The Court of Justice of the European Union (CJEU) has supported the opinion of the Advocate General that the mere fact that a worker did not apply to take annual leave cannot automatically mean the loss of the right to payment in lieu of untaken leave at the end of the employment relationship (Max-Planck-Gesellschaft zur Fӧrderung der Wissenschaften eV v Tetsuji Shimizu).

The claimant was employed by Max-Planck-Gesellschaft zur Fӧrderung der Wissenschaften, a non-profit organisation governed by private law, for more than ten years on a number of fixed-term contracts. Some two months before his employment was due to end, he was invited by his employer to take his outstanding annual leave. However, he only took two days off and requested payment in lieu of 51 days of leave not taken in the last two years. His employer refused his request on the ground that under German law his failure to apply for leave meant that he had lost the right to carry over untaken leave from one holiday year to the next. This prompted him to seek redress through the German labour courts.

They asked the CJEU to interpret the Working Time Directive to ascertain whether it precludes such legislation and, if so, whether the same applies when the dispute is between two private individuals.

The CJEU ruled that EU law does preclude a worker from automatically losing their paid annual leave entitlement and, consequently, their right to payment in lieu of leave untaken in any year solely because they did not exercise their right to take time off, unless the employer can show that it took steps to ensure that the worker was actually given the opportunity to take the leave days in question, in particular through the provision of adequate information, in good time. The onus is on the employer to prove that this has been done. Where the employer can demonstrate that in spite of those measures the worker deliberately refrained from taking their full leave entitlement, EU law does not preclude the loss of their leave entitlement or, in the event that the employment relationship comes to an end, the loss of a payment in lieu of the untaken leave.

Although a provision of an EU directive that aims to confer rights or impose obligations on individuals cannot be enforced directly in the case of a dispute between private individuals, the right of every worker to periods of paid annual leave is guaranteed by the Charter of Fundamental Rights of the EU. Any national laws that go against that right should, therefore, be disregarded where appropriate.

The case will now return to the German court for determination based on the CJEU’s ruling.