Death of the employee does not lead to the loss of the entitlement to vacation compensation ECJ 12.06.2014 C-118/13

The Hamm Regional Labour Court had referred the question to the European Court of Justice as to whether Art. 7 (1) of European Directive 2003/88 should be interpreted to mean that the entitlement to compensation for unused leave expires upon the death of the employee.

In the case before the ECJ, the sole heir and wife of a deceased employee had demanded financial compensation for 140.5 days of vacation. The employee had been employed by the company from 01.08.1998 until his death on 19.11.2010 and had been seriously ill since 2009. He was on sick leave from 11.10.2010 until his death.

The ECJ once again clarified that an employee's paid vacation entitlement is a particularly important principle of EU law from which no deviation is permitted. The financial compensation entitlement may not be withheld from the employee upon termination of the employment relationship. The only prerequisite for the entitlement to financial compensation for untaken leave is the termination of the employment relationship and the existence of remaining untaken leave. Compensation for remaining leave as financial compensation is essential to ensure the practical effectiveness of the entitlement to paid annual leave. Otherwise, an imponderable, uncontrollable event would retroactively lead to the complete loss of the leave entitlement. This does not correspond to the interpretation of Art. 7 of Directive 2003/88. The interpretation of Art. 7 of Directive 2003/88 rather shows that the entitlement to paid annual leave cannot be extinguished by the death of the employee.

Contrary to the previous case law of the Federal Labor Court, according to which the entitlement to leave compensation is not inheritable, the European Court of Justice has clarified that the financial compensation entitlement of the deceased employee is not lost and is inheritable.