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European Court gives green light to Finnish rules on annual leave

Written by
Dittmar & Indrenius, a leading Finnish law firm focused on creating exceptional added value to demanding corporate clients.
The European Court of Justice has held that Finnish rules on annual leave for workers on sick leave are in line with the requirements of EU law.

On 19 November 2019, the Grand Chamber of the Court of Justice of the European Union (the ‘CJEU’) gave a significant judgement on two requests for a preliminary ruling from the Finnish Labour Court. The requests concerned the right to postpone annual leave in accordance with the Directive 2003/88/EC (the ‘Working Time Directive’) and the Charter of Fundamental Rights of the European Union (the ‘Charter’).

The Working Time Directive lays down the minimum safety and health requirements for working time. According to the Article 7(1) of the Directive, every worker is entitled to paid annual leave of at least four weeks. The right to annual leave is also recognised as a fundamental right in Article 31(2) of the Charter. In earlier case law, the European Court of Justice has consistently ruled that a worker who becomes sick before or during annual leave is entitled to reschedule the period of annual leave that coincides with sick leave.

In Finland, the length of annual leave, as laid down by the Annual Holidays Act, is five weeks. In certain sectors, collective agreements grant even longer additional periods of annual leave. Finland has also incorporated into its legislation the EU law requirement of the right to postpone annual leave in the event of sickness. However, this right covers only the period of annual leave deriving from EU law, i.e. four weeks. Consequently, the right to postpone annual leave does not apply to the additional one week of annual leave granted by the Annual Holidays Act. As regards additional annual leave rights established in collective agreements, the social partners may choose whether the right to postpone is applied.

The Finnish rules were contested by trade unions in legal proceedings brought before the Finnish Labour Court, where it was argued that the right to take annual leave at another time outside sick leave should extend to additional leave granted by Member States (or social partners exercising their freedom to conclude collective agreements). The case brought to the fore important constitutional questions regarding the applicability of the Charter to Member States’ power to adopt measures in a field governed by EU-law-based minimum requirements. In order to obtain guidance on the proper interpretation of EU law, the Labour Court referred the case to the European Court of Justice for a preliminary ruling.

The Court ruled in favour of the employer side, concluding that neither the Working Time Directive nor the Charter create an entitlement to carry over annual leave exceeding the minimum period of four weeks. The Court highlighted especially the Directive’s character as minimum protection regulation. The Court also stated that the Finnish provisions in question fell outside the scope of the Charter, since they did not limit the minimum protections guaranteed to workers under the Working Time Directive and did not adversely affect the objectives of the Directive. Thus, the Finnish provisions were held to comply with the requirements of EU law.

There are several pending disputes concerning the same question in Finnish courts. The European Court of Justice judgement will affect the outcome of those disputes.

Mika Karkkainen
Dittmar & Indrenius

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