Is an employee automatically entitled to an allowance in lieu of annual leave? What if they chose not to take their accrued annual leave during their employment?
An employer may only pay in lieu of annual leave for days in excess of the statutory minimum or on termination of employment. The actual taking of leave is the rule and the allowance in lieu is the exception.
A recent opinion from the Court of Justice of the EU in the joined cases C-619/16 (Sebastian W. Kreuziger v Land Berlin) and C-684/16 (Max-Planck-Gesellschaft zur Förderung der Wissenschaften eV v Tetsuji Shimizu) noted that the entitlement to an allowance in lieu of annual leave is not lost automatically because an employee did not apply for the leave during their employment. If, however, the employer has taken appropriate steps to ensure the worker can avail of the leave and the worker deliberately declines to take their annual leave, then that worker cannot claim an allowance in lieu of annual leave not taken when the employment relationship comes to an end.
Employers are required to inform employees of the possibility that untaken annual leave may be lost without pay in lieu.
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