Article 7:635(4) of the Dutch Civil Code provides that employees on long-term sick leave can only accrue holiday rights over the last six months of such leave. The question that has arisen is how this restriction ties in with the ECJ's judgment in the Schultz-Hoff case. In October/November 2009, courts in both Utrecht and Amsterdam ruled that Dutch legislation is not in line with EU law on this point. What does this now mean in practice?

The Schultz-Hoff judgment

On 20 January 2009, the European Court of Justice ("ECJ") ruled on the interpretation of Article 7(1) of the Working Time Directive (Directive 2003/88/EC). This provision states that EU Member States must take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks. The questions referred for a preliminary ruling concerned workers from the UK and Germany who, under their national legislation, were confronted by a restriction of their right to paid annual leave because they had been on long-term sick leave. In brief, the ECJ ruled that Article 7(1) of the Directive precludes national legislation or practices under which the right to paid annual leave is extinguished at the end of the leave year, and/or at the end of a carry-over period laid down by national law, where the worker was unable to exercise his/her right to such leave because he/she was on sick leave for all or part of the relevant year and his/her incapacity to work persisted until the end of the employment relationship.

The ECJ's ruling has led to questions as to whether Dutch law is in line with the Directive, as Article 7:635(4) of the Dutch Civil Code restricts the holiday accrual rights of employees on long-term sick leave to accrual over the last six months of the period of sick leave.

Utrecht District Court - 14 October 2009

The case before the Utrecht District Court involved an employee who had been on sick leave for more than six months at the time her employment contract was rescinded. As part of the final settlement, and in accordance with Dutch law, the employer paid her an amount in lieu of unused holiday time only in respect of the holiday rights accrued during the last six months of her sick leave. It did so on the basis that she had not accrued holiday rights during the preceding part of her sick leave. The employee then sued the employer, invoking the Schultz-Hoff judgment.

The court ruled that in this specific case, where the employee had been unable to exercise her holiday rights as a result of her illness and where the employment contract was rescinded, the restriction laid down in the Dutch Civil Code is contrary to the Directive. Even though the Directive does not have a direct horizontal effect (i.e. an employee and employer cannot directly invoke the Directive against each other), the court ruled that it was possible to interpret Article 7:635(4) of the Dutch Civil Code in line with the Directive, in view of the Dutch statutory provision that the employer must offer the employee the opportunity to at least exercise the holiday rights to which he/she is statutorily entitled.

In this particular case, the employee's illness had not been such as to prevent her from exercising her holiday rights during her sick leave. The court ruled that it had been up to the employer to designate part of the employee's sick leave, during that period, as holiday time. As the employer had failed to do so, the court awarded the employee's claim for an amount in lieu of unused holiday time in respect of the remainder of her sick leave.

Amsterdam Court of Appeal - 10 November 2009

In a ruling issued on 10 November 2009, the Amsterdam Court of Appeal held that it was not within the power of a Dutch court to resolve the discrepancy between Article 7:635(4) of the Dutch Civil Code and the Directive by interpreting the national provision in line with the Directive. The Amsterdam court took the position that Dutch law explicitly – and also in light of parliamentary history – contains an unambiguous provision on the restriction of paid annual leave in the event of long-term sick leave. According to the court, the Dutch courts cannot be expected to apply an interpretation that breaches national legislation, and therefore the relevant legislation should be amended in order to bring it in line with the Directive. For this reason, the court rejected the claims of the employee in question.

Practical consequences

The Dutch Supreme Court has not yet addressed the matter, but legal commentators have expressed broad support for the ruling by the Amsterdam Court of Appeal. Until Dutch law has been brought in line with the Directive, no practical changes are expected. This means that, for the time being, the six-month restriction will continue to apply to holiday accrual rights in the event of sick leave.

However, we recommend that employers encourage employees on long-term sick leave who are able to exercise their holiday rights to take holiday time during their sick leave. The occupational health and safety service can be requested to advise on this issue. Holiday time that is taken during sick leave does not have to be taken later or be paid out when the employment relationship terminates.

The extent to which employees can be forced to take holiday time during sick leave is an interesting follow-up question, but one which exceeds the scope of this article.