It is clear that Member States are required to permit carryover of annual leave from one year to the next if: (i) the leave is untaken due to sickness and (ii) the leave is part of the four weeks’ annual leave granted to workers under the Working Time Directive (WTD Entitlement). In the combined case of Terveys- ja sosiaalialan neuvottelujärjestö (TSN) ry v Hyvinvointialan liitto ry and anor, the European Court of Justice confirmed that Member States are not required to permit carryover of leave in the event of sickness where that leave is in excess of the WTD Entitlement.

Employee L worked in the Finnish health sector and employee K in the freight transport sector. Under collective agreements, L and K were entitled to a period of paid annual leave in excess of WTD holiday entitlements. Both L and K had been unable to take all of their leave in one year due to sickness absence. In light of this, they asked their respective employers to carry over the untaken leave into the next leave year. Their requests were refused in respect of the paid annual leave that exceeded WTD Entitlement, since there was no requirement to do so under the relevant collective agreements. L and K brought claims alleging that this was in breach of EU law. The Finnish labour court made a reference to the ECJ.

The ECJ held that any entitlement annual leave in excess of the WTD Entitlement is determined by each Member State. Accordingly, the conditions for granting and extinguishing those additional days of leave are governed exclusively by national law, and it is not the business of the WTD to intervene. This means that Member States have the freedom to determine whether or not to permit the carryover of some or all of the additional days of leave where the employees have been incapable of working due to sickness.

Comment: This case is in line with previous domestic authority but nonetheless is helpful confirmation from a higher court. Remember that, if your contracts or collective agreements with employees reflect a more generous stance and do permit carryover of all leave, this arrangement will prevail. Therefore, employers wishing to be no more generous than necessary should ensure that any such documentation is clearly drafted, differentiating between WTD and non-WTD holiday so that only carryover of the former is permitted.

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