In this month’s ‘Commercial Law for Employers’ article, Kevin McVeigh, Partner and Head of the Corporate and Commercial Department in EDG Solicitors, considers the CJEU case of Tribunalul Botosani v Maria Dicu regarding entitlement to paid annual leave. The case considers whether periods of parental leave should be treated as periods of “actual work” for the purposes of calculating annual leave entitlement.

Kevin also considers Sebastian Kreuziger v Land Berlin, a case that has serious implications for the so-called ‘use it or lose it’ provisions of the Working Time Regulations 1998, which can see employees losing any untaken annual leave.

Tribunalul Botosani v Maria Dicu

Key Issues: Social Policy – Working Time – Parental Leave – Preliminary Ruling

Case: Tribunalul Botosani v Maria Dicu

Reference: Case C-12/17, CJEU (Grand Chamber), 4 October 2018

Legislation: Directive 2003/88/EC

Ms Dicu is a judge at the Tribunalul Botoșani (Regional Court, Botoșani). In 2014, she first took her entire annual leave entitlement and was then on maternity leave from 1 October 2014 to 3 February 2015. Subsequently, she took parental leave from 4 February 2015 until 16 September 2015, during which period her employment relationship was suspended. Lastly, she took 30 days’ paid annual leave from 17 September to 17 October 2015.

Pursuant to Romanian law, which provides for 35 days’ paid annual leave, Ms Dicu asked the court to which she had been appointed to grant her the five remaining days of paid annual leave for 2015, which she intended to take on working days over the end-of-year holiday period. The Tribunalul Botoșani refused that request on the ground that, under Romanian law, the duration of paid annual leave is commensurate with the period of time actually worked during the current year and, in that regard, that the period of parental leave she took in 2015 could not be regarded as a period of actual work for the purpose of determining her paid annual leave entitlement.

Ms Dicu brought proceedings against the Tribunalul Botoșani before the Tribunalul Cluj (Regional Court, Cluj, Romania), seeking a declaration that, for the purpose of determining her paid annual leave entitlement for 2015, the period she took as parental leave is to be regarded as a period of actual work.

By judgment of 17 May 2016, the Tribunalul Cluj (Regional Court, Cluj) granted Ms Dicu’s application. The Tribunalul Botoșani appealed against that decision before the referring court. The Curtea de Apel Cluj (Court of Appeal, Cluj, Romania) stayed the proceedings and referred a question to the Court of Justice of the EU (CJEU) for a preliminary ruling.

Consideration by CJEU

The CJEU noted that, as is apparent from the wording of Article 7(1) of Directive 2003/88, every worker is entitled to paid annual leave of at least four weeks, a right which, according to the CJEU’s established case-law, must be regarded as a particularly important principle of EU social law. Moreover, that right is expressly set out in Article 31(2) of the Charter of Fundamental Rights of the European Union, which Article 6(1) TEU recognises as having the same legal value as the Treaties.

The CJEU further noted that, while Member States are not entitled to make the very existence of the right to paid annual leave, which derives directly from Directive 2003/88, subject to any preconditions whatsoever, the issue raised in the present case is whether a period of parental leave must be treated as a period of actual work for the purpose of determining paid annual leave entitlement.

The CJEU considered it appropriate to recall the purpose of the right to paid annual leave, conferred on every worker by Article 7 of Directive 2003/88, which is to enable the worker both to rest from carrying out the work he is required to do under his contract of employment and to enjoy a period of relaxation and leisure. That purpose, which distinguishes paid annual leave from other types of leave having different purposes, is based on the premise that the worker actually worked during the reference period. The objective of allowing the worker to rest presupposes that the worker has been engaged in activities which justify, for the protection of his safety and health, his being given a period of rest, relaxation and leisure. Accordingly, entitlement to paid annual leave must, in principle, be determined by reference to the periods of actual work completed under the employment contract.

It is apparent from established case-law that, in certain specific situations in which the worker is unable to perform his duties as he is, for instance, on duly certified sick leave, the right to paid annual leave cannot be made subject by a Member State to a condition that the worker has actually worked. Thus, with regard to entitlement to paid annual leave, workers who are absent from work on sick leave during the reference period are to be treated in the same way as those who have in fact worked during that period. The same applies as regards workers on maternity leave, who are, as a result, unable to perform the duties required by virtue of their employment relationship and whose right to paid annual leave must be guaranteed when they are on maternity leave; it must be possible to exercise that right during a different period from that in which they are on maternity leave.

However, the CJEU considered that the case-law cited in the previous two paragraphs cannot be applied mutatis mutandis to the situation of a worker, such as Ms Dicu, who took parental leave during a reference period.

The CJEU held that:

Article 7 of Directive 2003/88/EC is to be interpreted as not precluding a provision of national law which, for the purpose of determining a worker’s entitlement to paid annual leave, does not treat the amount of time spent by that worker on parental leave during that reference period as a period of actual work.

Why is this decision important?

Employers need to apply carefully the provisions of the Working Time Directive (and the UK Working Time Regulations) when calculating an employee’s entitlement to annual leave. It has been clear that sickness and maternity leave are to be treated as periods of “actual work” for the purposes of such calculations. This decision of the CJEU means employers are not required to treat parental leave in the same way. 
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:62017CJ0012&from=EN

Sebastian Kreuziger v Land Berlin and Max-Planck-Gesellschaft v Shimizu

Key Issues: Social Policy – Working Time – Annual Leave – Preliminary Ruling

Case: Sebastian Kreuziger v Land Berlin and Max-Planck-Gesellschaft v Shimizu

Reference: Case C-619/16, CJEU (Grand Chamber), 6 November 2018

Legislation: Directive 2003/88/EC

From 13 May 2008 to 28 May 2010, Mr Kreuziger worked as a Rechtsreferendar (legal trainee) with the Land of Berlin, as part of a course of training governed by public law but not by the staff regulations of officials. His successful completion, on 28 May 2010, of the oral part of the second State examination marked the end of that traineeship and of that course of training with the Land.

Mr Kreuziger did not take paid annual leave between 1 January 2010 and the date on which his training ended. On 18 December 2010 he requested an allowance in lieu of the paid annual leave not taken. That request was refused on the grounds that the national rules do not provide for such a right to an allowance, that Directive 2003/88 applies only to workers, and that, in any event, the allowance in lieu provided for in Article 7(2) of that directive is based on the premise that the person concerned was unable to take his leave for reasons not attributable to him.

Mr Kreuziger brought an action against those decisions, which was dismissed by judgment of 3 May 2013. In that judgment, the national court noted that the national rules do not provide for any entitlement to the payment of an allowance in lieu of paid annual leave not taken upon termination of the employment relationship. The national court also took the view that, although it produces a direct effect, Article 7(2) of Directive 2003/88 does not provide the basis for such an entitlement in Mr Kreuziger’s favour.

Mr Kreuziger brought proceedings on appeal against that judgment and the appeal court decided to stay proceedings and to refer to the Court of Justice of the EU (CJEU) a number of questions for a preliminary ruling on Article 7(1) of Directive 2003/88.

Consideration by CJEU

The CJEU noted that it is the settled case-law of the court that, whenever the provisions of a directive appear, so far as their subject matter is concerned, to be unconditional and sufficiently precise, they may be relied upon before the national courts by individuals against the State where the latter has failed to implement the directive in domestic law by the end of the period prescribed or where it has failed to implement the directive correctly. In addition, where a person involved in legal proceedings is able to rely on a directive against a State, he may do so regardless of the capacity in which the latter is acting, whether as an employer or as a public authority. In either case it is necessary to prevent the State from taking advantage of its own failure to comply with EU law.

On the basis of those considerations, the CJEU has held that provisions of a directive that are unconditional and sufficiently precise may be relied upon by individuals, in particular against a Member State and all the organs of its administration, including decentralised authorities.

As regards Article 7(2) of Directive 2003/88, it is apparent from the case-law of the CJEU that that provision does not lay down any condition for entitlement to an allowance in lieu other than that relating to the circumstance, first, that the employment relationship has ended and, secondly, that the worker has not taken all the annual leave to which he was entitled on the date that that relationship ended. That right is conferred directly by the directive and does not depend on conditions other than those which are explicitly provided for therein. That provision thus fulfils the criteria of unconditionality and sufficient precision, and thus meets the conditions required for it to have direct effect.

The CJEU held that:

Article 7 of Directive 2003/88/EC must be interpreted as precluding national legislation, in so far as it entails that, in the event that the worker did not ask to exercise his right to paid annual leave prior to the termination of the employment relationship, that worker loses — automatically and without prior verification of whether the employer had in fact enabled him, in particular through the provision of sufficient information, to exercise his right to leave prior to the termination of that relationship — the days of paid annual leave to which he was entitled under EU law on the date of the termination of that relationship, and, accordingly, his right to an allowance in lieu of paid annual leave not taken.

Why is this decision important?

Employers need to apply carefully the provisions of the Working Time Directive (and the UK Working Time Regulations) when calculating an employee’s entitlement to annual leave. This decision of the CJEU means employers are not entitled to rely on the fact that an employee has not asked to exercise a right to take annual leave. Employers should ensure that employees are enabled to make a request for annual leave and provided with the relevant information on how to do so. 
http://curia.europa.eu/juris/document/document.jsf?text=&docid=207328&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=1961784