EU Case Law – Employers must Encourage Employees to take Holiday

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A case recently brought to the Court of Justice of the European Court by The German Courts highlighted the importance of ‘actively’ encouraging employees to use all of their annual leave each holiday year. The ruling was on a joint case of two employees who had not used up all of their allowance before being terminated or finishing their employment. Neither employee had received any payment in lieu of untaken holidays by their employer.

The CJEU ruled that:

‘EU law precludes a worker from automatically losing the days of paid annual leave to which he was entitled under EU law and, consequently, his right to an allowance in lieu of the leave which is not taken, solely because he did not apply for leave before the employment relationship ended.’

They then went on to say that those rights may be lost if the employer has given the employee sufficient information, opportunity and actively encouraged them to take their leave.

What does this mean for employers?

You cannot force people to take their time off but you can routinely advise them though (in writing!) how much holiday they have available to them and encourage them to take it. Create a process whereby between three and six months before the end of the holiday year, you notify each employee how much remaining leave he/she has. Ensure you highlight the Company’s policy on carrying over holiday (whether you do or do not allow it), as well as clearly outlining that any unused holiday at the end of the holiday year will be forfeited along with any rights to payment in lieu (unless due to exceptional circumstances such as long-term sickness or maternity leave).

In summary, an employee who has outstanding untaken leave at the end of the holiday year or the their employment will not be entitled to payment of those unused holidays as long as the employer has provided sufficient information, routine reminders and encouragement to take it.

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