ECJ: Death of the employee does not cancel holiday compensation – this also applies to private employers

What happens to open holiday entitlements when the employee dies? It is clear that nobody else – not even the heirs – gets the holiday granted (as free time) . Nevertheless, European and German holiday law provide for compensation for untaken leave in special cases. However, this only occurs if it was not possible to claim the leave. It was questionable whether the death of the employee is such a case. This was already clearly confirmed by the ECJ in a decision in 2014 (ECJ from 12. June 2014 – docket number C-118/13 – Bollacke).

I. Compensation for death (and heredity)

The German Federal Labor Court (Bundesarbeitsgericht), however, saw this differently and stressed that it was not possible for this decision to be compatible with German law. For this reason, the ECJ was once again asked the following question: “Does Article 7 of Directive 2003/88 […] grant the heir of a worker who died while in an employment relationship a right to financial compensation for the worker’s minimum annual leave prior to his death, which is precluded by [german law]?” 

Advocate General Yves Bot clearly answered this question in his Opinion of 29 May 2018. He made it clear, that – as already decided by the ECJ – the claim for compensation by the death of the employee must not be dropped. Unmistakably he pointed out:

I would recall that the Court has already ruled in Bollacke, regarding the same provisions of German law, that Article 7 of Directive 2003/88 must be interpreted as precluding national legislation or practice, such as that at issue in the main proceedings, which provides that the entitlement to paid annual leave is lost without conferring entitlement to an allowance in lieu of outstanding paid annual leave, where the employment relationship is terminated by the death of the worker.”

 II. Consequences for implementation in Germany 

This view was to be expected. Only very rarely, the ECJ or the Advocate General deviates from a clear (current) decision of the court (as we have here in the Bollacke case). What is problematic, however, is what that means for German law, since the Federal Labor Court took the view that this was incompatible with German law. Here again, the Advocate General is very clear. He makes it clear that the view of the Federal Labor Court is not mandatory. Also the literature and other lower German Labor courts have deviated from the Federal Labor Court. Indirectly, the Federal Labor Court is therefore advised by the Advocate General to reconsider this point of view. The Federal Labor Court

should take into account, on the one hand, that those national provisions are formulated in a relatively broad and general manner and, on the other hand, that the orders for reference themselves seem to indicate that the incompatibility of the national legislation with EU law is based on the interpretation by the Bundesarbeitsgericht (Federal Labour Court) of those provisions.” 

But even in the event that this is not possible, the Advocate General points out a solution. Here, the Advocate General is causing a surprise. He emphasizes: “I therefore invite the Court to strengthen the enforceability of the fundamental social rights which possess the qualities that allow them to be relied on directly in disputes between individuals.” He demands here a “direct horizontal effect” of the European regulations. Whether such an effect exists is one of the most problematic issues of European law. Especially in employment law, this has far-reaching consequences. If such an effect is lacking, European law can never apply directly between employee and (private) employer. In other words, claims must therefore necessarily result from the national law (interpreted in the sense of the European law). But if such an interpretation is not possible, a claim against the employer would not be possible as well. Only claims for compensation could then be made against the state itself.

This makes it clear that this decision can have far-reaching consequences. 

III. Consequences 

First of all, we have to wait and see how far the ECJ joins the Advocate General. Very often there are hardly any discrepancies here. If, in fact, a far-reaching direct horizontal effect is affirmed by the ECJ, this would further strengthen the importance of European law. Even more than now, European law should be observed. Especially in employment law, almost all areas are determined by European law. This must be considered in the legal advice. This applies not only in Germany, but in all EU countries. Only in this way can the risks for the employer be minimized.