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Can a Worker’s Minimum Holiday Pay be Reduced to Reflect Short-time Working? The Court of Justice of the European Union says “No!”

Last month, the Court of Justice of the European Union (“CJEU”) held in the case of Hein v Albert Holzkamm GmbH [2018] that workers are entitled to their normal holiday pay during their minimum period of 4 weeks’ annual leave guaranteed by EU law – even if they have worked prior short-time periods.

The Claimant, Mr Hein, is a concrete worker employed by the German company Holzkamm. He works under a collective agreement with a provision allowing for holiday pay to be calculated on the basis of average pay over 13 weeks. Periods of short-time working are taken into account for the calculation. As a consequence of the collective agreement provision, Mr Hein received significantly lower holiday pay as pay was calculated by a gross hourly wage which was less than his normal hourly wage.

Mr Hein brought a claim before the Labour Court in Verden, Germany, arguing that short-time periods of work during the reference period should not reduce his holiday pay entitlement. The Labour Court asked the CJEU whether its national legislation relating to the collective agreement provision conforms with European Union (“EU”) law.

The CJEU found in favour of Mr Hein and held that a worker should be paid his normal holiday pay for the minimum period of 4 weeks’ annual leave guaranteed by EU law. However, the court noted that EU law does not require normal holiday pay to be granted for the entire duration of holiday pay which the worker is entitled under national law. The judgment also advised that the right to accrue annual leave arises from actual work undertaken - annual leave does not accrue during periods where no work is done.

Calculating holiday pay can be tricky for employers, especially where working hours are irregular. Employers would be wise to take legal advice to ensure their calculations are compliant with national and European legislation to avoid Tribunal claims.

This bulletin is for general guidance purposes only and should not be used for any other purpose.

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