This case concerns, inter alia, the question of when statutory holidays expire (Article 7:640a DCC) or become time-barred (Article 7:642 DCC). The Court of Appeal finds that the employee has accumulated a total of 251.25 days of unused statutory and non-statutory holidays. After payment of 29 days by the employer, there are still 222.25 holidays that remain uncompensated. The employer takes the position that these holidays have expired or become time-barred and that, consequently, the employee is not entitled to any further compensation.
Expiry and limitation period of statutory holidays
Pursuant to Article 7:640a DCC, the entitlement to statutory holidays expires six months after the last day of the calendar year in which such entitlement was acquired, unless, up to that time, the employee was not reasonably able to take holiday. Moreover, Article 7:642 DCC stipulates that, without prejudice to Article 7:640a DCC, a legal claim for the granting of holidays expires five years after the last day of the calendar year in which such claim arose.
With these provisions, the Dutch legislator aims to comply with European legislation and regulations. Based on European legislation, employers have a far-reaching duty of care and – interlinked with this duty of care – a duty of disclosure towards their employees to ensure that the employees use their right to annual leave with retention of salary. In concrete terms, this means that employers must inform employees in a timely and transparent manner about the outstanding holidays and the consequences of not taking those holidays (i.e. the loss of entitlement to these days). If an employee fails to take his or her holiday, without being fully aware of the consequences, then the employer has neglected his duty of care and duty of disclosure towards that employee. As a result, a legal claim for granting the statutory holidays pursuant to Article 7:640 DCC does not expire. Also, in such scenario, the statutory holidays will not become time-barred pursuant to Article 7:642 DCC. From this, the Court concludes that Article 7:642 DCC is not compatible with Article 7 of Directive 2003/88 and Article 31(2) of the Charter.
In this case, the employer did not sufficiently encourage the employee to take holidays and also omitted to sufficiently point out the consequences of not taking holidays. The Court does not accept the employer’s defense that the employee (a lawyer) was aware of the consequences of not taking holiday due to his legal background and that the legal claim for holiday allowance should therefore be dismissed. According to the Court, the presence of such legal knowledge on the part of the employee does not affect the employer’s duty of care and duty of disclosure. The Court therefore allows the employee’s claim for payment of unused holidays. The employee had also accumulated a considerable number of holidays over and above the statutory minimum, but since he correctly interrupted the limitation period, these days must also be paid out.
Employers have a far-reaching duty of care and – interlinked with this duty of care – a duty of disclosure towards their employees, so that employees can actually use their right to annual holiday. Employers not only have to keep records of the holidays enjoyed by their employees, but they must also actively encourage their employees to take holidays. Lastly, employers must timely (and explicitly) point out to employees the consequences of not taking holidays. If an employer fails to do so, he may later be accused of neglecting his duty of care and duty of disclosure towards the employee and may have to pay out a backlog of holidays.