The European Court decides on untaken leave. Do employees have the right to payment of untaken leave?

03 Dec 2018

In Belgium, annual leave should be taken in the holiday year itself. Belgian law does not allow untaken leave to be transferred to the following year. Yet in practice, it does often happen that employees do not use all their annual leave days. The European Court of Justice, in its decision of 6 November 2018, encourages employers to actively stimulate their employees to take up their annual leave days.

On 6 November 2018, the Court of Justice decided on a German law, stating that untaken leave days cannot be converted into compensation, but expire immediately. This decision was based on a conflict between an employer and a former employee who claimed compensation for the untaken leave at the end of his employment contract.

The Court decided that, when it has not been verified whether the employee was able to take his annual leave or  whether the employee was aware of the consequences of not taking his annual leave, immediate loss of untaken leave days is not compliant with European law.

This decision might have an impact on Belgian law. In Belgium, a similar discussion will not arise at the end of the employment contract because the untaken leave is then covered by the departure holiday pay. But a discussion might arise about untaken leave at the end of the year.

The employer is obliged to pay the remaining leave at the latest on 31 December in the case of force majeure, for example in case of protracted illness, which results in the employee not being able to take his annual leave.

When there is no force majeure, but the employee chooses not to take his annual leave, the situation is different. In that case the employee loses the remaining untaken leave and there is no obligatory pay for the employer, which is comparable with the German rule.

An employer may not impede his employees from taking their annual holiday. In principle, he can be sanctioned in that case (e.g., criminal sanctions, though rarely applied in practice, or civil damages).  However, in its decision, the Court stresses that the employer is not only obliged not to impede his employees from taking their leave; he must also actively encourage his employees to take their leave in time. So even in case the employee does not request leave days, the employer should, according to the Court, formally encourage him to do so. The Court also links this with the obligation of the employer to keep the work sustainable and workable to avoid stress and burn-out.

Specifically, this means that the employer should inform his employees in time and in an exact manner that if they do not take their untaken leave, they will irrevocably lose any untaken leave days. According to the court, it is crucial that the employee decides deliberately and in full knowledge of the consequences not to take his annual leave. The employer carries the burden of proof in case of dispute.

Finally, note that this is less relevant for blue-collar workers than for white-collar workers. The former receive their double holiday pay in the month of May from the National Office for annual leave or their holiday fund. This holiday pay is permanently acquired, even when the worker does not take his annual leave.

> Action point

As an employer, you are obliged to ensure that your employees take all their annual leave before the end of the year. Since year’s end is fast approaching, you should remind them about this issue. If your employees do not respond, it is advisable to send a reminder in writing, in case your employees later claim that you have impeded them from taking their annual leave.