§3 Payment during annual leave

The Court has underlined that ‘the Directive treats entitlement to annual leave and to a payment on that account as being two aspects of a single right’, as the aim of the payment during annual leave is ‘to enable the worker actually to take the leave to which he is entitled’ (264). As a consequence it considered that ‘the purpose of the requirement of payment for that leave is to put the worker, during such leave, in a position which is, as regards remuneration, comparable to periods of work’ (265). Workers ‘must receive their normal remuneration for that period of rest’ (266) and ‘a reduction in a worker’s remuneration in respect of his paid annual leave, liable to deter him from actually exercising his right to take that leave, is contrary to the objective pursued by Article 7’ (267), the timing of the reduction is irrelevant (268). The Court has held that payments for annual leave in the form of part payments staggered over the annual period of work are incompatible with the Directive. It has stressed that the payments should be made for a specific period in which the worker actually takes rest (269): the point at which the payment for annual leave is made must put the worker during that leave in a position that is comparable to periods of work as regards remuneration (270). Where pay is made up of various components, the Court has considered that a specific analysis is needed to determine ‘the normal remuneration to which the worker in question is entitled during his annual leave’ (271). According to the Court, normal remuneration should not be lower than the average normal remuneration received by the workers during periods actually worked (272). In the specific case of short-time working arrangements, periods during which workers are freed from any obligation to work should not be taken into consideration for determining the average normal remuneration (273). As to what constitutes ‘the normal remuneration’, the Court has held that the components of total remuneration relating to the professional and personal status of the worker have to be paid during the paid annual leave. It gave the example of allowances relating to seniority, length of service and to professional qualification (274). If allowances are linked intrinsically to performing tasks required by the worker’s contract of employment and are calculated as part of the worker’s total remuneration, they must be taken into account in the remuneration to which the worker is entitled during annual leave (275). Similarly, commission received for performing tasks required by the contract of employment, such as a commission on sales, must be taken into account in calculating remuneration (276). It is for national courts to assess the reference period considered representative for the calculation of the average component payable for annual leave (277). It is not, however, necessary to take into account components of remuneration intended to cover exclusively ‘occasional or ancillary costs arising at the time of performance of the tasks which the worker is required to carry out under the contract of employment’ (278) or ‘collectively agreed additional payment on top of […] average normal remuneration’ (279). Given its exceptional and unforeseeable nature, remuneration received for overtime does not, in principle, form part of the normal remuneration (280). However, when the obligations arising from the employment contract require the worker to work overtime on a broadly regular and predictable basis, and the corresponding pay constitutes a significant element of the total remuneration that the worker receives for the professional activity, the pay received for that overtime work should be included in the normal remuneration (281). In order to determine whether a threshold of hours worked granting entitlement to overtime pay is reached, the hours corresponding to a worker’s period of paid annual leave must be taken into account as hours worked (282). In addition, the Court has consistently held that, as regards the entitlement to paid annual leave, workers who are on sick leave during the reference period must be treated in the same way as those who have actually worked during that period. Consequently, in the case of a worker who was partially incapacitated for work due to illness and wished to take paid annual leave, the Court has ruled that the level of pay during annual leave must be based on the normal rate, not a rate that has been temporarily reduced due to partial incapacity to work (283).

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