The Court of Justice of the EU has ruled that annual leave untaken at the time of a worker's death passes to his/her estate and they are entitled to the pay in lieu equivalent.

Article 7 of Directive 2003/88, entitled ‘Annual leave’, is worded as follows:

‘1. Member States shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and/or practice.

2. The minimum period of paid annual leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated.’

The German employee in this case had had a serious illness and had accrued some 140 days of annual leave at the time of his death. Should his spouse, his sole beneficiary, be entitled to receive payment in lieu, even though the employee in question had not made an application to a tribunal?

As with other cases involving paid annual leave and its importance in law, the CJEU said, "... it must be stated that the entitlement to paid annual leave constitutes only one of two aspects of an essential principle of EU social law and that that principle also includes the entitlement to a payment... In order to ensure respect for that fundamental workers’ right affirmed in EU law, the Court may not make a restrictive interpretation of Article 7(2) of Directive 2003/88 at the expense of the rights that workers derive from it..."

The Court went on to find that, "... if the obligation to pay annual leave were to cease with the end of the employment relationship because of the worker’s death, the consequence of that circumstance would be an unintended occurrence, beyond the control of both the worker and the employer, retroactively leading to a total loss of the entitlement to paid annual leave itself, as affirmed in Article 7 of Directive 2003/88."

The Court ruled:

"Article 7 of Directive 2003/88/EC of the European Parliament and of the Council of 4 November 2003 concerning certain aspects of the organisation of working time must be interpreted as precluding national legislation or practice, such as those at issue in the main proceedings, which provide that the entitlement to paid annual leave is lost without conferring entitlement to an allowance in lieu of leave outstanding, where the employment relationship is terminated by the death of the worker. Receipt of such an allowance is not to be dependent on a prior application by the interested party."

Practical lessons from this decision:

This case is entirely consistent with other CJEU case law in this area (much of it referred to in this judgement) - paid annual leave is a special right of all workers that the EU takes particularly seriously. Any attempt to remove a worker's rights to paid annual leave or any policy or procedure that limits the likelihood of a worker taking advantage of their right to annual leave is likely to be ruled unlawful under the Directive.
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