ECJ: Entitlement to holiday compensation even in the event of unilateral resignation without cause

According to Austrian holiday law, employees are not entitled to holiday compensation for the current holiday year if they terminate their employment in an unauthorised manner (Section 10 para. 2 UrlG). However, the interpretation and application of the law must also take into account the requirements of EU law, including the fundamental right to paid annual leave laid down in Art. 31 (2) GRC, which is implemented by Art. 7 of the Working Time Directive (Directive 2003/88/EC).

The ECJ has already stated in the decision C-314/15, Maschek v City of Vienna, that employees who were not able to use up all their paid annual leave before the end of the employment relationship are entitled to financial compensation for unused annual leave under Art. 7 of the Working Time Directive. The reason for the employment relationship was terminated is irrelevant. Since then, it has been disputed whether Section 10 (2) UrlG is compatible with Union law.

The Supreme Court made a preliminary ruling in a case (9 ObA 137/19s) in which a claim for leave compensation had been filed after an unauthorised resignation. The ECJ (C 233/20, job-medium GmbH) ruled that Art. 7 of the Working Time Directive in conjunction with Art. 31 (2) GRC precludes a national provision according which does not provide for a holiday replacement benefit for the current working year if the employee unilaterally terminates the employment relationship prematurely without good cause. In such a case, it is not necessary to examine whether it was impossible for the employee to use up the days of leave either.

According to ECJ case law, the fundamental right to paid annual leave is also directly applicable between private individuals. The provision of Section 10(2) UrlG is not (or no longer) applicable, as it is not in line with the fundamental right to paid annual leave enshrined in primary law. Employees are therefore entitled to the holiday replacement benefit for the current holiday year even in the event of resignation without good cause. The reduction of the holiday replacement benefit in the event of unauthorised early resignation during the final settlement of the employment relationship is no longer permissible.

The claim for holiday compensation is subject to the general three-year limitation period. However, shorter expiry periods under collective and individual agreements must be observed and may be held against a (subsequently) asserted claim by the employer (OGH 8 Ob A 11/13w).