The European Court of Justice (ECJ) released its decision on 12 June 2014 in the case of Gülay Bollacke v K + K Klaas & Kock B.V. & Co. KG. This is another in the raft of recent holiday pay decisions which could have financial consequences for employers. In this case it involves workers accruing paid annual leave which they have been unable to take due to sickness.

Mrs Bollacke raised an action in a German national court against her late husband’s employer in respect of payment in lieu for paid annual leave which he failed to use, owing to sickness, prior to his death. The matter was referred to the ECJ after the court of first instance rejected the claim, as, under national law, the right of an employee to payment in lieu for holidays not enjoyed was extinguished on death.

Article 7 of the EU Working Time Directive (No. 2003/88) gives every worker the right to paid annual leave, including payment in lieu. The ECJ held that this extended to those who had been ill and whose employment relationship had then ended due to the death of the employee. The only condition for workers to be entitled to such a right under the Article is that the employment relationship had ended and that the worker had not taken all paid annual leave up until the end of that relationship.

Consequently, national legislation which states that such a right is lost on the death of a worker will not be compatible with this decision and is open to challenge.

This means that should a worker die having accrued holidays which they were unable to enjoy due to sickness up to the date of their employment relationship terminating, the sums due in payment in lieu should be paid to the estate of the deceased.