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Case law: Employers must alert workers to outstanding holiday entitlement and encourage them to take it if they want to stop them carrying it forward

UK employers whose employment terms prevent workers from carrying forward the four weeks' holiday they are entitled to under EU law must tell workers about their outstanding holiday entitlement and encourage them to take it, or risk those terms being ineffective following an EU ruling.

December 2018

This update was published in Legal Alert - December 2018

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

Under UK law, full-time employees and workers are entitled to at least 5.6 weeks' paid holiday each year (pro-rata for part-timers), four weeks of which is their entitlement under EU law. The remaining 1.6 weeks is a UK entitlement only.

UK employers can refuse to allow staff to carry untaken holiday over into the next holiday period (or to receive payment in lieu of untaken holidays on leaving) unless certain exceptions apply.

However, the Court of Justice of the European Union (CJEU) has recently ruled on the legality of German laws which say that workers are only entitled to pay in lieu of untaken leave if they have asked to take that leave and been prevented from doing so by their employer. Its findings impact UK employers.

Neither of the workers in the two cases in question had asked to take their untaken leave. However, one of the employers had written to their worker to alert him to the fact he had holiday left, and asked him to take it.

The CJEU found that workers are always the weaker party in the employment relationship, the consequence being that employers should not discourage workers from taking annual leave and should go further and:

  • inform workers of their entitlement to paid leave
  • give them accurate information about their entitlement including, if that is the case, that they cannot carry untaken holiday forward into the next holiday year
  • do so in good time for them to take the relevant holiday
  • tell them when their entitlement to it expires, and
  • encourage them to take it.

The CJEU found that if an employer failed to ‘diligently’ comply with these requirements, then any terms they had in place purporting to stop an employee from carrying their holiday over into the next holiday year (and so preventing them from claiming pay in lieu of untaken holiday when they left) would not apply.

This means only UK employers who diligently comply with these requirements can continue to stop workers from carrying the four weeks' holiday they are entitled to as a result of EU law over into the next year. As for any of the remaining 1.6 weeks' annual leave, they can continue to stop workers from carrying it over if they've not asked to take it.

This requirement to ‘encourage’ workers to take leave implies that employers must take positive action - simply having a policy setting out workers' entitlements is unlikely to be enough.

For example, employers could write to all workers who have not taken all the four weeks' holiday, at least three months before the end of the holiday year, telling them how much holiday they have left and encouraging them to take it. Employers could also ask supervisors/managers to find out why workers have not booked leave, as it may be a symptom of some other issue. Keeping records of such action and responses from the worker would be a wise move.

Operative date

  • Now

Recommendation

UK employers wanting to stop workers from carrying the four weeks' holiday they are entitled to as a result of EU law over into the next holiday year should ensure their systems and procedures ensure that:

  • all workers entitled to paid holiday are informed of their entitlement in good time to act on it
  • any who may fail to take their holidays in full in a holiday year are informed of their outstanding entitlement and positively encouraged to take it
  • they are informed that they will lose their holiday if they do not, and
  • payment in lieu is made to any worker who leaves but has not taken their full holiday entitlement.

Case ref: Kreuziger v Land Berlin and Max-Planck-Gesellschaft v Shimizu Case C-684/16

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.

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