ANNUAL LEAVE | Use or lose it?

As we draw a close to the calendar year, the Court of Justice of the European Union (CJEU) has handed down an important judgment on the right to paid annual leave.

The Court decided that a worker should not automatically lose their right to paid annual leave because they did not apply for it.

What is this case all about?

Mr Shimizu worked at Max-Planck Institute in Germany. A couple of months before his employment terminated, the employer invited him to take the leave that he still had outstanding, but they did not force him to do so. He took two days of leave and asked for payment for the other remaining days he had not taken.

However, under German Law, he had essentially lost his right to carry over this leave to the next year. The matter was referred to the CJEU.  

What did the Court decide?

The Court decided that if a worker does not take their paid annual leave, leave should not be lost automatically.

This unless the employer has informed the employee, both accurately and in good time, that their leave may be lost at the end of the calendar year.  

The onus of proof is therefore placed on the employer to prove they have done this.  

Court of justice of european union

Is this decision relevant to UK employers?

Yes. Employment Tribunals have to try and interpret UK law to give it the same purpose and effect as EU law. The EU (Withdrawal) Act states that the principle of supremacy of EU law continues to apply to the interpretation of rules and laws passed before exit day so this decision is relevant to UK employers and employees.

Ellis Whittam Top Tip!

Employers should periodically review whether employees have taken leave. 

If they have a lot of leave outstanding, remind them of how much leave they still have to use before the holiday year ends. 

Make them aware that unused leave may be lost.

"This decision represents something of a sea change"
James Tamm, Director of Legal Services, Ellis Whittam


James Tamm, Director of Legal Services at Ellis Whittam, comments “This decision represents something of a sea change. Prior to this, the view on holidays was traditionally ‘use them or lose them’. This places some emphasis back on employers. Be proactive; set a reminder two to three months prior to the end of the holiday year to tell your workers to book any remaining time off or risk losing it. That sort of simple step will help prevent this decision affecting your business”.

Seek HR and Employment Law advice from Ellis Whittam’s Employment Law Advisers who can help you navigate though all the grey areas surrounding annual leave and holiday pay.