally, as in King. Alternatively, individuals could seek broader inclusion for self-employed workers through legal channels, as demonstrated by the Aslam case. There, Uber drivers were classified as “workers,” affording them protection under UK minimum wage and working time regulations. Like Mr. King, their worker status is now settled. However, it remains uncertain if they could collectively bargain for improved pay or pensions without facing obstacles posed by EU competition law. A third option involves the CJEU recognizing the social importance of collective bargaining and extending those rights to gig economy workers. Until then, a complete victory for gig workers seems premature.

Although King won his individual battle, the broader struggle continues. When an employment right can be defended individually in court, but not collectively, true success for gig economy workers remains elusive.

Barnard & Peers: chapter 20

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