§1 The entitlement to an allowance in lieu

The Directive allows an allowance in lieu of paid annual leave to which a worker was entitled on the date employment ended and which has not been taken (294). The purpose of the allowance in lieu of outstanding entitlements to annual leave is to avoid that the termination of the employment relationship, by making it no longer possible to take paid annual leave, would lead to ‘a situation in which the worker loses all enjoyment of that right, even in pecuniary form’ (295). Two conditions are laid down for entitlement to an allowance in lieu: ‘first, that the employment relationship has ended and, second, that the worker has not taken all annual leave to which he was entitled on the date that that relationship ended’ (296). The Directive does not impose any additional condition. In particular, the Court has ruled that no prior application should be required (297). As the Court emphasised, it is only where employment has ended that Article 7(2) allows an allowance in lieu of paid annual leave: a worker must normally be entitled to actual rest, with a view to ensuring effective protection of health and safety (298). By contrast, ‘the possibility of financial compensation in respect of the minimum period of annual leave carried over would create an incentive, incompatible with the objectives of the Directive, not to take leave or to encourage employees not to do so’ (299). If the worker did not ask to exercise the right to paid annual leave prior to the termination of the employment relationship, the worker cannot lose the right to payment in lieu automatically and without prior verification of whether the employer had in fact enabled the worker, in particular by providing sufficient information, to exercise the right to leave prior to the termination of that relationship (300). The burden of proof is on the employer (301). If the contract has not ended, an allowance in lieu cannot be paid. It is irrelevant whether the worker was prevented from taking annual leave for reasons to do with production or the organisation of the undertaking (302). If the contract has ended, the reason why it ended is irrelevant (303). To ensure the effectiveness of this provision of the Directive, an allowance in lieu of paid annual leave is due also if the worker has asked to end the employment relationship (304), retires (305) or even dies (306). The right to an allowance in lieu is not extinguished upon the worker’s death but forms part of the assets to be inherited by the heirs (307). In the event of termination of the employment relationship after the worker has been unlawfully dismissed then reinstated in his or her employment, in accordance with national law, following the annulment of the dismissal by a decision of a court, that worker is entitled to financial compensation in lieu of paid annual leave not taken during the period between the date of the unlawful dismissal and that of the reinstatement in employment (308). However, if the worker obtained other employment during that period, this worker cannot claim from the first employer compensation corresponding to the period of work with the new employer.

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Source: EUR-Lex (Cellar) · retrieved 2026-09-07