Does § 10 (2) of the Leave Entitlement Act conform to Union law?

Oct 12, 2020 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (OGH) has asked the European Court of Justice (ECJ) for a preliminary ruling on the question of whether § 10 (2) of the Austrian Leave Entitlement Act (Urlaubsgesetz, UrlG) is compatible with Union law.

Pursuant to § 10 (1) UrlG, the employee is entitled to compensation for the holiday year in which the employment relationship ends at the time of termination of the relationship as compensation for the holiday corresponding to the length of service in this holiday year in relation to the ratio of the total holiday year. Any annual leave already taken is to be credited against the aliquot amount of leave. Pursuant to § 10 (1) UrlG, holiday pay for annual leave taken in excess of the aliquot amount is not to be refunded, except in the event of termination of the employment relationship through unjustified premature resignation or culpable remission. A compensation allowance is not due if the employee leaves prematurely without good cause.

In the present case, an employee resigned from the employment relationship without justification. At the time of leaving, he had an outstanding vacation entitlement. With reference to § 10 (2) UrlG, the employer refused to pay a holiday compensation. The employee then filed a claim for holiday compensation plus interest. In his opinion, § 10 (2) UrlG is in violation of Article 31 (2) of the Charter of Fundamental Rights of the European Union (CFR) and Article 7 of the Working Time Directive 2003/88/EC and was therefore not applicable.

The defendant employer requested that the action be dismissed on the ground that the provision does not conflict with Union law. The lower courts dismissed the action and took the view that § 10 (2) UrlG is indeed in conformity with Union law. The plaintiff's appeal is directed against this decision.

The OGH suspended the proceedings and submitted to the ECJ the question whether § 10 (2) UrlG is unobjectionable under Union law. In the event of a negative answer, it is requested to answer the question whether and how the employer should use up the leave in the event of an unjustified departure of the employee which could not be foreseen by the employer.

OGH 9 ObA 137/19s (29.04.2020)