Outstanding holiday entitlement on death

Tue, 01 Jul 2014

Richard Adkinson considers the ruling of the First Chambers of the CJEU has ruled in Gülay Bollacke v K + K Klaas and Kock B.V. and Co. KG (C-118/13) that an entitlement to accrued paid annual leave does not lapse when the worker dies.

Background facts

Mrs Bollacke was the wife and sole beneficiary of her late husband’s estate. He fell ill in 2009, did not work again after 11.10.2010 and died on 19.11.2010. At the time of his death he had accrued 140.5 days of untaken leave. The issue was whether she could claim a sum in lieu of the leave outstanding on his death.

Relevant provisions of WTD

Article 7 of the Working Time Directive (2003/88/EC) states that

“1. Member States shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and/or practice. 

“2. The minimum period of paid annual leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated.”

Article 15 allows more favourable treatment and Article 17 provides for derogations but not from Article 7.

CJEU judgment

The court reviewed its case law and noted paid annual leave was a particularly important principle of EU social law from which there may be no derogations. It further noted that the purpose of a payment in lieu on termination was to ensure the worker benefitted in some way from his leave entitlement when it had proven impossible for them to have taken leave.

The court went on to rule that Mrs Booacke was entitled to the payment in lieu on death. The Court cited 3 reasons:

1.     The right is to paid annual leave. There is thus a clear requirement for payment. Because the court may not take a restrictive interpretation towards workers’ rights, this pointed towards a conclusion that there should be an entitlement to payment even on death,

2.     Article 7(2) merely required the employment relationship to terminate and for there to be outstanding leave in order to give rise to the entitlement to payment. There was no other requirement,

3.     The requirement to pay financial compensation ensured the effectiveness of the entitlement to paid annual leave.

It concluded that

“It follows, first, that Article 7 of Directive 2003/88 is not to be interpreted as meaning that the death of a worker that ends the employment relationship relieves the deceased worker’s employer of payment of the allowance in lieu to which that worker would ordinarily have been entitled by way of paid annual leave outstanding, and, secondly, that receipt of such an allowance cannot be made subject to the existence of a prior application for that purpose.”

Implications

This case is not only of importance in the employment context for employers, but also in the field of the administration of the estates of the deceased. If a person dies while a worker with holiday pay owing then that sum, like any outstanding wages, must be a debt due to the estate. If the death had been preceded by a lengthy period of illness, then the sum owed could be significant.

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