Holiday pay still due on death

The European Court of Justice has ruled that holiday benefits should not be lost if an employee dies before claiming them. The decision overturns a German court that ruled a widow could not claim payments for holidays lost due to illness owed to her late husband. He had been seriously ill since 2009 as a result of which he was unfit to work until the date of his death. On that date he had accumulated 140.5 days of annual leave outstanding.

In the case, Bollacke v K+K Klaas & Kock, Mr Bollacke’s widow and sole beneficiary sought up to €16,000 (£13,000) in lieu of lost holiday entitlement. Supermarket chain Klaus & Kock rejected her application for an allowance in lieu of the 140.5 days of annual leave he had outstanding, expressing doubts that the entitlement was inheritable.

The Landesarbeitsgericht (Higher Labour Court, Germany) ruled that, when a worker dies, the contract of employment is over, thus ending any holiday entitlements; however, the matter was referred to the ECJ, which said that in this case, European law superseded national law.

“An important principle of social law”

The European court concluded that the Working Time Directive cannot be interpreted as meaning that a worker’s death relieves the worker’s employer of the need to make payments equal to that which the worker would ordinarily been entitled to. It added that this is an “important principle of social law and that the right to annual leave and to a payment on that account constitute two aspects of a single right”. It also noted that any payment should not depend on the worker having made a prior application to take the leave.

A statement from the court read: “The unintended occurrence of the worker’s death must not retroactively lead to a total loss of the entitlement to be paid annual leave.”

Following the ruling, which will send a precedent across the European Union, it is recommended that HR teams review the way in which employment contracts deal with untaken holiday. IBB’s employment team has a breadth of experience drafting both complex and simple contracts, policies and procedures for a variety of sectors.

EU employment law precludes national regulations

The Working Time Directive states that every worker is entitled to a minimum four weeks’ paid annual leave, and that this may not be substituted for an allowance in lieu, unless the employment relationship comes to an end.

The Court had previously held that where the employment relationship has terminated, the worker is entitled to an allowance in lieu in order to prevent the loss of that right to paid holiday. EU law precludes national legislation or practices under which an allowance in lieu is not due to the worker at the end of the employment relationship, although the worker could not benefit from his right to paid annual leave because of his illness.

Find out how we can help you can stay on the right side of the UK’s ever-changing employment law by calling us on 01895 207892, or email your details to employment@ibblaw.co.uk .

IBB’s Employment Team provides advice on the employment aspects of all major business decisions.