An Advocate General of the Court of Justice of the European Union (ECJ) has published his opinion in the cases of QH v. Varhoven kasatsionen sad na Republika Bulgaria and CV v. Iccrea Banca SpA Istituto Centrale del Credito Cooperativo. These cases seek a ruling on whether a worker should be entitled to paid annual leave from the date of dismissal to the date of reinstatement where it was established that their dismissal was unlawful.
In both cases, the local courts made a request for a preliminary ruling to ECJ on whether there is an entitlement on the part of a worker to paid annual leave in respect of the period from the date of dismissal to the date of reinstatement where it is established that such a worker has been unlawfully dismissed. In essence, their request concerned the interpretation of Article 7 of the Working Time Directive 2003/88/EC and of Article 31 of the Charter of Fundamental Rights of the European Union on working hours.
Article 7 (1) of the Directive states that: "Member States shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and/or practice."
Article 31 (1) of the Charter provides that: "Every worker has the right to working conditions which respect his or her health, safety and dignity."
Decisions of national courts
QH v. Varhoven kasatsionen sad na Republika Bulgaria
In this Bulgarian case, a teacher brought a claim against the school for compensation for loss of paid annual leave for the period between her unlawful dismissal and reinstatement. The Bulgarian Regional Court held that under Bulgarian law a worker was not entitled to paid annual leave if they did not carry out work under the employment relationship. QH, who represented the teacher, appealed this decision to the District Court relying on the provisions of Article 7 of the Directive. The District Court referred the case for a preliminary ruling to the ECJ.
CV v. Iccrea Banca SpA Istituto Centrale del Credito Cooperativo
In this Italian case, the employee was dismissed as a result of a collective redundancy procedure. The dismissal was later held to be unlawful and the employee was reinstated. She brought a claim before Italian courts for an allowance from her employer to cover the paid annual leave and leave for "abolished public holidays" accrued in the period when she was not working. The Italian Court of Appeal held that no allowance was payable in lieu of leave accrued but not taken between dismissal and reinstatement because the allowance was necessarily linked to "missed rest". That did not apply because the employee had not worked during that period. The employee appealed to the Supreme Court which then referred the question for a preliminary ruling.
Opinion of the Advocate General
The Advocate General pointed out that, as the entitlement to paid annual leave is an important principle of EU law, it should not be given a restrictive interpretation. This entitlement must, in principle, be determined by reference to the period of actual work. Interestingly, the Advocate General considered the previous decisions of the ECJ where the link between the provision of actual work and the right to paid annual leave had been broken. He noted that there are certain unforeseeable circumstances outwith the control of the employee and that the right to paid annual leave cannot therefore be subject to the condition that work is actually carried out.
On that basis, the Advocate General considered sick leave and maternity leave to be fundamentally similar to the cases where a worker has been absent from work as a result of unlawful dismissal. He argued that the employee must be put into a position comparable to that in which they would have been had they been able to exercise their right during their employment.
The Advocate General concluded that a worker unlawfully dismissed then reinstated must be entitled to paid annual leave from the date of dismissal to the date of reinstatement as it would be unfair for an employee to suffer as a result of his employer's wrongful act. This is subject to an exception where the employee worked for another employer. In that situation the employee may not recover payment in lieu of holiday for any time when they were working for that alternative employer.
Although the opinion of the Advocate General is not formally binding, such opinions are normally followed by the ECJ. If that happens, it will have a significant impact on some of the member states but it does not fundamentally change the position under UK law. The Employment Rights Act 1996 already requires that employees be compensated for benefits which would have accrued in the period between dismissal and reinstatement or re-engagement. This includes their right to paid annual leave. In any event, the opinion provides helpful clarification that both UK and EU laws are compatible with their approach towards annual leave in the circumstances where a person's absence before reinstatement or re-engagement results from an unlawful act of the employer.