A question that is very often asked by workers is what happens when their holidays have not been taken by 31 December, are they forfeited? Are they accumulated with those in the following year? The Court of Justice of the European Union has answered these questions in its judgement of 22 September 2022.

The first thing we should take into account is that workers are entitled to annual holidays, which is stipulated in Article 38 of the Spanish Labour Relations Act and in Article 31, Section 2, of the Charter of Fundamental Rights of the European Union, in this way guaranteeing the right of all workers to an annual period of paid holidays.

However, under certain circumstances a worker may not have been able to take his/her holidays in the calendar year and this is where the doubts arise, both for workers and employers. Within the scope of this situation, the Court of Justice of the European Union has recently clarified this matter by means of a reference for a preliminary ruling submitted by the Labour Supreme Court of Germany.

In order to understand this matter better, we will analyse the case in depth:

What happened in this specific case?

In the case in question, the plaintiff worker, whose contract had been terminated, claimed economic compensation for the holidays he was unable to take in the last four years, because the company had not provided any incentive for him to do so. On the other hand, the company alleged that the right and the amounts claimed had expired, in the case of German regulations these expire after three years.

The debate that the European High Court focused on was related to the application of the term of expiry for claiming holidays, specifically German regulations determine that a claim for the right to holidays expires in 3 years, in Spain the term for economic  compensation for holidays not taken is limited to one year, according to the provisions in Article 59 of the Spanish Labour Relations Act, although this must not be strictly applied if the company had not actively encouraged the worker to exercise this right.

On the one hand, the expiry of the right to claim annual paid holidays must be applicable when the employer has adopted an active position, incentivising the worker to exercise his/her right to take the holidays that had not been taken; therefore, this had occurred for a reason caused by the employee. In such case, the company can indeed claim that the right had expired.

However…If the worker cannot take his/her holidays for reasons caused by the company?

The Court of Justice of the European Union concluded that the expiry of the right is against the regulations when the employer had effectively failed to encourage the worker to exercise his/her right to annual holidays. Therefore, although the court did not clarify the way such incentive must take place, it should be sufficiently understood, because the company cannot benefit from its own infringement by alleging the right had expired if the holidays could not be taken for a reason caused by the company.

Therefore, the conclusions we can draw from the ruling of the Court of Justice of the European Union is that the expiry of the right to take holidays or receive economic compensation in lieu thereof is strictly limited if the labour relationship has been terminated and the right may only be opposed if it is reliably shown that company had encouraged the worker to take the rest period by means of sufficient information and incentive to exercise such right because if no such information and incentive was provided by the company, the claimed right cannot be deemed to have expired.

Did any of your workers not take all their holidays in 2022? Have they claimed the holidays even though they had been informed and incentivised to take them? Please do not hesitate to contact me in order to study the special features of your particular case to find the most appropriate solution.