In this Article we examine the Opinion of Advocate General Hogan (delivered on 29th January 2020; Case C-762/18 and Case C-37/19). The issue was whether a worker who is unlawfully dismissed by their employer and is then subsequently re-instated, by an order of a national court order, has an entitlement to paid annual leave for the period from the date of their unlawful dismissal to the date of ordered reinstatement.

In arriving at his conclusions, he examines the parameters of Article 31 of The Charter of Fundamental Rights of the European Union, Article 7 of Directive 2003/88, the social law reasons underpinning those provisions, a number of cases which can be distinguished from the questions referred in this instance, and the questions referred to the European Court of Justice (ECJ).

The matter concerned two cases.

The Bulgarian Case - Case C‑762/18 – Background facts ⚓︎

QH was employed as a music teacher in a primary school. She was dismissed in 2004 and upon appeal her dismissal was deemed unlawful and she was reinstated as an employee.

In November 2008, QH was dismissed again, though she did not appeal that dismissal. Instead, she brought a number of actions against the school seeking payment in the amount of approximately €3,600, being compensation for unused paid annual leave accrued for the period representing her initial dismissal to her second, final dismissal (April 2004 to November 2008) (the “Relevant Period”).

QH’s cases ran aground within the Bulgarian legal system, given existing case law there which provided that a worker was not deemed to be carrying out work under the employment relationship during such a period. Consequently, QH was not entitled to paid annual leave on the basis of Bulgarian Law. The case progressed to the point where a Bulgarian Court made a referral to the ECJ, for interpretation.

Referral to ECJ

The thrust of the referral for interpretation by the ECJ was whether the Bulgarian legislation contravened the relevant EU Directive, and thus would a worker be entitled to be paid annual leave and unused paid leave for the Relevant Period?

In relation to the substantive issue, AG Hogan identified Article 7(1) of Directive 2003/88, which sets out that “every worker is entitled to paid annual leave of at least four weeks” as being “a particularly important principle of EU social law”, and re-iterated as such by the Court in “its established case-law”, (“BECTU”; “Schultz-Hoff and Others”; “Dicu”). He added “Moreover, that right…is now expressly enshrined as a fundamental right in Article 31(2) of the Charter. It follows, therefore, that the right to paid annual leave should not be given a restrictive interpretation”, (“Heimann and Toltschin”; “King”).

AG Hogan emphasised that “the purpose of the right to paid annual leave, conferred on every worker by Article 7(1) of Directive 2003/88, which is to enable the worker both to rest from carrying out the work he or she is required to do under the contract of employment and to enjoy a period of relaxation and leisure”, and that this distinguishes paid Annual Leave from other types of leave.

Specifically, he cites the Court’s judgment in 2018 in Dicu (C‑12/17, EU:C:2018:799), wherein it stated that: ‘the objective of allowing the worker to rest presupposes that the worker has been engaged in activities which justify, for the protection of his safety and health, as provided for in Directive 2003/88, his being given a period of rest, relaxation and leisure. Accordingly, entitlement to paid annual leave must, in principle, be determined by reference to the periods of actual work completed under the employment contract’.

However, he said that, on occasion, the Court had broken what had been an “intrinsic” link “between the provision of actual work, on the one hand, and the right to paid annual leave, on the other.” This usually occurs when there are circumstances “beyond control of the worker.” Typical examples include sickness (“Schultz-Hoff”; “Dominguez”; “Dicu”) and maternity leave (“Merino Gomez”). It was accepted that those exceptions do not apply in the case of a worker on “zero hours short time” (‘Kurzarbeit Null’) or a worker who took parental leave (“Dicu”), during a reference period.

Should an Exception Apply? ⚓︎

The approach taken by the Court was to assess if and whether an exception should also apply to a case such as QH’s, namely a worker who has been unable to work because of an unlawful dismissal and was subsequently reinstated. AG Hogan determined that an exception would only generally apply where:

1. The absence from work is not foreseeable (“Schultz-Hoff”; “Dicu”; “Heimann and Toltschin”;) and,
2. The absence is beyond the worker’s control (“King”; “Dicu”).

AG Hogan said that: “All those criteria seem to me to be met in a situation where the worker is unlawfully dismissed but is later reinstated by a judicial decision. Indeed, a worker in such a position will have been unable to perform his or her duties for a reason that was unforeseeable and beyond his or her control.” He added that: “More fundamentally, it does not seem just that the worker who was denied the opportunity to work during the period of dismissal by reason of what, by definition, were the wrongful acts of the employer, should suffer as a result”, emphasising that there is an obligation on employers to ensure that the workers are given the opportunity to exercise the right to paid annual leave (“Kreuziger”).

He therefore ultimately concluded that the underpinning EU Directives should be interpreted in favour of an entitlement to annual leave for a period between a dismissal and a subsequent re-instatement.

The Italian Case - Case C‑37/19 ⚓︎

CV was an employee of Iccrea Banca. She was repeatedly dismissed from her employment over a period of eight years, between July 2002 to September 2010 when she was ultimately dismissed; and, on each prior occasion, she was re-instated and resumed her employment, her dismissals being found to be unlawful, by the Italian courts.

Additionally, CV instituted legal action her employer so she could receive an allowance from Iccrea Banca to cover the paid annual leave and leave for ‘abolished public holidays’ accrued but not taken in 2003 and 2004 respectively, a period during which she had been unlawfully dismissed prior to her re-instatement. The Court of Appeal of Rome (Corte d’appello di Roma) declared that no allowance was payable in lieu of leave accrued and not taken in the period between the dismissal and reinstatement because the allowance is necessarily linked to ‘missed rest’, which was not applicable because CV had not worked during the period involved.

CV appealed that judgment to the Italian Supreme Court of Cassation (Corte suprema di cassazione), which in turn, referred a question to the ECJ.

Referral to ECJ 

Unused paid leave ⚓︎

The central point of the Italian Supreme Court of Cassation’s referral question was whetherArticle 7(2) of Directive [2003/88] and Article 31(2) of the [Charter] must be interpreted as precluding provisions of national legislation or national practices, which have the effect that a worker who was unlawfully dismissed, loses their right to the payment of an allowance for annual leave (or a legal equivalent “abolished public holidays”), earned but not taken. This is similar to the second question in the Bulgarian case, C-762/18.

The Second Question – C‑762/18 and The Question in C-37/19 ⚓︎

AG Hogan expresses the opinion that given that he found the answer to the first question should be “that a worker unlawfully dismissed and subsequently reinstated must be entitled to paid annual leave for the period from the date of dismissal until the date of reinstatement.” Therefore, it follows that: “The answer to the second question is necessarily, that Article 7(2) of Directive 2003/88 and Article 31(2) of the Charter must be interpreted in turn as precluding national legislation or case-law or national practices, according to which, once the employment relationship has ended, the right to payment of an allowance for paid leave earned but not taken is denied” in circumstances where the worker was unable to take the leave before the employment relationship ended, due to being unlawfully dismissed by their employer.

What is the answer to the Italian question? ⚓︎

He clarifies that if the worker obtained other employment in the period between the unlawful dismissal and the reinstatement in that first post, that worker cannot claim from the first employer the allowance in lieu corresponding to the period of work performed in the new post, as to allow that to occur would “no longer reflects the actual purpose of the right to paid annual leave” and would go beyond the scope of the principles established in cases such as “Dicu” by the Court, “namely that the worker’s right to paid annual leave should not be compromised by reason of events essentially beyond his or her control.”

Recognising that it is settled case-law that the right to annual leave constitutes only one of two aspects of the right to paid annual leave as a fundamental right of EU law, he re-iterates that that right also including the entitlement to payment (“Schultz-Hoff and others”; “Bollacke”; “King”; “Bauer and Willmeroth”) and states that Article 7(2) of Directive 2003/88 “lays down no condition for entitlement to an allowance in lieu other than that relating to the fact, first, that the employment relationship has ended and, secondly, that the worker has not taken all the annual leave to which he or she was entitled on the date that that relationship ended.” (“Bollacke”; “Bauer and Willmeroth”); and neither is “the reason for which the employment relationship is terminated…relevant as regards the entitlement to an allowance in lieu provided for in Article 7(2) of Directive 2003/88.” (“Maschek”; “Bauer and Willmeroth”).

Conclusion: What does this mean for employers? ⚓︎

AG Hogan’s Opinion is largely a re-iteration of settled EU law with respect to the right of a worker to annual leave and the right to be paid for same, but it clarifies the position in respect of workers who were unlawfully dismissed both with respect to the gap between when unlawful dismissal occurred and when the employment relationship is restored, by order of a national court.

It further clarifies the position with respect to the right to payment for any leave which was accrued but unused, as the worker did not have an opportunity to use the leave due to the unlawful act of his/her employer.

Were the ECJ to adopt AG Hogan’s opinion as persuasive, that would clarify that employers are responsible for the cost of leave accrued during the gap between dismissal and re-instatement or re-engagement and also for any leave accrued but not taken prior to the putative ending of the employment relationship, those potential costs would be an additional factor to be borne in mind by employers, in the context of an employee challenging a dismissal.