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No break for the CJEU in deciding holiday pay cases

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Holiday pay seems to have been at the forefront of the Court of Justice of the European Union’s (CJEU) mind this week as the court has been busy deciding two cases on the matter. Both are helpful to remind employers of their obligations in respect of providing employees with paid annual leave.

The first of those cases, Max-Planck-Gesellschaft v. Shimizu, considered the right to payment in lieu of untaken annual leave.

Mr Shimizu worked at a German private scientific support institute until 2013 and brought a claim for the payment of untaken leave for 2011-2012. Max-Planck-Gesellschaft did invite Mr Simizu to take the annual leave before the end of the relevant holiday year, but did not force him to do so. Mr Simizu did not take the leave and so, under national law, he lost the right to carry it over to the next leave year. The CJEU held that under the Working Time Directive (WTD) a worker who does not use the right to paid annual leave should only lose the leave if the employer has “diligently” brought to the worker’s attention the fact that leave will be lost.

For employers this case highlights the importance of informing employees of their right to take the 20 days’ minimum annual leave entitlement under the WTD before the end of each holiday year. Such information should be given in good time before the end of the holiday year and should make clear to the employee that the leave will be lost if they do not take it. If the employer does not take these steps they may be required to pay the employee in lieu of the untaken leave.

The second decision in the past week was in two linked cases, Wuppertal v. Bauer and Willmeroth v. Brossonn, about the right of a deceased worker’s heir to receive payment for untaken paid annual leave. The CJEU found that an heir does have the right to financial compensation for unpaid leave accrued by the employee before their death, under both the WTD and the Charter of Fundamental Rights of the European Union. The underlying basis for the CJEU’s decision was to protect the right to paid annual leave as it constitutes a particularly important principle of EU law.

This decision reiterates the importance European law places on a worker’s right to paid annual leave and represents a change in the law which may lead to employers having to make unexpected payments to families of deceased workers.

If you have any questions about the effect of these two decisions on your business or questions on holiday pay generally, please contact a member of our team.