In a decision that could affect all EU countries, the European Court of Justice (ECJ) has ruled that a German company was acting against EU law when it refused to pay the widow of a former employee an allowance in lieu her dead husband’s outstanding holiday entitlement.
Entitlement to pay in lieu of holiday does not lapse when an employee dies
Prior to the ECJ decision, the Federal Labour Court had ruled that the employee’s outstanding holiday entitlement (140 days) was lost when he died and that no allowance was due to his widow.
However, the European Court ruled that, under Article 7 of the Working Time Directive, entitlement to pay in lieu of holiday does not lapse when an employee dies and that full payment should be made to his widow.
The ECJ ruling has overruled years of German practice and may have far reaching implications for German employers, as well as those in other EU countries where holiday entitlement is currently lost upon the death of an employee. Employees who have been on long-term sickness absence may have accrued significant holiday entitlement, the full value of which will now be payable to their estate. As well as the financial implications of this ruling, HR departments will be required to track all holiday accrual during long-term sickness absence and may also need to update their sickness absence policies.
Working Time Directive - Directive 2003/88/EC
Gülay Bollacke v K + K Klaas & Kock B.V. & Co. KG ECJ C-118.13
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