EU paid holiday entitlement did not lapse at end of holiday year

Does a worker lose their annual holiday entitlement under EU law if they do not take the leave before the end of the holiday year?

Only if the employer diligently gives the worker the opportunity to take it, according to the latest ruling of the Court of Justice of the European Union (CJEU)

Background

There are 2 sources of statutory annual leave. The first originates in EU law and gives workers 4 weeks’ paid holiday; the second derives from UK law and gives workers an additional 1.6 weeks’ paid holiday. Although employer and employee can agree in writing to carry over the second type of leave to the next leave year, EU law requires that the 4 weeks’ holiday entitlement must be taken in the leave year to which it relates, or else it is lost (unless the worker is unable to take their holiday in the year in which it accrued either because they are on maternity leave or on sick leave).

However, in its latest decision the CJEU has ruled that the right to 4 weeks’ leave is not automatically lost if a worker does not exercise his right unless the employer has ‘diligently’ brought to the worker’s attention that leave will be lost, the burden of proof resting with the employer.

Facts

The Claimant in that case worked at the Max Planck Institute in Germany until 2013. Two months before his employment was due to end, the employer invited the Claimant to take his accrued leave. The Claimant chose to take only two days of his leave and asked for payment in lieu of 51 untaken days from 2011 and 2012. The employer refused, relying on the Working Time Directive under which a worker must take their holiday in the year in which it is earned. The Claimant’s claim for holiday pay in the German courts failed for the reason relied on by the employer.

The Claimant challenged the courts’ ruling before the CJEU.

CJEU decision

The CJEU upheld the Claimant’s right to holiday pay, ruling that a worker’s failure to exercise their right to annual leave will not result in the automatic loss of that leave at the end of the leave year in accordance with the Working Time Directive unless the employer can show that it had exercised “all due diligence in enabling the worker to actually take” their paid annual leave. The employer has the burden of proof in this respect.

Comment

The impact of this decision of the CJEU is that workers’ entitlement to 4 weeks’ paid holiday will not lapse if it is not taken before the end of the holiday year in which it accrues and they will be able to carry forward any untaken holiday (and at end of employment to receive payment in lieu of the total accrued) unless the employer
a) has formally encouraged the worker to take their entitlement; and
b) has informed the worker that, if it is not taken, the holiday will be lost at the end of the holiday year. 

Max-Planck-Gesellschaft v Shimizu

Warning

This article is not a substitute for legal advice. The information may be incorrect or out of date and does not constitute a definitive or complete statement of the law. This article is not intended to constitute legal advice in any specific situation. Readers should obtain legal advice and not rely on the information in this article.