In Gülay Bollacke v K+K Klaas & Kock B.V. & Co. KG, Mr Bollacke had been seriously ill for a considerable period of time and unable to work up until the date he died, on 19 November 2010. On that date he had accumulated 140.5 days of annual leave outstanding. Mr Bollacke's widow submitted an application to K+K for a payment in lieu which corresponded to the annual leave not taken by her husband. K+K rejected the application expressing doubts that an inheritable entitlement could exist and a German court asked the ECJ for a preliminary ruling.
The ECJ ruled that the Working Time Directive precludes national legislation or practice from providing that, on termination of employment, no payment in lieu of untaken holiday is to be paid to a worker who has been on sick leave for the whole or part of the leave year and/or the “carry-over period”. Therefore, EU law prohibits a provision that in the event of an employment relationship being terminated by the death of the worker, entitlement to paid annual leave is lost and no payment is made in lieu of the amount of leave accrued but not taken. Furthermore, the ECJ held that the payment does not depend on a prior application by the interested party.
The ECJ's decision in this case relates to the four weeks' annual leave to which workers are entitled under the WTD, which is transposed into UK law under Regulation 13(1) of the Working Time Regulations 1998 (WTR) and has two practical implications:
1. Where a worker dies, any payments that would have been due and paid into his or her estate, must include a payment for any accrued holiday that is untaken under Regulation 13(1) WTR at the time of death.
2. Where a worker had died, an application for a payment in lieu of holiday entitlement accrued under Regulation 13 (1) WTR does not have to be made for the entitlement to be valid. If payment is not made automatically, personal representatives will be able to bring a claim under S.1 of the Law Reform (Miscellaneous Provisions) Act 1934 which provides that causes of action vested in a worker who has died survive for the benefit of his or her estate.
While the ECJ's ruling does not impact on the additional right to 1.6 weeks paid leave per year in the UK under Regulation 13A WTR and any contractual entitlement above the 5.6 weeks that the WTR requires, employers should review their practice on payment in lieu of outstanding accrued entitlement for these two elements when a worker dies in service, to ensure that the legal and contractual issues are fully assessed.
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