Schultz-Hoff v Deutsche Rentenversicherung Bund,European Court of Justice

Last month we looked at the Advocate General's opinion in Stringer and others v Her Majesty's Revenue & Customs. In that case the Advocate General's opinion was that employees continue to accrue paid annual leave under the Working Time Directive (WTD) during sickness absence and are entitled to a payment in lieu on termination of employment.

The Advocate General was also asked for an opinion in the Schultz-Hoff case, in which the employee was classified under German law as severely disabled. The employee was signed off on continuous sick leave from 8 September 2004. By a letter dated 13 May 2005 the employee requested to take his annual leave for 2004, from 1 June 2005. The employer refused on the ground that it first needed to be satisfied that the employee was able to work. In September 2005, the employee was granted an invalidity pension retroactively from 1 March 2005 and the employment relationship between the parties ended at the end of that September.

The employee brought a claim for an allowance in lieu for leave for 2004 and 2005. The claim was dismissed and the employee appealed. The appeal court asked the ECJ for a preliminary ruling.

The Advocate General's opinion is that, under the WTD, leave not taken by a worker because of illness during the leave year must be granted at a later date. Further, at the end of the employment relationship, workers have a right to an allowance in lieu of leave. Both of these rights apply where the employee has been absent during the entire leave year due to illness.

Key points

• The Advocate General's opinion is that where an employee is unable to take annual paid leave under the WTD it must be granted at a later date. On termination of employment the employee is entitled to an allowance in lieu of accrued holiday.
• These rights are not extinguished if the employee has been absent for the whole of the leave year.
• This is not a legally binding decision, so we will have to wait for the decision of the ECJ.

What you should do

• Review your policies. You can limit the amount of leave carried forward when an employee is sick or paid on termination in excess of the entitle­ment under the WTD.