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Court Rules on Entitlement to Allowance in Lieu of Annual Leave

The Court of Justice of the European Union has recently given its decision on the right to an allowance in lieu of annual leave at the end of employment.

Employee Requests Retirement

The case concerned Mr Hans Maschek, a civil servant in Vienna, who retired at his own request on 1st July 2012. Between November and December 2010 Mr Maschek was on sick leave, and agreement was reached with his employer that meant from January 2011 he was not required to attend work, but would continue to receive his salary.

After retiring, Mr Maschek asked his employer to pay him an allowance in lieu of paid annual leave not taken, claiming that he had fallen ill again shortly before he retired. His employer refused his request on the grounds that, according to the rules on the remuneration of civil servants of the city of Vienna, a worker who terminates the employment relationship at his own request is not entitled to such an allowance. 

Case referred to European Court

Mr Maschek brought a case against his employer to the Administrative Court of Vienna, which in turn asked the Court of Justice whether such rules are compatible with EU law.

In giving its judgment, the Court highlights that the relevant European Directive provides that every worker is entitled to paid annual leave of at least four weeks and that the right to paid annual leave is a particularly important principle of EU social law. It is granted to every worker, whatever his state of health. 

When the employment relationship comes to an end and paid annual leave can therefore no longer be taken, the Directive states that the worker is entitled to an allowance in lieu in order to prevent the impossibility of taking leave leading to a situation in which the worker loses all enjoyment of that right, even in pecuniary form.

Reason for Employment Ending Irrelevant

The reason why the employment relationship has ended is irrelevant, said the Court. Therefore, the fact that a worker terminates the employment relationship at his own request has no bearing on his entitlement to receive, where appropriate, an allowance in lieu of the paid annual leave that he could not use up before the end of his employment relationship.

The Court concluded that the Directive precludes national legislation such as that on the rules on the remuneration of civil servants of the city of Vienna, which deprives the worker, whose employment relationship was terminated following his request for retirement, of an allowance in lieu of paid annual leave not taken and who has been unable to use up his entitlement to paid annual leave before the end of that employment relationship. 

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