It is well-established that on termination of employment, a worker is entitled to pay in lieu of any accrued but unused holiday entitlement that may exist at the date they leave. This payment will usually be in respect of their final leave year only (subject to special rules for employees on long-term sickness absence who have been unable to take their holiday over a lengthy period of time).
What happens, though, where an employee dies during their employment with an outstanding holiday balance? Will they (or their estate) be entitled to a payment in respect of the accrued but untaken holiday?
This was the issue that fell to be determined by the European Court of Justice (ECJ) recently*.
Mr Bollacke was employed by K + K between August 1998 and November 2010. He had fallen ill in 2009 and taken a significant amount of sick leave. At the time of his death he had accrued 140 days of annual leave.
Following his death, Mr Bollacke’s wife (and sole beneficiary) sought payment for the 140 days holiday that her husband had accrued but been unable to take before his death. However, the employer refused to make the payment.
Mrs Bollacke consequently brought proceedings to recover the pay. After consideration in the German courts, the claim was considered by the ECJ.
The ECJ noted that every worker is entitled to paid annual leave and reaffirmed the importance of this fundamental principle in European law. It further noted the well-established rule that when a worker is unable to take holiday because their employment had ended, the worker is entitled to a payment in lieu of that outstanding leave.
The ECJ held that the death of the worker did not extinguish this right to a payment in lieu of untaken holiday and that, consequently, Mrs Bollacke (as her husband’s beneficiary) was entitled to the payment sought.
The ECJ also held that payment of the holiday pay did not depend on, or require, the relevant party to make an application for that payment.
This case is a further example of the ECJ’s strive to protect workers’ rights to holiday pay in an increasing number of circumstances.
The ECJ’s decision comes at a time when two cases are pending before the Employment Appeal Tribunal (EAT) regarding the exclusion of overtime payments from holiday pay. In both cases, Employment Tribunals have held that overtime must be taken into account when calculating statutory holiday pay. If these decisions are upheld on appeal at the end of July, it will mean that wage bills in relation to holiday pay will be substantially higher for many businesses than had previously been thought. It may also mean that claims for back pay could go back over several years to the start of employment.
We will keep you updated once these decisions are announced. Let us know what your own thoughts are by commenting below.
This post was edited by Merran Sewell. For more information, email email@example.com.
Bollacke v K + K Klaas and Kock BV and Co