ECJ ruling on accruing annual leave during unlawful dismissal proceedings

At a glance

• The European Court of Justice (ECJ) ruled that employees will continue to accrue holiday when they are in the proceedings for an unfair dismissal. 
• The ECJ justify its ruling by arguing that an employee is unable to work in this period, solely because of the dismissal. 

The ECJ ruled, in a case brought by the Supreme Court of the Czech Republic, that employees will continue to accrue holiday entitlement during the period in which proceedings are taking place for an unfair dismissal claim, if the dismissal is considered invalid. The ECJ argues that the period of dismissal proceedings should be treated as working time for the purpose of holiday entitlement in the event of unlawful dismissal. The employee is unable to work solely because of the dismissal, which is the employer's fault. Holiday entitlement therefore arises for this period.

The ruling further increases the employer's costs in the event of a unlawful dismissal. The employee will use the accrued holiday if reinstated, or the accrued holiday will have to be paid out to the employee in connection with the employment termination.