In two judgments on 6 November 2018 (C-684/16 and C-619/16) the European Court of Justice brought important clarifications to the question of loss of paid annual leave.

Two employees who were subject to German law had been refused payment of an allowance for unused holiday at the end of their employment contract on the basis that they had not asked to take their annual leave during the relevant reference period, that is, before the end of the employment relationship.

The European Court of Justice held that such an automatic loss of the right to paid annual leave is contrary to EU law, in particular the Working Time Directive (2003/88/EC of 4 November 2003), which, notably, implies respect for the following principles:

The mere fact that a worker has not asked to take his or her leave within the appropriate time period cannot lead to the automatic loss of this leave if the employer has not previously ensured that the employee was in a position to take the leave.

On this point, the European Court of Justice called attention to the fact that while a national provision can envisage the loss of the right to paid annual leave at the end of a reference period, a carry over period or the end of the working relationship, this was only ‘provided, however, that the worker who has lost his right to paid annual leave has actually had the opportunity to exercise [that right].’

The employer must ensure that the employee is able to take his paid annual leave, if necessary through the provision of sufficient information.

According to the European Court of Justice the employer has an obligation to ensure that workers are given the opportunity to exercise their right to paid annual leave, in particular by the provision of ‘sufficient information,‘ which consists of:

• encouraging the employee, formally if necessary, to take his or her paid annual leave;
• whilst also informing him or her, accurately and in good time, of the fact that if he or she does not take the annual leave, it will be lost at the end of the reference period or authorised carry over period.

The burden of proof of ‘sufficient information’ will fall on the employer in the event of litigation

The European Court of Justice is opposed to an employee losing his or her untaken paid leave if the employer has not established that it has shown ‘all due diligence’ in ensuring the employee is able to take that leave.

However, if the employer demonstrates that ‘it was deliberately and in full knowledge of the ensuing consequences that the worker refrained from taking the paid annual leave to which he was entitled after having been given the opportunity to exercise his right thereto’ then in that situation, the employee loses his or her untaken leave at the end of the applicable reference period or carry over period.