Holiday pay in lieu only applies to 4 weeks' minimum
In Neidel v Stadt Frankfurt am Main the ECJ held that where national law provides workers with statutory annual leave in excess of the four weeks required by the Working Time Directive, it need not entitle them to pay in lieu of any additional leave not taken because of sickness. In addition, a law which limits the carry-over of statutory annual leave to 9 months after the relevant leave year is not compatible with the Directive, as the carry-over period must be substantially longer than the reference period in which the entitlement accrued.
In this case, the ECJ held that where a national law provides workers with statutory annual leave in excess of the four weeks required by the Working Time Directive, it need not entitle them to an allowance in lieu on termination of any such additional leave that they have been unable to take because of sickness. It is for member states to decide whether to provide workers with additional holiday rights and whether to provide for an allowance in lieu of any such rights. The ECJ also held that a German law which limited the carry-over of statutory annual leave to a period of 9 months after the expiry of the relevant leave year was incompatible with the Directive. In doing so, the court confirmed that workers on sick leave must be able to carry over their minimum statutory holiday entitlement for a period substantially longer than the reference period in which that entitlement accrued.
So where does this leave us in the UK? In this case, the ECJ confirmed that under the Directive, on termination of employment a worker must be paid an allowance in lieu of untaken statutory annual leave entitlement, but this requirement only applies to the minimum four weeks' annual leave, as confirmed by its recent decision in Dominguez v Centre informatique du Centre Ouest Atlantique and another  IRLR 321. In Dominguez, the ECJ also confirmed that national law can treat sick workers differently with regard to access to paid holiday entitlement so long as all workers are entitled to at least the statutory minimum four weeks' leave, and now, in Neidel, goes even further by adding that the Directive does not impinge on national law which grants additional holiday rights, as in the UK, which grants 1.6 weeks’ additional leave.
The Government’s decision to amend the Working Time regulations in the light of ECJ’s decisions is now critical given the wealth of EU case law and the uncertainty over what to do when sick workers are unable to take their holiday entitlement. This is even more crucial, since in this case the ECJ have determined that the carry-over period must be "substantially longer than the reference period in respect of which the leave is granted", which in effect means, that as leave is allocated on a yearly basis, the carry-over must be longer than a year.
Created on: 29-May-12 11:52