Julie Duane, Solicitor Advocate at CG Professional.
The European Court of Justice (“ECJ”) has recently decided in the case of Max-Planck-Gesellschaft v Shimizu 2018 whether or not an employee loses their statutory holiday entitlement if they do not use it.
In accordance with the Working Time Directive which has become enshrined into domestic law by the Working Time Regulations, all workers are entitled to a minimum of 20 days. However, under the Working Time Regulations employees are also entitled to an additional 1.6 weeks (eight days) as part of the statutory entitlement.
Whilst employers can provide employees with additional annual leave this isn’t something which is governed or dictated by domestic legislation and is one for the employers to determine within the employee’s contract of employment.
During the period of 2011/2012, the employee failed to take his statutory holiday entitlement. His employer had invited him to do so before the end of the relevant year but had not forced him to take this leave. As a result, and in accordance with German jurisdiction he lost his right to carry the statutory entitlement into the following year. When the employee’s employment was terminated, he sought to pursue a claim of unpaid holiday pay.
The ECJ held that where an employer has diligently told its employees that their leave would be lost if it is not taken before the end of the holiday year and they fail to do so, then they do not have the right to exercise a right to paid annual leave in accordance with the Working Time Directive. If, however, the employer fails to take this action then the employee will be entitled to take their untaken holiday over into the next holiday year.
What does this mean for employers?
Firstly, employers should note that this case is only determinative of the Working Time Directive leave i.e. the 20 days available to employees, it does not apply to the additional 1.6 weeks (eight days). Equally any holiday in excess of the Working Time Directive, for example where an employee is granted 35 days annual leave, this case law is only applicable to the initial 20 days and not the remaining 15 days.
Employers should therefore ensure that in order to comply with the Working Time Directive the following occurs:-
- Employers should ensure that they are informing employees that they should take their leave before the end of the year otherwise it would be lost. A failure to do so could mean that the employees are entitled to carry over that leave into subsequent years;
- Whilst the ECJ did not define how employers can inform employees of their rights, this should be outlined in a robust holiday policy provided by the employer. Employers should also advise employees of the terms of the policy during their induction;
- Employers are encouraged to issue an annual reminder about its terms to employees on an annual basis; and
- Employers should be mindful of the exceptions to this provision, namely where individuals cannot exercise the right due to long term sickness, maternity leave and other types of parental leave. In those scenarios, legal advice should be sought in order to determine what leave can and cannot be carried over.
If you have any questions regarding the holiday pay provisions or have a query regarding any other employment-related matter, please do not hesitate to contact a member of the CG Professional team who would be more than happy to help.