Article 7 of Council Directive 2003/88/EC (117Kb PDF) of 4 November 2003, concerning certain aspects of the organisation of working time, ensures a period of paid annual leave of at least four weeks for all employees.
Unlike other requirements of daily and weekly rest periods (Articles 3 and 5), the Directive does not allow for any exemption from the requirement for an annual rest period. It is an absolute entitlement that cannot be reduced.
Conditions for entitlement and granting are subject to national regulation. However, this cannot replace the minimum period of paid annual leave by an allowance in lieu, except where the employment relationship is terminated.
The Directive’s provision for paid annual leave was the subject of a decision of the European Court of Justice (ECJ) in 2001, following a complaint against the United Kingdom. This was brought by the Broadcasting, Entertainment, Cinematographic and Theatre Union (BECTU) against the Secretary of State for Trade and Industry (Case C-173/99). The decision was significant in bringing together the provisions in the Directive with the Charter of Fundamental Rights of the European Union, which states in Article 31(2): ‘Every worker has the right to… an annual period of paid leave’.
The UK legislation made entitlement to paid annual leave subject to a qualification period of 13 weeks’ employment. There is no such qualification in the Directive and BECTU complained to the ECJ that the UK Government’s legislation deprived many of the union’s members on short-term contracts of their right under EC law to paid annual leave.
In its judgement, the ECJ ruled against the UK, arguing that the Working Time Directive:
…does not allow a Member State to adopt national rules under which a worker does not begin to accrue rights to paid annual leave until he has completed a minimum period of 13 weeks’ uninterrupted employment with the same employer.
More recently, there has been debate about the interaction between annual leave and sick leave.
In Case C-277/08, Francisco Vicente Pereda v Madrid Movilidad SA, the ECJ ruled in 2009 that a worker who was unfit for work before the commencement of a period of paid annual leave was entitled to take that leave at another time which did not coincide with the period of sick leave.
Further clarification was given in June 2012 in judgment C-78/11. The case concerned the National Association of Large Distribution Companies (ANGED) in Spain and the Federation of Trade Unions (FASGA) and others. The ECJ ruled that if a worker was sick and incapacitated for work, and where that incapacity occurred during a period of paid annual leave, the worker had the right to receive future annual leave that corresponded to the period of incapacity for work.
The ECJ reasoned that, according to settled case law, entitlement to paid annual leave must be regarded as a particularly important principle of EU social law, and one that is expressly enshrined in the Charter of Fundamental Rights. The right to paid annual leave therefore could not be interpreted restrictively.
ECJ case law has established that an individual’s right to take annual leave is separate from their need to take sick leave. It is also clear that a worker’s annual leave entitlement would not be lost if that worker was sick during annual leave – the worker would have the right to take the leave at a later date. Further, it does not matter when an employee falls sick – it can be before or during the period of annual leave – and a new period of leave can be scheduled outside the normal reference period for annual leave.