European Court Decision Clarifies Holiday Leave

The recent decision (22nd November 2011) by the CJEU (Court of Justice of the European Union) in respect of KHS AG v Schulte will come as some respite for employers who now have clarification on the issue of accruing and carrying over holiday while an employee is absent from work due to illness.

The case involved Mr Schulte who was employed in Germany as a locksmith by KHS. 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 three months. However, if the employee could not take the annual leave due to illness, the leave could be carried over into 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 that 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.

Julie Bruce, head of Endeavour’s employment law team, explains: “An entitlement to carry over should be given and in this case the court ruled that the 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.”

Julie suggests that employers should 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).

For further information, contact Julie at j.bruce@endeavourpartnership.com