Workers’ minimum holiday pay under European law cannot be reduced to reflect short-time working, the European Court of Justice (CJEU) has ruled.
In a German case, Hein v Albert Holzkamm GmbH, a construction worker operated under a collective agreement. This agreement allowed for holiday pay to be calculated on the basis of a 13-week average pay (a long-standing provision of German law).
Following a 26-week lay-off, his holiday pay was calculated under German law using his average pay (excluding overtime). As such, his holiday pay was lower than his normal pay.
Daniel Barnett’s Employment Law Bulletin summarised the case: “The CJEU held that this breached EU law in respect of pay for the four weeks’ paid leave guaranteed by EU law. Therefore, German legislation allowing for collective agreements to take into account reductions in earnings due to short-time working for calculating holiday pay was incompatible with EU law. In respect of overtime, where it is exceptional and unforeseeable, it did not have to be taken into account in calculating minimum holiday pay.”
“The CJEU also held that the right to accrue annual leave arises from actual work, so annual leave did not accrue during periods when no work was done.”
In addition, the Daniel Barnett’s summary noted
the CJEU’s decision that, despite many years of German case law allowing this
to be done, its ruling “could not be limited to avoid retrospective effect due
to any legitimate expectation of employers of legal certainty, as there would
not be serious economic repercussions from the judgment.”
