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Sick employees will not lose holiday entitlement

April 2009 - Corporate & Commercial. Legal Developments by Norrbom Vinding Law Firm, member of ius laboris.

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Under Community law, employees on sick leave are entitled to take paid holiday at a later stage or receive a payment in lieu. This principle was recently underlined by the European Court of Justice.

Employees are entitled to paid holiday under the Working Time Directive. The Directive is a minimum standards directive, meaning that it lays out the basic rights that employees must enjoy. Member states are, of course, allowed to offer better rights.

Two references to the European Court of Justice concerned a number of questions on the complex relationship between statutory holiday entitlement and sick leave, including whether a group of employees had actually received the minimum entitlement under the Working Time Directive.

One reference was about an employee who had been off sick until his employment was terminated by the employer. He was therefore unable to take his accrued holiday. Under German law, he would lose his paid holiday entitlement. He therefore brought the question of whether German law was incompatible with the Directive before a German court, which then asked the ECJ to rule on the interpretation of the Working Time Directive.

The ECJ ruled that the Directive does not preclude national legislation providing that employees on sick leave are not entitled to take paid holiday while off sick. But the Directive does not allow national legislation to deprive employees of their holiday entitlement if they were prevented by sickness from taking the holiday. Nor does the Directive allow national legislation precluding departing employees from receiving a payment in lieu of any accrued holiday if the reason for not taking the holiday is that they were off sick.

In Norrbom Vinding's view: 

  • national legislation whereby employees lose their paid holiday entitlement if they are off sick must now be regarded as incompatible with Community law, but the impact of the ruling on Denmark is assumed to be limited given the fact that employees prevented by sickness from taking paid holiday are entitled under the Danish Holiday Act to receive a payment in lieu

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