Workers have the right to an allowance in lieu of paid annual leave if their employment has terminated and they have holiday outstanding, but what if the worker has died? The Court of Justice of the European Union held in Bollacke v Klaas & Kock BV that their rights do not die with them.
Mr Bollacke, who started working for K & K in August 1998, became seriously ill in 2009. During that year, he was unfit for work for more than eight months. He was also unable to work during the year leading up to his death in November 2010. When he died, he had 140.5 days of annual leave owing to him.
His wife asked K & K to pay the amount outstanding to his estate. The company refused on the basis that the estate was not entitled to a payment for outstanding holiday entitlement.
Decisions of lower courts
The court of first instance rejected the application because under German case law, there was no entitlement to an outstanding allowance in lieu of paid annual leave if the employment relationship came to an end following the employee’s death.
The appeal court questioned the validity of German case law and asked the CJEU to decide if was compatible with Article 7 of the Working Time Directive. It also asked whether Article 7 had to be interpreted so that accrued annual holiday entitlement attached to the worker as an individual; and whether or not employers were obliged to grant leave to a worker even if they had not submitted an application in advance of the employment relationship being terminated.
Article 7(2) requires member states to ensure that workers have a period of paid annual leave, which cannot be replaced by a payment in lieu, unless the employment relationship has ended.
Decision of CJEU
Noting that the entitlement of every worker to paid annual leave was a particularly important principle of European Union social law, the Court said that the right to take leave and to be paid for it were two aspects of the same right.
It was clear from European case law that workers had the right to an allowance in lieu of their holiday entitlement when their employment came to an end to ensure they did not lose out in the event that they were no longer able to take their leave. Likewise, workers on sick leave who were not able to take their leave because of illness and whose employment had come to an end also had the right to receive an allowance for the holiday accrued during the time they were off sick in lieu of paid annual leave.
But what about a worker who had died? The Court pointed out that there were only two conditions stipulated in the directive for entitlement to an allowance in lieu - termination of the employment relationship and outstanding holiday. In order to ensure the effectiveness of the entitlement and to ensure respect for a fundamental right affirmed in EU law, the court held that financial compensation could not be lost because of the worker’s death. It followed, therefore, that Article 7 could not be interpreted as meaning that employers were relieved from having to pay the allowance in lieu of holiday when a worker died.
In addition, the Court held that as entitlement was conferred directly by the Working Time Directive, it was not necessary for the worker concerned to have made an application in advance for an allowance in lieu of holiday before their employment terminated.
This case confirms the high regard which European law holds for the right to paid annual leave under the Working Time Directive. In light of this decision, UK employers should not attempt to withhold outstanding statutory annual leave due to a deceased worker’s estate.