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Employment news: European Court of Justice upholds workers’ right to carry over paid annual leave

European Union
Written by
CASTEGNARO, your partner in labour and employment law in Luxembourg.
This article summarises an important recent judgment of the European Court of Justice, confirming workers’ rights in relation to carrying over paid annual leave and setting out under what conditions it can be carried over indefinitely.

The European Court of Justice has clarified that workers who have not been allowed to take annual paid leave by their employer are entitled to carry it over indefinitely in the absence of a national stipulated carry-over period (Conley King v The Sash Window Workshop and Richard Dollar, C-214/16, 27 November 2017).

The case related to a UK worker, Mr King, who had worked on the basis of a ‘self-employed commission-only contract’ for 12 years. When he retired, he took his employer to court for payment of leave taken and not paid, as well as leave earned and not taken during the 12 years of his contract, which his employer had refused to pay because of Mr King’s self-employed status.

Having recognised that the claimant was a ‘worker’ in accordance with the Working Time Directive (2003/88) and therefore entitled to holiday pay, the Court of Appeal of England and Wales expressed doubt about the possibility of cumulating paid leave for the 12 years of Mr King’s contractual relationship and about the right to payment in full for this leave at the end of the contract. UK law stipulates that paid annual leave can only be taken during the year in which it is accrued, and cannot be carried over. In addition, in the event of a disagreement about the payment of annual leave, the worker must first take his or her leave in order to be able to ask for payment for it in court, without any certainty of success in this action. The Court of Appeal of England and Wales therefore referred the following questions to the European Court of Justice:

1. Does Directive 2003/88 allow a member state to demand that a worker take leave before knowing if he is entitled to payment for it?

The Court concluded this was not allowed, pointing out that as the purpose of paid annual leave is to give the worker a period of rest, relaxation and leisure, payment for this leave must be made when the annual leave is actually taken.

2. Do national legislation or practices whereby a worker cannot carry over and accumulate paid leave earned and not taken until the end of the employment relationship, due to the employer’s refusal to pay it, comply with Directive 2003/88?

The Court held that preventing a worker from carrying over and accumulating leave in these circumstances does not comply with the Directive. The Court made the following points and clarifications:

  • The principle is that if workers have not been able to take leave for reasons beyond their control, they does not lose the right to paid annual leave at the end of the reference period or carry-over period fixed by national law.
  • There is an exception to this principle if the worker has not been able to take paid leave because of illness for several consecutive years. The accumulation of leave cannot be unlimited due to the difficulty of organising work this would create for the employer. In this case, a carry-over period limited to 15 months is reasonable to protect the employee’s rights and the employer’s interests (KHS AG v Winfried Schulte, C-214/10, 22 November 2011).
  • However, if an employer does not allow a worker to take paid leave, for example by refusing to pay for it, then the European Court of Justice considers the employer ‘must bear the consequences’. In contrast with the scenario where an employer is faced with periods of absence due to a worker’s long-term illness, here the employer has profited from the fact that the worker has not interrupted work to take annual leave. As a result it is not necessary to protect the employer’s interests.


Implications of the Court’s judgment

In the absence of a carry-over period stipulated by law in accordance with Directive 2008/33, there is no limitation to the accumulation of annual leave for a worker who has not been allowed to take paid leave by an employer. In this case, Mr King was therefore entitled to payment for leave not taken during the full 12 years of the employment relationship.

Dorothée David
Head of Knowledge - Luxembourg