UK: workers may be entitled to carry over statutory holiday if they have not been encouraged to take it

The ECJ has ruled that workers cannot be deprived of paid statutory holiday entitlement on the termination of employment or at the end of a particular reference period or authorised carry-over period, unless the employer has ensured "specifically and transparently" that the worker is actually given the opportunity to take the leave. This means encouraging workers, formally if necessary, to take their leave entitlement and informing them, accurately and in good time, that they will lose it if they don't take it. The burden of proof will be on the employer to show that "it has exercised all due diligence" in order to enable the worker actually to take his entitlement; loss of entitlement will only be lawful if the worker deliberately declines to take their leave knowing the consequences.

The Court ruled that German legislation that provided otherwise should be construed consistently, if possible. If this is not possible, then the law must be disapplied in favour of both public sector workers (who can rely directly on the Working Time Directive) and private sector workers (on the basis that the right to paid annual leave is a fundamental right of EU law enshrined in the Charter of Fundamental Rights of the European Union). (Kreuziger v Land Berlin and Max-Planck-Gesellschaft zur Förderung der Wissenschaften eV v Shimizu)

The prohibition in the Working Time Regulations 1998 on the carryover of the four weeks' EU-derived statutory holiday will now need to be read as subject to the proviso that the employer has exercised all due diligence to ensure the worker could take their leave and knew the consequences of not doing so. A clear holiday policy explaining the potential loss of untaken entitlement will be a good start, but employers should also consider issuing specific reminders a reasonable time prior to the end of the leave year to those who have not taken four weeks' leave, encouraging them to take it. Particular care may be needed to ensure workers who are not employees are also given this information.