Employees have a right to be paid for their unutilised leave upon termination, even if they don't request to use it
News    ·   15-11-2018

AUTHOR: Ron Galea Cavallazzi; Edward Mizzi; Katya Gatt

The Court of Justice of the European Union (CJEU) recently delivered its preliminary rulings on two referrals by German courts asking whether EU law precludes national legislation under which a worker loses his entitlement to payment of an allowance in lieu of paid leave not taken if the worker did not ask to take the leave in question before the employment relationship was terminated.

The CJEU iterated that every worker’s right to paid annual leave is a particularly important principle of EU social law, expressly laid down in the European Social Charter. It stressed that upon termination of employment the actual taking of paid leave to which a worker is entitled is no longer possible, so the Working Time Directive provides for an allowance in lieu in order to prevent the undermining of that right.

The only legal conditions for the exercise of that right, the Court said, are simply that the employment relationship has ended and that this has taken place before all paid leave is availed of. This is reflected in the local implementing legislation of the Directive, the Organisation of Working Time Regulations, which attaches no conditions to the right of a worker to ask for an allowance for outstanding paid leave once employment is terminated. An employer’s unconditional obligation to pay compensation for leave entitlement unavailed of after termination is also reflected in our Employment and Industrial Relations Act.

Previous CJEU decisions show that it is of no consequence that leave was not availed of because the employee was on sick leave (Schultz-Hoff and Others, C-350/06), and go so far as to conclude that the right does not lapse where termination of employment was brought about by the worker's death (Bollacke, C-118/13).

The CJEU concluded that national legislation which permits the automatic loss of the right to paid leave not availed of before the termination of an employment relationship and, accordingly, the worker’s allowance in lieu thereof, due to the worker having not requested the right to exercise that right, is in breach of EU law. This applies unless the employer actually gave the worker an opportunity to avail of the leave not taken and the worker deliberately and knowingly refused to do so, the proof of which is the employer’s burden.

Cases cited: Case C-619/16, Kreuziger v Land Berlin ECLI:EU:C:2018:872; Case C-684/16, Max-Planck-Gesellschaft zur Förderung der Wissenschaftenv tetsuji Shimizu ECLI:EU:C:2018:874


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