23 January 2017

The Danish state is liable in damages for lack of replacement holiday 

The Supreme Court has ruled that the Danish state is liable in damages for not having made the Holiday Act consistent with the Working Time Directive fast enough in relation to sickness during holiday. However, the Supreme Court ruled in favour of the Danish state as the Supreme Court found that the state was not liable in damages at the time of the employee's sickness during the summer holiday 2010.

RIGHT TO REPLACEMENT HOLIDAY UNDER THE WORKING TIME DIRECTIVE

It appears from the Directive that all employees must be entitled to minimum four weeks of paid holiday each year. In case C-277/08 (Pereda), the European Court of Justice ruled that the right to four weeks' holiday must be construed in the way that if an employee is reported sick during a planned holiday, the employee will be entitled to replacement holiday. The European Court of Justice did not limit the right to replacement holiday to the situation where the sickness starts before the holiday begins.

This was not consistent with the previous Danish Holiday Act, which only entitled the employee to replacement holiday if the employee got sick before the holiday began. If the employee got sick during the holiday, this was the employee's own responsibility.

Based on the Pereda ruling, a working group was set up, and in September 2010, it published a report concluding that the previous Danish scheme was presumably not in accordance with EU law. Despite the report's conclusions, a bill to amend the Holiday Act was not introduced until January 2012 as the government waited for the ruling of a pending action. The new rules on the right to replacement holiday in case of sickness during holiday came into force on 1 May 2012.

THE SPECIFIC CASE

An employee got sick during his holiday in July 2010 and therefore requested a replacement holiday. The employer rejected the request as the Holiday Act applicable at that time did not prescribe such right. The employee therefore chose to bring legal action against the Danish state.

The employee claimed that the Danish state was liable in damages for the employee's lack of right to replacement holiday as the state had not changed the Holiday Act to make it consistent with the European Court of Justice's construction of the Directive based on the Pereda ruling.

THE SUPREME COURT: THE ACT SHOULD HAVE BEEN CHANGED EARLIER

In general, the Supreme Court found that a member state may be liable in damages for a failure to implement EU law if the violation is sufficiently serious.  

When assessing whether a violation is sufficiently serious, it must be assessed whether the member state has clearly and grossly violated its discretionary powers. In this connection, the Supreme Court emphasises that if a member state continues a specific conduct despite a ruling in a fundamental case, which determines that the disputed conduct is contrary to EU law, this constitutes a sufficiently serious violation of EU law.

The Supreme Court found that it was well-founded to set up a working group to assess the importance of the European Court of Justice's case law as to the wording of the Holiday Act as the Pereda ruling had created doubt as to the Danish Holiday Act's consistency with article 7 of the Directive, and the Danish authorities therefore had to clarify as quickly as possible the need for amending the Danish Holiday Act and to implement any required amendments. But the Supreme Court also found that it was the responsibility of the Danish authorities in immediate continuation of the report from September 2010 to bring the Holiday Act in accordance with the Directive as construed in the Pereda ruling. As the above required a simple amendment of the act, this amendment should have come into force on 1 January 2011 and not on 1 May 2012.

Consequently, the Danish state had disregarded EU law in a sufficiently serious manner, and the Supreme Court found that the Danish state was liable in damages by not having implemented - with effect from 1 January 2011 - the possibility of replacement holiday in case of sickness during holiday.

However, the employee in question was not entitled to damages as the holiday and sickness took place in the summer of 2010 and therefore before the state's conduct was considered to give rise to liability.

COMMENTS

The ruling is interesting because the Supreme Court makes general considerations as to when a disregard may be considered sufficiently serious for a member state to be liable.

Further, the Supreme Court found that the Danish state was in fact liable in damages for the failure to implement the rules on replacement holiday as the authorities had not made the Danish rules consistent with EU law fast enough. Consequently, there may be a basis for other employees, who got sick during holiday taken in the period 1 January 2011 to 1 May 2012, to make claims against the state for lack of implementation. But please note that, in most cases, these claims would be time-barred.

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