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Jessica Vaculíková | November 21, 2023

Compensation for untaken leave under the case-law of the Court of Justice of the European Union

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The Court of Justice of the European Union (“CJEU”) has recently issued a decision with a significant Czech imprint. In the above decision, the CJEU addressed the preliminary question if a dismissed employee is entitled to financial compensation for days of untaken leave for the period from the date of his dismissal until the date of his reemployment.

The preliminary question was preceded by a court dispute between an employee, on the one hand, and the Road and Motorway Directorate of the Czech Republic, as the employer, on the other. The employee had been employed by the company since 2009 on the basis of an employment contract, but was subsequently dismissed by her employer in 2013.

In the original legal proceedings before the Czech courts, it was eventually decided that the employer’s notice was invalid. After receiving the notice, the employee in question informed her employer that she insisted on continued employment, but she was not assigned work until the final decision on the invalidity of the notice.

The employee was subsequently reemployed by the same employer in 2017, after the dispute over the invalidity of her termination before the domestic courts had been settled. Thus, after the employee was reemployed in her original job, she submitted a request to take annual leave that she had not taken in the interim period from the date of her dismissal until the date she was reemployed. The employer did not comply with the employee’s request, and after she began to take leave despite the employer’s disapproval, the employee was again dismissed for unauthorized absence.

After being dismissed again, now on the grounds of unauthorised absence, the employee again took the matter to court, seeking payment of reimbursement of wages plus interest for the days of leave between the date of her first dismissal and the date of her reemployment. However, the employee was unsuccessful with her claim at both the first and second instance of the judicial system, so she decided to appeal against the judgment of the Regional Court in Brno.

The Supreme Court, as the Court of Appeal, subsequently requested the CJEU to rule on the preliminary question referred to in the introduction concerning financial compensation for untaken leave. In its decision, the CJEU dealt with the interpretation of the compliance of the relevant article of Directive 2003/88/EC on the regulation of working time with domestic case law or laws. 

Under Czech law, specifically Act No. 262/2006 Coll., the Labour Code (hereinafter referred to as the “Labour Code”), an employee who has received a notice of termination of employment but notifies the employer in writing that he or she continues to be employed is entitled to reimbursement of wages or salary until the court decides whether or not the notice was valid. The domestic case law also states that: “If, however, the employee has not actually worked from the time he notified his employer that he wished to work until the time the notice given to him was declared invalid, he shall not be entitled to paid annual leave for that period.” And it is this decision-making practice of the Czech courts that has been subject to review by the CJEU.

In its decision, the CJEU found, among other things, that the entitlement to paid leave established by Directive 2003/88/EC on the organisation of working time has a dual purpose, namely, to allow the employee to take a break from his tasks and, on the other hand, to have time to relax and pursue interests outside work.

Logically, the above-mentioned dual purpose of leave cannot be fulfilled in the case where the employee did not work, but according to the CJEU, there are exceptions where the right to leave must be granted to employees who did not work. This is also the case where an employee who was unlawfully dismissed from employment and then reemployed was not allowed to actually work for his employer.

It is precisely this exception that applies to the case of the employee in question, who, according to the CJEU, was thus denied, in breach of Directive 2003/88/EC on the regulation of working time, the right to financial compensation for days of untaken leave for the period between the date of her dismissal and the date of her reemployment.

The above decision of the CJEU will certainly bring about a change in the decision-making practice of the Czech courts, which have so far been dismissive of claims for paid leave during the duration of litigation concerning the invalidity of termination of employment.

Author: Jessica Vaculíková, Petr Pešek