European Court decision clarifies holiday leave

The CJEU’s (Court of Justice of the European Union) subsequent decision in KHS AG v Schulte(22/11/2011) will come as some respite for employers.

Facts - Schulte was employed in Germany by KHS as a locksmith. Under a German collective agreement Schulte was entitled to 30 days holiday. The agreement provided that holiday leave if not taken in one year could be carried over to the next year, but must generally be used within 3 months.

However if the employee could not take the annual leave due to illness, the leave could be carried over in to the next year as long as it was used with in a period of 15 months of the new holiday year. (3 months + 12 months).

Schulte suffered a heart attack which left him permanently disabled, he subsequently brought a claim for pay in lieu of holiday from 2006-2008. KHS’s defence was a period of 15 months had elapsed and Schulte had lost his entitlement.

The CJEU held that although workers can take statutory holiday accrued during sick leave following their return to work, even if leave entitlement  is carried on to another leave year, a worker on a period of long term sickness cannot indefinitely accumulate leave over that period of sickness.

An entitlement to carry over should be given and in this the court ruled that the any carry over period must take into account the specific circumstances of the sick worker. The  Court ruled that the period in which the holiday could be carried over must be substantially longer than the holiday year.  it was permissible, on the facts of this case, for the employer to require that the accrued leave must be taken within 15 months of the next holiday year otherwise it was lost. 

Employers must ensure, if required, that periods of leave may be staggered, planned in advance and available in the long term. The carry over period must also be substantially longer than the period in which leave is granted (holiday year).