We are nearing the end of the holiday year but what happens to annual leave if your employee hasn’t booked to take it?

Is it lost?

This was the question before the Court of Justice of the European Union (CJEU) in the case of Max-Planck-Gesellschaft v Shimizu 2018.

Mr Shimizu worked at the Max Planck Institute from 2011 to 2013.

During 2011 and 2012 he didn’t take his statutory leave entitlement.

His employer had asked him to do so before the end of the holiday year but didn’t “make him” do so.

Under German law, Mr Shimizu lost the right to carry his statutory holiday into the next leave year.

On leaving his employment, Mr Shimizu claimed unpaid holiday pay.

The CJEU held that a worker who doesn’t exercise their rights to paid annual leave under the WTD can only lose their statutory leave entitlement if the employer has “diligently” told them that the leave will be lost if it’s not taken before the end of the holiday year.

If this doesn’t happen, the employee can carry their untaken WTD holiday over into the next holiday year.

This ruling demonstrates an onus on employers to ensure that enough reminders and opportunity is provided to allow employees to take their holiday entitlement.

The CJEU didn’t expressly define how employers can “diligently” inform employees of their rights however it isn’t enough just to have a contractual clause which states that holiday will be lost if not taken.

In addition to background policies, you will need to proactively issue reminders about the terms, in writing to demonstrate you have done your best.

Importantly, this ruling only applies to the 4-week statutory minimum granted under the WTD.

The worker’s additional 1.6 weeks under the WTR or any additional contractual entitlement can be forfeited.

The only time this does not apply is where the employee has been unable to exercise their holiday rights due to long-term sickness absence, maternity leave and other types of parental leave.

Different rules apply in these situations.