Case C-118/13, Bollacke – claiming the unused paid annual leave of her late husband

If a worker accrues paid annual leave but dies before taking it, then can the heir to his estate claim a cash equivalent from the employer by dint of the EU’s ‘working time’ Directive 2003/88/EC? And in view of the fact that a goal of the Directive is the health and safety of workers, is an employer obliged to grant leave even if the employee has not asked for it?

Facts
In 1998, Mr Bollacke went to work for K + K Klaas & Kock B.V. & Co. KG. After more than a decade of being employed by them, he became seriously ill. He was on sick leave for 8 months in 2009. In 2010, he also took periods of sick leave and, in the October of that year, he drew up a will. He named a woman as the sole beneficiary of his estate. Shortly afterwards, he married her. The marriage was two days old and he died.

Mrs Bollacke subsequently wrote to her late husband’s employer claiming money in lieu of the paid annual leave that her late husband had not taken before his death. She noted that up to and including 2010, it had been a customary practice of employees working for the firm to accumulate and to take their holiday over to the next calendar year if, because of the pressure of work, the employee had been unable to take their holidays. Although Mrs Bollacke contended that Mr Bollacke had not taken his holiday because of his employer’s under-staffing of the firm, it was a fact that for years Mr Bollacke had not exercised his rights to take his basic paid holiday leave. Consequently, at the time of his death, Mr Bollacke had amassed unused paid annual leave totalling in excess of 140 days.

Mr Bollacke’s employer refused to pay and doubted whether the accrued rights were capable of being inherited.

Mrs Bollacke took the employer to court but her claim was thrown out at first instance. The Bocholt tribunal relied on 2011 German case law that suggested that when an employee died, the contract of employment was terminated and the right to compensation for unused paid leave was extinguished. In essence this was because the employee was under an obligation to work for his employer; paid leave for the duration of the holiday was an exemption from the employee’s obligation. The remainder of the obligations in the contract of employment were left intact so that the employer was still obliged to pay wages to his employee. Since death ended the contract of employment, the employee was no longer obliged to work; consequently, the exemption ceased to exist, together with the strictly personal right that was linked to it. There was no right to be compensated for the unused holiday because it was impossible for a dead employee to take a holiday. Thus, it could not be replaced by an allowance in lieu because the employment relationship had not been terminated; instead, it was the death of the employee that extinguished the right to a holiday.

On appeal, the Landesarbeidsgericht in Hamm recalled the wording of the EU’s working time Directive 2003/88/EC of the European Parliament and of the Council of 4 November 2003 concerning certain aspects of the organisation of working time (OJ [2003] L299/9).

As regards annual leave, Article 7 of that directive provides:

1. Member States shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and/or practice.
2. The minimum period of paid annual leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated.

The Landesarbeitsgericht also recalled that this Article of the Directive had been interpreted in various pieces of CJEU case law, including the judgment in Joined Cases C-131/04 and C-257/04, Robinson-Steele, when the CJEU had stated:

58. The directive treats entitlement to annual leave and to a payment on that account as being two aspects of a single right. The purpose of the requirement of payment for that leave is to put the worker, during such leave, in a position which is, as regards remuneration, comparable to periods of work.

The Landesarbeitsgericht thought that this might mean that the right to annual leave was not extinguished on the death of an employee in so far as it related to the employee’s wage. This would allow it to belong to the employee’s estate and thus be inherited. In any event, the Landesarbeitsgericht also recognised the fact that Article 7 of the Directive was a very important principle of EU social law and was anchored in Article 31(2) of the EU Charter.

A further doubt centred on whether German case law could be maintained in light of Article 7(1) of the Directive. The Directive contains minimum provisions relating to health and safety. It requires that work be organised in such a way as to grant a minimum period of paid annual leave. Accordingly, it was incumbent on the employer to ensure that the employee received the time to rest. The employer had the power to grant the holiday, and ensure that it could be taken. If the responsibility for asking for a holiday were to be left to the employee, then the employer could have an economic advantage in just paying financial compensation, and that would be contrary to the Directive’s aim of protecting the health and safety of workers.

Questions Referred
According to the Curia website, the Hamm Landesarbeitsgericht has asked:

1. Is Article 7(1) of Directive 2003/88/EC to be interpreted as precluding national legislation or practice according to which the entitlement to a minimum period of paid annual leave is lost in its entirety on the death of the worker, namely not only the entitlement to release from the obligation to work, which can no longer be implemented, but also the entitlement to payment of remuneration in respect of annual leave?
2. Is Article 7(2) of Directive 2003/88/EG to be interpreted as meaning that the entitlement to an allowance in lieu of a minimum period of paid annual leave on termination of the employment relationship attaches to the person of the worker in such a way that that entitlement accrues only to him, in order to enable him to realise at a later date the purposes of rest and leisure associated with the granting of paid annual leave?
3. Is Article 7(1) of Directive 2003/88/EC to be interpreted as meaning that, having regard to the protection of the safety and health of workers, the employer is obliged, when organising working time, actually to grant the worker leave by the end of the calendar year or, at the latest, by the end of a carry over period applicable to the employment relationship, regardless of whether or not the worker has submitted an application for leave?

Comment
One week before the Hamm Landesarbeitsgericht had made its reference to the CJEU, another reference from a different German labour court about the correct interpretation of Article 7 of the working time Directive was being removed from the CJEU’s register. For a summary of the now-removed reference, see Case C-311/12, Kassner – does EU law stop the social partners eroding paid annual leave?

One week after the Hamm Landesarbeitsgericht made its reference about Article 7 of the working time Directive, the Sixth Chamber of the CJEU disposed by judicial Order an earlier reference made by a Spanish labour court that had also involved the correct interpretation of the same provision. For a summary of the Spanish dispute, see Case C-194/12, Maestre García – checking out where annual leave coincides with sick leave The Order of the CJEU is dated 21 February 2013.

Update – 8 June 2014
The judgment of the First Chamber is due to be handed down on 12 June 2014.

Update – 6 August 2014
Judgment

A version of the CJEU’s judgment in Case C-118/13, Bollacke ECLI:EU:C:2014:1755 is reproduced below. The reproduction is not authentic. Only the versions of the document published in the ‘Reports of Cases’ or the ‘Official Journal of the European Union’ are authentic. The source of the reproduction is the Eur-Lex Europa web site. The information on that site is subject to a disclaimer and a copyright notice.

 

JUDGMENT OF THE COURT (First Chamber)

12 June 2014 ( )

(Request for a preliminary ruling — Social policy — Directive 2003/88/EC — Organisation of working time — Paid annual leave — Allowance in lieu in the event of death)

In Case C‑118/13,

REQUEST for a preliminary ruling under Article 267 TFEU from the Landesarbeitsgericht Hamm (Germany), made by decision of 14 February 2013, received at the Court on 14 March 2013, in the proceedings

Gülay Bollacke

v

K + K Klaas & Kock B.V. & Co. KG,

THE COURT (First Chamber),

composed of A. Tizzano, President of the Chamber, E. Levits (Rapporteur), M. Berger, S. Rodin and F. Biltgen, Judges

Advocate General: M. Wathelet,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

–        K + K Klaas & Kock B.V. & Co. KG, by M. Scheier, Rechtsanwalt,

–        the German Government, by T. Henze and J. Möller, acting as Agents,

–        the Danish Government, by M. Wolff and V. Pasternak Jørgensen, acting as Agents,

–        the Hungarian Government, by M. Fehér, K. Szíjjártó and K. Molnár, acting as Agents,

–        the United Kingdom Government, by L. Christie, acting as Agent, and by E. Dixon, Barrister,

–        the European Commission, by M. van Beek and F. Schatz, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment

1        This request for a preliminary ruling concerns the interpretation of Article 7 of Directive 2003/88/EC of the European Parliament and of the Council of 4 November 2003 concerning certain aspects of the organisation of working time (OJ 2003 L 299, p. 9).

2        The reference has been made ​​in proceedings between Mrs Bollacke and the former employer of her late husband, K + K Klaas & Kock B.V. & Co. KG (‘K + K’) concerning the interested party’s right to receive an allowance in lieu of paid annual leave not taken by Mr Bollacke at the date of his death.

 Legal context

 EU law

3        Article 7 of Directive 2003/88, entitled ‘Annual leave’, is worded as follows:

‘1. Member States shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and/or practice.

2. The minimum period of paid annual leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated.’

4        Article 15 of Directive 2003/88, entitled ‘More favourable provisions’, provides that:

‘This Directive shall not affect Member States’ right to apply or introduce laws, regulations or administrative provisions more favourable to the protection of the safety and health of workers or to facilitate or permit the application of collective agreements or agreements concluded between the two sides of industry which are more favourable to the protection of the safety and health of workers.’

5        Article 17 of that directive provides that Member States may derogate from certain provisions of that directive. However, no derogation is allowed with regard to Article 7 thereof.

 German law

6        Paragraph 7(4) of the Federal Law on Paid Leave (Bundesurlaubsgesetz) of 8 January 1963 (BGBl. 1963, p. 2), in the amended version of 7 May 2002 (BGBl. 2002 I, p. 1529), provides that:

‘If, because of the termination of the employment relationship, the leave can no longer be authorised in full or in part, an allowance in lieu thereof shall be paid.’

7        According to Paragraph 1922(1) of the Civil Code (Bürgerliches Gesetzbuch), upon the death of a person (devolution of an inheritance), that person’s property (inheritance) passes as a whole to one or more than one other persons (heirs).

 The dispute in the main proceedings and the questions referred for a preliminary ruling

8        Mrs Bollacke is the wife and sole beneficiary of her late husband, who was employed by K + K from 1 August 1998 to 19 November 2010, the date of his death.

9        Mr Bollacke had been seriously ill since 2009. During that year he was unfit for work for more than eight months. He was again unable to work from 11 October 2010 until the date of his death.

10      It is not in dispute that, on the date of his death, Mr Bollacke was entitled to a minimum of 140.5 days of annual leave outstanding.

11      By letter of 31 January 2011, Mrs Bollacke submitted an application to K + K for an allowance in lieu of those days of leave outstanding. K + K rejected that application on the ground that there were doubts that an inheritable entitlement could exist.

12      The court of first instance, hearing that application by Mrs Bollacke, also rejected the application, on the ground that, under the case-law of the Bundesarbeitsgericht (Federal Labour Court), entitlement to an allowance in lieu of paid annual leave outstanding at the end of the employment relationship does not arise where that relationship is terminated by the death of the employee. That judgment being the subject of an appeal, the referring court raises the question of the validity of that national case-law in the light of the case-law of the Court relating to Article 7 of Directive 2003/88.

13      In those circumstances the Landesarbeitsgericht Hamm decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘1.      Is Article 7(1) of Directive 2003/88/EC to be interpreted as precluding national legislation or practice according to which the entitlement to a minimum period of paid annual leave is lost in its entirety on the death of the worker, namely, not only the entitlement to release from the obligation to work, which can no longer be implemented, but also the entitlement to payment of remuneration in respect of annual leave?

2.      Is Article 7(2) of Directive 2003/88 to be interpreted as meaning that the entitlement to an allowance in lieu of a minimum period of paid annual leave on termination of the employment relationship attaches to the person of the worker in such a way that that entitlement accrues only to him, in order to enable him to realise at a later date the purposes of rest and leisure associated with the granting of paid annual leave?

3.      Is Article 7(1) of Directive 2003/88 to be interpreted as meaning that, having regard to the protection of the safety and health of workers, the employer is obliged, when organising working time, actually to grant the worker leave by the end of the calendar year or, at the latest, by the end of a carry-over period applicable to the employment relationship, regardless of whether or not the worker has submitted an application for leave?’

 Consideration of the three questions referred

14      By its three questions, which it is appropriate to consider together, the national court asks, in essence, whether Article 7 of Directive 2003/88 must be interpreted as precluding national legislation or practice, such as those at issue in the main proceedings, which provide that the entitlement to paid annual leave is lost without conferring entitlement to an allowance in lieu of leave outstanding, where the employment relationship is terminated by the death of the employee and, if so, whether receipt of such an allowance depends on a prior application by the applicant.

15      In that regard it should be noted, first, that, according to the Court’s settled case-law, the entitlement of every worker to paid annual leave must be regarded as a particularly important principle of European Union social law from which there may be no derogations and whose implementation by the competent national authorities must be confined within the limits expressly laid down by Council Directive 93/104/EC of 23 November 1993 concerning certain aspects of the organisation of working time (OJ 1993 L 307, p. 18) itself, that directive having been codified by Directive 2003/88 (see Schultz-Hoff and Others, C‑350/06 and C‑520/06, EU:C:2009:18, paragraph 22 ; KHS, C‑214/10, EU:C:2011:761, paragraph 23; and Dominguez, C‑282/10, EU:C:2012:33, paragraph 16).

16      Moreover, it must be noted, first, that Article 7 of Directive 2003/88 is not one of the provisions from which the directive expressly allows derogation (see Schultz-Hoff and Others, EU:C:2009:18, paragraph 24), and, second, that that directive treats entitlement to annual leave and to a payment on that account as being two aspects of a single right.

17      Finally, the Court has previously stated that when the employment relationship has terminated, and, therefore, it is in fact no longer possible to take paid annual leave, Article 7(2) of Directive 2003/88 provides that the worker is entitled to an allowance in lieu in order to prevent all enjoyment by the worker of that right to paid annual leave, even in pecuniary form, being lost because of that ‘impossibility’ (see, to that effect, Schultz-Hoff and Others, EU:C:2009:18, paragraph 56, and Neidel, C‑337/10, EU:C:2012:263, point 29).

18      Consequently, the Court has held that Article 7(2) of Directive 2003/88 must be interpreted as precluding national legislation or practices which provide that, on termination of the employment relationship, no allowance in lieu of paid annual leave not taken is to be paid to a worker who has been on sick leave for the whole or part of the leave year and/or of a carry-over period, which was the reason why he could not exercise his right to paid annual leave (Schultz-Hoff and Others, EU:C:2009:18, paragraph 62).

19      It is in the light of that case-law that it must be established whether, when the event that terminated the employment relationship is the worker’s death, such an event may preclude entitlement to paid annual leave being transformed into an entitlement to an allowance in lieu.

20      In that regard, it must be stated that the entitlement to paid annual leave constitutes only one of two aspects of an essential principle of EU social law and that that principle also includes the entitlement to a payment (see, to that effect, Schultz-Hoff and Others, EU:C:2009:18, paragraph 60 and the case-law cited).

21      In fact, the expression ‘paid annual leave’, used by the EU legislature, in, inter alia, Article 7 of Directive 2003/88, means that, for the duration of annual leave within the meaning of that directive, the worker’s remuneration must be maintained. In other words, workers must continue to receive their normal remuneration throughout that period of rest and relaxation (see, Robinson-Steele and Others, C‑131/04 and C‑257/04, EU:C:2006:177, paragraph 50; Schultz-Hoff and Others, EU:C:2009:18, paragraph 58; and Lock, C‑539/12, EU:C:2014:351, paragraph 16).

22      In order to ensure respect for that fundamental workers’ right affirmed in EU law, the Court may not make a restrictive interpretation of Article 7(2) of Directive 2003/88 at the expense of the rights that workers derive from it (see, to that effect, inter alia, Heimann and Toltshin, C‑229/11 and C‑230/11, EU:C:2012:693, paragraph 23 and the case-law cited, and the order in Brandes, C 415/12, EU:C:2013:398, paragraph 29 and the case-law cited).

23      Next, it should be noted, as the Hungarian Government puts forward in its observations, that Article 7(2) of Directive 2003/88, as interpreted by the Court, lays down no condition for entitlement to an allowance in lieu other than that relating to the fact, first, that the employment relationship has ended and, secondly, that the worker has not taken all annual leave to which he was entitled on the date that that relationship ended.

24      Finally, it should be noted that receipt of financial compensation if the employment relationship has ended by reason of the worker’s death is essential to ensure the effectiveness of the entitlement to paid annual leave granted to the worker under Directive 2003/88.

25      Indeed, if the obligation to pay annual leave were to cease with the end of the employment relationship because of the worker’s death, the consequence of that circumstance would be an unintended occurrence, beyond the control of both the worker and the employer, retroactively leading to a total loss of the entitlement to paid annual leave itself, as affirmed in Article 7 of Directive 2003/88.

26      For all those reasons, that provision of Directive 2003/88 cannot therefore be interpreted as meaning that that entitlement may be lost because of the worker’s death.

27      Moreover, since Article 7(2) of Directive 2003/88 does not impose any condition for entitlement to an allowance in lieu other than that relating to the fact that the employment relationship has ended, it must be held that receipt of such an allowance should not be make subject to the existence of a prior application for that purpose.

28      Indeed, on the one hand, that entitlement is conferred directly by the directive without the worker concerned having to take any steps in this regard and, secondly, that entitlement does not depend on conditions other than those which are explicitly provided in the directive, so that the fact that the worker has not previously applied for an allowance in lieu under Article 7(2) of that directive is entirely irrelevant.

29      It follows, first, that Article 7 of Directive 2003/88 is not to be interpreted as meaning that the death of a worker that ends the employment relationship relieves the deceased worker’s employer of payment of the allowance in lieu to which that worker would ordinarily have been entitled by way of paid annual leave outstanding, and, secondly, that receipt of such an allowance cannot be made subject to the existence of a prior application for that purpose.

30      It follows from the foregoing considerations that the answer to the questions referred is that Article 7 of Directive 2003/88 must be interpreted as precluding national legislation or practice, such as those at issue in the main proceedings, which provide that the entitlement to paid annual leave is lost without conferring entitlement to an allowance in lieu of leave outstanding, where the employment relationship is terminated by the death of the worker. Receipt of such an allowance is not to be dependent on a prior application by the interested party.

 Costs

31      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (First Chamber) hereby rules:

Article 7 of Directive 2003/88/EC of the European Parliament and of the Council of 4 November 2003 concerning certain aspects of the organisation of working time must be interpreted as precluding national legislation or practice, such as those at issue in the main proceedings, which provide that the entitlement to paid annual leave is lost without conferring entitlement to an allowance in lieu of leave outstanding, where the employment relationship is terminated by the death of the worker. Receipt of such an allowance is not to be dependent on a prior application by the interested party.

[Signatures]


Language of the case: German.

 
 
Update – 22 January 2017
There are now three preliminary references concerning the CJEU’s Bollacke judgment; see further, Case C-569/16, Bauer – an heir’s accrued leave rights post-Bollacke but contra legem.