News and Events

Holiday Pay

  • Posted

Can a worker's minimum holiday pay under EU law be reduced to reflect short-time working?

No, held the CJEU in Hein v Albert Holzkamm GmbH.

The case arose from a construction worker in Germany working under a collective agreement which allowed for holiday pay to be calculated on the basis of a 13-week average pay (a long-standing provision of German law). After a 26-week lay-off, his holiday pay was calculated under German law on the basis of average pay, excluding overtime, meaning that it was lower than his normal pay.

The CJEU held that this breached EU law in respect of pay for the 4 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 (paras. 26-30).

The CJEU also held 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.