CJUE: hours during the holiday period are counted as working time for overtime purposes

On 13 January 2022 in case No. C-514/20, the Court of Justice of the European Union (CJEU) provided a clarification on the inclusion of paid annual leave in the calculation of the volume of hours worked entitling to overtime pay.

It stated that, to determine whether the threshold of hours worked entitling the employee to an overtime bonus has been reached, the hours corresponding to the period of paid annual leave taken by the employee must be considered as hours worked.

The case concerns a German employee that, in August 2017, worked 121.75 hours during the first 13 days and then took paid annual leave on the remaining 10 days, corresponding to 84.7 hours of work.

The employee, considering that he had worked overtime - on the assumption that the days of paid annual leave should be considered to determine the number of hours worked - asked to the German Labour Court to order the employer to pay him overtime pay.

In particular, he asked for a 25% surcharge in respect of 22.45 hours, corresponding to the volume of hours allegedly worked more than the 184-hour threshold.

The Court asked the CJEU if Article 31(2) of the [Charter] and Article 7 of Directive [2003/88] preclude a provision of a collective agreement which, for the purposes of calculating whether and for how many hours an employee is entitled to an overtime bonus, takes account only of the hours worked, to the exclusion of hours taken by the employee by way of minimum paid annual leave.

The Court's answer is affirmative. This assumes that, according to Article 7(1) of Directive 2003/88, Member States shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks. The entitlement of every worker to paid annual leave must be regarded as a particularly important principle of EU social law from which there can be no derogation, and which can be implemented by the competent national authorities only within the limits expressly laid down by Directive 2003/88.

Moreover, the right to paid annual leave is also expressly enshrined in Article 31(2) of the Charter.

Consequently, every incentive to refrain from taking leave or to encourage workers to refrain from taking leave is incompatible with the objectives of the right to paid annual leave, that aim to guarantee workers the benefit of an effective rest period to ensure effective protection of their safety and health.

Accordingly, any action or omission on the part of an employer which has a potentially dissuasive effect on a worker's entitlement to paid annual leave is also incompatible with the purpose of the right to paid annual leave.

This decision is of considerable importance for employers, who will have to take it into account when organising the working time of their employees.