State not employer to cover cost of 'dam burst' of holiday entitlements

In the previous newsletter we reported that a 'dam burst' of employees' holiday entitlements was on the horizon. Some months ago, Utrecht's subdistrict court ruled that allowing a period of sickness absenteeism to have an influence on the holiday allowance is contrary to what is expected of a 'good employer'. More recently, the Amsterdam Court of Appeal handed down a judgement that an employee who is in dispute with his employer cannot based their case on the European Directive nor on the 'good employer' argument. 

Accumulation and take up of holiday entitlement during sickness leave has been a frequent topic of discussion over recent months. Recent European and Dutch case law indicates that Dutch legislation is in conflict with the European Working Time Directive. As a result, the Dutch state is possibly liable for any related damages.

Legal situation
Under Dutch law, employees who are unfit for work for a lengthy period accumulate holiday entitlement only during the final six months of their absence. Sick employees are however permitted to take holidays, but these days do not have to count against their overall allowance. To prevent a 'dam burst' of holiday entitlements and to limit the associated costs of occupational disability faced by businesses, Dutch legislators have incorporated limitations on the accumulation of leave in the Dutch Civil Code.

European Directive
Early in 2009 the European Court of Justice ruled that on the basis of the European Working Time Directive every employee has the right to a minimum number of days leave, irrespective of their health status. The problem is that while national governments are required to transpose the Directive into domestic legislation, their failure to do so does not permit citizens to lodge claims on the basis of the European Directive. While courts in the Netherlands have the duty to, as far as possible, conform to European regulation in their interpretations, judges may not challenge a national regulation. As was reported in the last newsletter, the subdistrict court in Utrecht attempted to circumvent this by proceeding on the basis of what is expected from a 'good employer' rather than to make a direct reference to the European Working Time Directive.

Amsterdam Court of Appeal
In a ruling contrary to that in Utrecht, the appeal court in Amsterdam recently ruled that Dutch judges must apply Dutch law and that an employee who is involved in a dispute with their employer cannot call upon the provisions of the European Directive. The appeal court explicitly ruled that it is up to legislators to bring regulations into line with the Directive. It appears almost inevitable, therefore, that an amendment will be required in order to bring the Civil Code into conformity with the European Directive.

Conclusion
Until Dutch law is brought into line with the European Directive - a process which may well take some time - an employee in question should make the Dutch state liable, and not you as an employer, on the grounds that the state failed to correctly transpose the Directive into domestic law. We will have to wait and see whether an employee who is denied their rights is prepared to pursue such a course of action.