Use it or lose it!

Two recent judgement by the Court of the European Union (ECJ) have significant implications for the way employers deal with annual leave.

“Use it or lose it” is a common principle embedded in many employment relationships.  It clearly makes sense from everyone’s point of view to prevent the stockpiling of annual leave.  Holiday is the opportunity for rest and relaxation from which there are obvious benefits for both employer and employee.

However, in the two cases in question (Kreuziger v Land Berlin and Max-Planck-Gesellschaft zur Förderung der Wissenschaften eV v Shimizu) the employees had both asked for payments in lieu of untaken holiday on the termination of their employment.  Their employers (one a public sector employer and the other private sector) refused.  The cases were referred to the ECJ.

In its judgement the ECJ found that a worker could not automatically lose his or her right to paid annual leave days to which he or she was entitled under EU law or a payment in lieu of those untaken annual leave days just because he or she did not apply to take them before the end of his or her employment.

It went on to say that the right to a payment in lieu of untaken holiday leave would only be lost if the employer had given the worker the opportunity and specific and transparent encouragement to take the leave in good time and could prove that he or she had done so.

So, what’s the message for employers:

• Although these cases dealt specifically with payments in lieu of notice, they have implications for the way in which you deal with holiday leave throughout someone’s employment;
• Give your employees regular and clear encouragement to take their annual leave (not just when they are getting to the end of the holiday year or have handed in their notice);
• Remind your employees that if they don’t take their annual leave, then they will lose it at the end of the holiday year (depending on the exact wording of your terms and conditions); and
• Keep a record of the fact that you have done both these things – a copy of letters or emails sent to your employees or notes from one to one or team meetings that you have held.

If you don’t do this, then you may find that your employees will be able to claim a right to carry over untaken holiday leave to the next holiday year and be paid in lieu of untaken holiday when they resign or leave your employment for any other reason.

One final note – the judgements of the ECJ apply only to the four week holiday entitlement set out in the EU Working Time Directive.  They do not apply to the additional 1.6 weeks included in the United Kingdom’s Working Time Regulations.

George Lepine http://www.on-track-hr.co.uk  - a trustworthy value for money HR service dedicated to helping you to meet your business goals and get the best from your team.

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