On 12 October, the European Court of Justice (ECJ) adopted a landmark decision in Case C-57/22 - Ředitelství silnic a dálnic. The issue, brought before the ECJ by the Supreme Court of the Czech Republic, related to a question whether annual leave accrues to employees who were unlawfully dismissed during the period when they were unable to work because of the unlawful dismissal. The ECJ overthrew the consistent case law of Czech and Slovak courts in this matter. Read on to learn more and to find out the impact of the ECJ ruling on Czech and Slovak employment relationships.
Until the day of the ECJ ruling, Czech and Slovak Courts had consistently ruled that an employee who had been unlawfully dismissed and then reinstated was not entitled to annual leave for the period between the date of the dismissal and the reinstatement on the ground that, during that period, the employee did not actually work for the employer. During the period of unlawful termination, mutual rights and obligations are governed by special provisions in the Labour Code (both countries have similar regulations), which only entitle the employee to salary reimbursement of their average earnings. Specifically, if a court rules that the employment was terminated unlawfully, the employee is entitled to salary reimbursement from the day they inform the employer that they insist on resuming their employment until the day the employer reinstates them or until the employment is lawfully terminated.
However, the ECJ ruled that this interpretation by the Czech and Slovak courts was contrary to EU law. According to the ECJ, the period during which the employment relationship is terminated unlawfully should be treated as time worked for the purposes of annual leave entitlement. Hence, the employee’s vacation entitlement should accrue during the period when the employee cannot work due to unlawful dismissal, even though they are already entitled to pay for that period.
The rationale to adjudicate annual leave to the employee was that the employee did not actually carry out work because of the employer’s fault: without the unlawful dismissal, the employee would have been in a position to work and to enjoy their right to annual leave. The ECJ considered the argument that the employee already received salary reimbursement equal to the employee’s average earnings for the respective period as irrelevant.
Conclusion
Employment disputes both in the Czech Republic and Slovakia can often last for several years, during which employees may accrue a relatively high annual leave entitlement. Employers should therefore be aware of this new ECJ ruling. In our view, this could particularly impact settlement negotiations after a dispute the employer loses. It is possible that employees will request that the settlement offer also reflect reimbursement for accrued and unused annual leave to which they became entitled during the period they could not work because of the unlawful dismissal.
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