C-684/16 Max Planck Gesellschaft v Shimuzu [2018]

C-684/16 Max Planck Gesellschaft v Shimuzu [2018]

C-684/16 Max-Planck-Gesellschaft zur Förderung der Wissenschaften e.V. v Shimizu [2018] involves the question of whether a worker loses the right to a payment in lieu of untaken annual leave on termination if the leave is not applied for during employment. The Court of Justice of the European Union (CJEU) clarified that the worker must have been given an opportunity to take the leave, and it is the employer's responsibility to show that it encouraged the worker to do so.

Tetsuji Shimizu was employed by Max-Planck-Gesellschaft zur Förderung der Wissenschaften e.V. until December 31, 2013. Max-Planck invited Mr Shimizu to take his leave before the termination of employment but did not force him to take it on specific dates. Mr Shimizu, however, took only two days' leave and sought payment for the remaining untaken leave.

Max-Planck's defence was unsuccessful in lower courts, and the case was appealed to the Bundesarbeitsgericht (Federal Labour Court, Germany). The court held that the entitlements to paid annual leave lapsed under national law since they were not taken during the year for which the leave was granted. However, the court sought clarification from the CJEU on the consistency of national law with the Working Time Directive.

The CJEU clarified that the Working Time Directive does not impose any condition on the right to payment in lieu of untaken holiday on termination, except that the employment relationship has terminated, and the worker has not taken all entitled paid annual leave. While national law can set conditions for exercising the right to annual leave, it would be non-compliant for it to prescribe an automatic loss of rights without ensuring the worker had an effective opportunity to take the leave.

The employer is required to encourage the worker to take holiday, inform them of the risk of losing leave, and prove to the court that it fulfilled these obligations. If the worker deliberately declined to take the holiday, and was aware of the consequences, the possibility of losing the right to paid annual leave or payment in lieu on termination is not excluded.

The decision impacts how national laws, especially those aligning with the Working Time Directive, handle the right to annual leave and payment in lieu. It emphasises the employer's responsibility to facilitate the worker's opportunity to take leave and places the burden of proof on the employer. This ensures that the worker's right to annual leave is not automatically lost and depends on the circumstances, including the employer's actions and the worker's awareness.
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