In Neidel v Stadt Frankfurt am Main, the Court of Justice of the European Union (CJEU) has held that where a member state’s national law provides workers with more than the minimum four week’s statutory holiday specified in the Working Time Directive, it needn’t guarantee workers payment in lieu of holidays, upon termination of employment, that they have been unable to take due to sickness, over and above that minimum four week period.
Mr Neidel, a fire-fighter based in Germany, retired after a long period of sickness absence. He didn’t receive any payment in lieu of his accrued and untaken statutory holiday. This treatment was compliant with German law, which didn’t provide for payment in lieu of untaken leave in this way. Mr Neidel brought a holiday pay claim in a German administrative court, which in turn referred certain aspects to the CJEU.
The CJEU confirmed that an employee is entitled on termination of employment to payment in lieu of statutory leave not taken due to sickness. However, it noted that the Directive did not prevent member states from limiting payment in lieu to the period specified in the Directive, thereby excluding any additional holiday entitlement over and above four weeks. This was an aspect that member states were competent to decide upon in national law.
The CJEU also held that a German national law limiting the carry-over of a sick worker’s statutory holiday entitlement for a maximum period of nine months following the end of the leave year was non-compliant with the Directive. The CJEU referenced a previous decision in KHS AG v Schulte where it had held that a worker absent on sick leave must be entitled to carry over untaken statutory holiday for a time period “substantially longer” than the relevant reference period itself.
Impact for employers
- UK law (The Working Time Regulations) exceeds the Directive’s requirements by providing workers with holiday entitlement of 5.6 weeks. This case suggests that the Directive’s rules regarding sick employees’ holiday entitlements need only apply to the minimum four week entitlement, and not the full 5.6 weeks under the Working Time Regulations (WTR).
- The UK Government announced proposals last year to amend the WTR to expressly allow employees who are unable to take their holidays due to sick leave to carry them forward to the next holiday period. The consultation only made reference to the four week entitlement provided in the Directive. This decision confirms that limiting the protection in this way will be compliant with the Directive.
- The Government’s proposals also touched upon how long the holiday entitlement carry-over period will be for sick workers, but it is not clear what time period is likely to be introduced. Based upon this decision, and the previous case of KHS AG v Schulte, it is likely that a period of at least 15 months (as approved by the CJEU in Schulte) will be required in order to be compliant with the CJEU’s requirement for a period “substantially longer” than the leave year.