Inheritability of holiday entitlement – The ECJ has ruled once again
The European Court of Justice (ECJ) has recently handed down a ruling favourable to employees and their heirs in cases where a deceased employee had not taken their paid annual leave prior to their death (ECJ, judgment of 6 November 2018, Case Nos. C-569/16 and C-570/16). Under this provision, the heirs of a deceased employee may claim financial compensation from the employee’s former employer for any annual leave not taken.
As early as 2014, the ECJ ruled that (Judgment of 12 June 2014 – Case C-118/13, the Bollacke case), that an employee’s entitlement to paid annual leave does not lapse upon their death. German labour law was therefore not compatible with European labour law.
It now needs to be clarified whether the legal situation is different if German inheritance law is applied instead of German employment law. Until now, German inheritance law has provided that holiday entitlements cannot form part of the estate. This is because the purpose of annual leave – rest and relaxation – can no longer be fulfilled following the employee’s death. Holiday entitlements therefore previously lapsed upon the employee’s death.
The ECJ has now ruled that the deceased employee’s entitlement to financial compensation for unused paid annual leave may pass to their heirs. If national inheritance law does not provide for this possibility, the heirs may therefore rely directly on EU law, regardless of whether the employer is a public or private entity.
It is true that the death of an employee means that he or she can no longer take the time off for rest and recuperation associated with the entitlement to paid annual leave. However, another aspect is the entitlement to pay during leave or to financial compensation for annual leave not taken at the time of termination of the employment relationship. This pecuniary component should form part of the employee’s assets and, by way of Universal succession pursuant to Section 1922(1) of the German Civil Code (BGB) shall pass to the heirs and may not be revoked with retroactive effect.
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