20.12.2017

ECJ: Prevents the employer that the employee takes his entitlements for paid leave, the leave entitlement can be transfer unlimited and accumulated

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An employee must be able to transfer and accumulate unused leave entitlements if the employer does not allow him to take his annual leave as paid leave. EU law prohibits that an employee must take his leave before he can determine whether he is entitled to pay for that leave. In contrast to cases of long-term sick employees, a limitation of the transfer period to protect the employer’s interest is not required. This was decided by the Court of Justice of the European Union on 29 November 2017 (File.: C-214/16).

Mr. Conley King demands compensation for unused leave. He worked for The Sash Window Workshop (SWWL) on the basis of a so called “freelance contract exclusively on commission basis” from 1999 until his retirement in 2012. Under the contract, Mr. King received commissions only. If he took annual leave, it wasn’t paid.

After cancellation of his employment, Mr. King requested from his employer to pay compensation for both annual leave taken, but unpaid and annual leave not taken for the entire period of his employment. SWWL rejected Mr. King’s request. The competent Employment Tribunal (United Kingdom Labour Court) ruled that Mr King is an “employee” within the meaning of UK legislation and entitled to payment during his annual leave. The Court of Appeal referred several questions to the Court of Justice on the interpretation of the above-mentioned directive concerning certain aspects of the organisation of working time (2003/88/EC), which was transformed into British law and lies the foundation for the aforementioned claim.

According to the ECJ, EU law prohibits that an employee has to take his annual leave before he can ascertain whether he is entitled to payment during the leave.

The purpose of the entitlement to paid annual leave is that the employee can recover from his work and enjoy a period of relaxation and leisure time. However, an employee cannot fully enjoy his or her vacation if he or she cannot be sure that he or she will also receive a compensation for the period of the annual leave. This could also prevent employees from taking their annual leave. However, any practice or omission of an employer which could have such a deterrent effect would be contrary to the objective pursued by the right to payment during annual leave.

Furthermore, the ECJ also criticises a violation of the right to an effective remedy under Art. 47 of Charter of Fundamental Rights of the European Union. In the context of the present case, this right would not be guaranteed if, in the event that the employer grants the employee only unpaid leave, the employee would not be entitled to claim paid leave as such in court, but would first be forced to take unpaid leave and then claim its payment.

An employee can transfer and accumulate leave entitlements indefinitely, if the employer refuses to pay compensation during the period of the annual leave. In addition, an employee must be able to transfer and accumulate entitlements to paid annual leave which he/she has not taken in several successive reference periods because of the employer’s refusal to reimburse such leave periods until the date of termination of his/her employment relationship. The jurisprudence of the ECJ on the limited transfer of rights to paid annual leave to employees who were unable to take this leave due to illness is not transferable.

Author: Damian Wypior, Esq., German Attorney at Law