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Court of Justice Clarifies Holiday Pay Entitlements Under EU Law

Precedential Decision by Judiciary or Regulatory Agency

Author: Ben Smith, Trainee Solicitor – Littler United Kingdom

The European Court of Justice recently concluded that remuneration for the minimum required period of annual leave under EU law must not be less than the employee’s normal average pay during periods of actual work. In this case, the claimant’s holiday pay had been calculated as an average of pay over a period that included “short-time” working, resulting in a significant reduction in holiday pay compared to his usual pay for periods where he did work. “Short-time” working are periods where an employee remains employed, but is not required to do any work and is paid a “short-time” working allowance, which is significantly less than normal pay. The Court of Justice found this was not permissible. In addition, the Court of Justice confirmed that annual leave as a matter of EU law accrues only when the employee is doing actual work, therefore, no annual leave was accrued during periods of “short-time” working.