Abstract
The right to annual paid leave is a key principle of the EU's social dimension. However, difficulties arise time and again in relation to the compliance of national law with EU law, often due to problematic employer practices. In this article, we analyse the case of C-37/25 YH v. GTC Dijon, but we also highlight that there are limits to the protection of an employee's right to annual paid leave, which the CJEU assesses in the context of ‘specific circumstances’. In our examination of this issue, we draw attention to the cases already outlined, while also critically highlighting the likely uncertainties ahead, which may necessitate comparative research between Member States.
Introduction
Annual leave is one of the central elements of labour law rest period systems. It is important in many respects, as it allows employees to rest, regenerate, and recharge. There are also a number of labour law protections related to this, particularly regarding its redeemability, the ordering of rest periods, and their continuous nature, which are strict obligations for employers. Although annual paid leave is a traditional institution of labour law, we still encounter changing and, in some cases, problematic employer practices across Europe.
This was also the case with an employee named YH, who was entitled to payment for her annual leave due to the termination of her employment relationship, but whose employer did not consider this justified as it believed that she was able to rest during her sick leave, and so she should not be entitled to financial compensation for unused annual paid leave days. The court hearing the case was uncertain about the employee's leisure activities during her sick leave, and ultimately gave the Court of Justice of the European Union the opportunity to express its opinion on the relationship between annual leave and sick leave, as well as the merits and assessment, impacting their implementation at national level. 1
This case was analysed based on the Article 7(1) of the Directive 2003/88/EC of the European Parliament and of the Council of 4 November 2003 concerning certain aspects of the organisation of working time (the Directive) and Article 31(2) of the Charter of Fundamental Rights of the European Union.
The purpose of this article is to present the findings of the case, and to reflect on one of the cornerstones of labour law, namely, the relevance of the right to annual paid leave, the relationship between sick leave and annual paid leave, and the rules governing national (and employer) restrictions on the right to the latter, in particular the shortcomings thereof.
The facts of the case and the question referred
YH had been employed by GTC Dijon (the employer) since 1983. Unfortunately, the relationship between the employer and YH was not without its difficulties. Following a change in the employer's partners in June 2020, relations between YH and her employer deteriorated. YH believed she was a victim of workplace harassment by one of the partners. Before the Dole (France) Industrial Tribunal, the referring jurisdiction, YH requested two particular things. The first was the judicial termination of her employment contract at the exclusive fault of GTC Dijon, a process that in France is distinct from regular termination and may be requested only by the employee. When the employee considers that the employer might be breaching contractual commitments and there are serious deficiencies on the side of the employer, the employee can turn to the Labour Council for a judicial termination of the employment contract. During the procedure, the employee must continue working, unlike in cases of immediate termination. 2
It is important to highlight another element of the dispute. Since February 2022, YH had been on sick leave. Because of this, as a second request, YH asked the employer to be ordered to pay compensation in the amount of 7,629.50 euros, in respect of the right to paid annual leave acquired while she was on sick leave. This request was denied by the employer for the following reasons.
First, in January 2023, the Primary Health Insurance Fund of France refused to recognise the occupational origin of the illness for which YH had been on sick leave. However, this leave permitted YH's freedom of movement: she could stay at or leave her home at her discretion. In July 2024, the employer had a report drawn up by a bailiff on YH's leisure activities, using freely accessible content published on her Facebook page. Based on this report, the referring court found that, during her sick leave, YH regularly took holidays and often went to restaurants. The referring French court considered that YH benefitted from rest as well as relaxation and leisure time during sick leave. Furthermore, French national law does not permit account to be taken, when examining a claim for compensation in respect of paid annual leave accrued during a period of sick leave, of the specific circumstances relating to the nature of the illness. In particular, it excludes consideration of situations where the illness does not immobilise the worker, does not require intensive treatment, and may still allow for rest, relaxation or leisure. In view of this, it was argued that during the period of sick leave, the purpose of the paid annual leave was also fulfilled, since, as the employer proved, the employee was able to enjoy her private life by engaging in various leisure activities. For this reason, the referring court submitted a request for a preliminary ruling to the Court of Justice of the European Union in January 2025. It sought clarification as to whether Article 7(1) of Directive 2003/88/EC and Article 31(2) of the Charter preclude the extinction or reduction of paid annual leave accrued during a reference period where the worker was on sick leave of non-occupational origin that did not involve any restrictions on outings or daily activities. This question is important: if an employee does not spend their sick leave exclusively at home, but also organises leisure activities, can they effectively be on both vacation and sick leave at the same time, and does this period count towards their annual paid leave entitlement? The answer to this question fundamentally affects the employee's rights in relation to annual leave.
The position of the CJEU and the boundaries of the right to annual paid leave
In examining the case, the CJEU analysed in detail the nature of paid annual leave and the associated expectations, primarily referring to Article 7(1) of Directive 2003/88 that every worker is entitled to paid annual leave of at least four weeks. The CJEU explained that this right to paid annual leave must be regarded as a principle of EU social law, being of particular importance since it is also expressly enshrined in Article 31(2) of the Charter. The implementation of this right by the competent national authorities can only be carried out within the limits expressly laid down by Directive 2003/88. According to settled case law of the Court,
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the right to annual leave has a dual purpose, namely, to allow the worker to rest from the performance of the tasks incumbent upon the worker under their employment contract, on the one hand, and to have a period of relaxation and leisure, on the other hand. The CJEU has emphasised that this dual purpose, which is a distinguishing element, is based on the premise that the worker actually worked during the reference period. Indeed, the objective of allowing the worker to rest presupposes that the worker has carried out work justifying, in order to ensure the protection of their safety and health as referred to in Directive 2003/88, the benefit of a period of rest, relaxation, and leisure. Accordingly, the right to paid annual leave must in principle be determined on the basis of the periods of actual work performed under the employment contract: in certain situations in which the worker is incapable of carrying out his or her duties, the right to paid annual leave cannot be made subject by a Member State to a condition that the worker has actually worked. The same applies, in particular, with regard to workers who are placed on sick leave during the reference period. As is clear from the Court's case-law, with regard to entitlement to paid annual leave, workers who are absent from work on sick leave during the reference period are to be treated in the same way as those who have actually worked during that period.
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On that basis, and in light of the relevant provisions of the Directive, national legislation or practice cannot provide for the expiry of the right to paid annual leave at the end of the reference period and/or a carry-over period fixed by national law. This applies where the worker has been on sick leave for all or part of the reference period and has therefore not had the opportunity to exercise that right. This also applies when an employee engages in any leisure activity during sick leave, and it is also not connected to the occupational origin of the illness. The purposes of sick leave and regular leave are different; illness is a cause beyond the control of the employee, even if the time spent on sick leave is similar to that spent on regular leave – during this time, the worker is subject to physical or psychological constraints due to their illness.
At the same time, this circumstance is consistent with the reasoning of an earlier CJEU judgment. 5 Based on it, in the case of long-term illness lasting over several reference periods, the unlimited accumulation of annual leave would be incompatible with the purpose of annual paid leave and would also represent an excessive absence for the employer, causing difficulties in work organisation. Following the CJEU practice, after a period of 15 months the right to paid leave may expire under national law, and this period is consistent with the objective of the Directive. However, this restriction is also exceptional, because if the worker has not been given an opportunity to take this leave, and in particular if the employer has not fulfilled their obligations to encourage and inform them about taking paid annual leave in a timely manner, there are specific consequences. One such consequence is that the acquired right to paid annual leave cannot be extinguished at the expiry of the reference period and/or a carry-over period laid down by national law. This rule was also clarified in Fraport and St. Vincenz-Krankenhaus, where the employer defended itself by arguing that a worker who, on health grounds, has been unable to take leave for a long period of time, loses the entitlement to leave 15 months after the end of the year. According to the employer's reasoning, this would be the case irrespective of whether the employer has fulfilled its obligations to enable that worker to take such leave. Finally, it is important to note, that problematic practices of employers featured in both these cases. In Fraport and St. Vincenz-Krankenhaus, German employers were unaware that non-compliance with their informational obligation would not relieve them of the fundamental duty to grant paid annual leave. In GTC Dijon, the employer in France argued that if an employee also engaged in leisure activities during sick leave, they could not expect to be granted or paid their annual paid leave.
‘Specific circumstances’?
As set out in paragraph 32 of the decision, there are specific circumstances which justify a derogation from the rule that paid annual leave rights cannot be extinguished. This difference is based on the purpose of the right to paid annual leave, the need to protect the employer from a risk of excessive absence of the employee, and the difficulties this would cause in terms of work organisation. From a perspective of protecting the position of employers, it is relevant to ascertain what further boundaries and specific circumstances exist that can protect their interests against this principle of social law.
One such circumstance is the 15-month rule on the accumulation of leave.
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Employer protection against excessive accumulation was addressed in KHS,
Another restriction can be inferred from the case law of the CJEU, although not on a time basis, such as the exemplary 15 months, but on a behavioural basis. This is because a situation where the employer acts appropriately in providing information about the exception to rule on leave, but the employee still does not take the leave, can be interpreted in a similar way. The employer's obligation to grant leave 8 cannot be interpreted as meaning that the employer is obliged to force the employee to take annual leave, as the employer's responsibility for granting leave cannot be unlimited. According to the CJEU, the employer is required to formally encourage the employee to take leave, and inform them in good time when they may lose their right to leave or financial compensation. 9 If the employer proves that the worker deliberately and knowingly refrained from taking paid annual leave after having been given the opportunity actually to exercise their right thereto, EU law does not preclude the loss of that right or, in the event that the employment relationship ends, the corresponding absence of an allowance in lieu. 10 Of course, if the employer does not actually provide an option of exemption and has not clearly and transparently informed the worker (e.g., through repeated warnings) 11 of the possibility of losing their rights, then this restriction ceases to apply, as stated in Fraport and St. Vincenz-Krankenhaus. This highlights the conditional nature of the specific circumstances requirement: protection from work organisational difficulties is not automatic, but can only be enforced when the employer provides the appropriate information about the exception as a ‘bonus et diligens pater familias’.
When considering difficulties in work organisation, however, there is another factor to consider that may be added to this list in the future. In terms of time constraints, the risk of an excessive accumulation of periods of leave results in a conjunctive theoretical prerequisite for the constraint, i.e., that this accumulation leads to difficulties for the organisation of work (paragraph 33). 12 However, it is not clear whether other circumstances could result in this work organisation risk.
Moreover, the list of specific circumstances cannot be closed because, with the increasing number and prevalence of non-standard forms of work, where it is becoming increasingly difficult to distinguish between working time and availability, it may be that the interpretation of leave will not be so straightforward. 13 This is particularly true in cases where a worker is employed at several workplaces at the same time, a trend that can also be observed in the gig economy. How can employers protect themselves from abuse? Pennings points out other weaknesses of the existing rules. He suggests that if a worker leaves employment without having worked, then the rule set out in the above judgments should still be followed, according to which if the prolonged illness is not due to the employee's influence and is not their decision, then the period of absence from work due to illness still becomes the reference period. 14 All these questions raise the issue of whether the vague list of specific circumstances will be expanded through CJEU case law. 15
From the opposite perspective, however, the (non-exhaustive) list of what does not qualify as a specific circumstance is clearer. Such circumstances include the ‘mild’ nature of the illness, the employee's activity, lifestyle and leisure activities during sick leave, as was revealed in the present case, as well as the employer's passive behaviour on informing the employee about his or her rights to annual paid leave.
Finally, this case draws attention to frequent problems with national legal practices. Previously, under French law, annual leave could only be taken after sick leave if the illness was work-related. The law of April 22 2024, which aligns various aspects of French law with EU law, harmonises the French Labour Code with regard to paid leave accumulated during periods of non-work-related illness. These new provisions entered into force on April 24 2024, on the basis of which ‘ordinary’ sick leave is now considered a period of effective work for the purpose of determining paid leave duration. However, this was not the case in the past. 16 For this reason, this case also highlights the need for research to properly map national legislation on restrictions on the right to annual leave. 17 This is essential to clarify the concept of special circumstances, i.e., when the right to annual paid leave may be legally restricted. Looking at the literature, such restrictions can also be found in regulations of other countries, for example in Croatian regulations, which refer to a preliminary employment period. 18 Furthermore Pennings, examining CJEU case law, calls for additional analysis of the approach to annual leave in order to improve legal predictability, which is particularly important for addressing questions that remain unresolved. 19 The divergent interpretations and static national laws create enforcement challenges, so it is important to reduce these issues. 20
This activity may also serve as a guide for employer best practice, since, as became clear in this case, the employer monitored the private life of the absent employee in order to use it as evidence to support its argument that the employee was not sufficiently ill during sick leave to be unable to rest. This employer behaviour draws attention to the importance of the right to disconnect and its connection to the right to privacy, following Mangan's logic. 21 In order to clarify the scope of the related possibilities and the limits of employer interests, the scope of the aforementioned exceptions must therefore be clarified.
Conclusion
In the present case, a decision consistent with previous case law confirmed the right to annual leave and that it is a unique fundamental social right. The case can therefore be seen as consistent with previous CJEU rulings (Schultz-Hoff and KHS) and a logical continuation thereof, yet it highlights certain national practices that may currently be flawed. The employee's right to paid annual leave and its redemption is an extremely strong, inheritable entitlement, 22 which must be protected, while also taking the legitimate interests of the employer into account. The CJEU also considers the restriction of rights to be in line with EU law in the context of ‘specific circumstances’. The cases in which this applies are still unclear, with a few exceptions allowing for the legitimate interests of employers. However, in view of the ongoing changes and the more flexible and informal forms of work, it is likely that ‘specific circumstances’ will need to be clarified further in the near future. In the course of this process, the CJEU will have to tread carefully, balancing fundamental social rights of employees with the work organisation and economic interests of employers.
Footnotes
Data availability statement
Not applicable.
Declaration of conflicting interests
The author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Ethical approval and informed consent statements
Not applicable.
Funding
The author received no financial support for the research, authorship, and/or publication of this article.
