Brussels, 07/07/2011 (Agence Europe) - European Union law does not preclude a limitation of entitlement to annual leave or to an allowance in lieu of leave not taken, as long as this limit is compatible with the objective of recuperation. It is for the member states to establish a limitation period. A limit of 18 months, on expiry of which entitlement to leave or to the allowance in lieu of leave is extinguished, is sufficient.
This is the response which has been suggested to the Court of Justice by Advocate General Verica Trstenjak, in her conclusions on Case C-214/10. The matter was brought before the Court by the Regional Employment Tribunal of Hamm, which was asked to settle a dispute between the company KHS and one of its employees, Mr Schulte, who had worked for the company since 1964, but whose employment was terminated on 31 August 2008, due to the consequences of a heart attack six years earlier. In March 2009, he lodged a legal claim for the payment in lieu of leave he did not take in the calendar years 2006, 2007 and 2008, the reference periods. In August of the same year, the Employment Tribunal of Dortmund awarded him financial compensation for the minimum annual leave provided for by the law. When KHS brought its appeal, the Tribunal of Hamm ruled that by virtue of the collective agreement applicable, Mr Schulte's annual leave entitlement for 2006 had expired on 3 March 2008. This agreement provides that entitlement to paid annual leave is for 30 days a year; it does not provide for an allowance to be paid in lieu of leave due to illness upon the expiration of a period of 15 months (carry-over period) after the calendar year to which the leave refers (reference period).
Under the circumstances, the Tribunal of Hamm asked the Court about compatibility with Directive 2003/88/EC regarding various aspects of organisation of working time of a legislation and/or national practices which provide for the entitlement to paid annual leave to expire after the reference period and/or the carry-over period, even in cases in which the worker is unable to work for a long period (it being clarified that this long-term incapacity for work has the consequence that it could accumulate entitlements to minimum paid annual leave over several years, if there is no time limit on the possibility to carry these rights over). In the event of a negative response, it asks whether the carry-over of these rights should be possible for a period of at least 18 months.
In her conclusions, Trstenjak first of all points out that according to the case-law of the Court of Justice, there is an inviolable right to annual leave, even in cases of long-term illness and, she continues, this is also valid for the entitlement to payment in lieu of annual leave not taken. This entitlement, which implements the entitlement to leave, is effectively refused on the grounds that due to the length of the illness, the circumstances rendered the entitlement to leave invalid. It is supposed to put the worker in a position to be compensated for his annual leave financially “under comparable conditions to those that would apply if he were still in active employment and received an allowance in lieu of leave”.
In the view of Trstenjak, however, the accumulation, without any limitation in time, of entitlements to leave or allowances in lieu is not required by EU law in order to achieve the objective of recuperation essentially sought by the directive: to allow the worker to recover from the effort and stress of the working year and draw new strength for the rest of the working year. She argues that this objective is not achieved if the leave is not taken until years later and accumulating entitlement to leave over several years so as to double or even treble the minimum leave allowance does not increase the recuperative effect. Moreover, the disadvantages arising for the employer, both from the prolonged absence of the employee and the financial burden of accumulated entitlement to leave or allowances in lieu are potentially liable to encourage the employer, under some circumstances, to terminate as soon as possible the employment of employees who are unfit to work for long periods. As regards the entitlement to allowances in lieu, the advocate general points out that an unlimited accumulation could give rise to an erroneous expectation on the part of the employee that he is entitled to an indemnity on termination of his employment relationship rather than allowances in lieu of leave.
As regards the limitation in time of the possibility of exercising entitlements to leave or allowances in lieu already acquired, the advocate general rules out the full loss of such entitlements. In cases of long-term illness, a worker is unable to prevent the automatic and complete loss of entitlement to leave through lapse of time. Lastly, the advocate general states that the time-limit of 18 months, on expiry of which entitlement to leave or allowances in lieu is extinguished, is consistent with the purpose of protection enshrined in the directive: the employee would have up to two and a half years to take his minimum leave for a given leave year. At the same time, the employer would be secure in the knowledge that there can be no unfettered accumulation of entitlement to leave with the consequent difficulties of organisation of work, and no significant financial burden associated with entitlements to allowances in lieu accumulated over long periods. However, this period is a guideline which the member states should follow as far as possible, whilst remaining free to adopt other rules, as long as they observe the limits imposed by the directive. Nevertheless, the advocate general considers a possible carry-over period of only six months to be insufficient. (F.G./transl.fl)