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Judgment of the Court of Justice of the EU оn compensation for unused annual paid leave

Judgment of the Court of Justice of the EU оn ...

On 25.06.2020 a Judgment of the Court of Justice of the EU („the Court“) under joint cases C-762/18 and C-37/19 was published. The judgment concerns the right of annual paid leave of an employee, who was unlawfully dismissed and then reinstated back to work. The Court also ruled on the entitlement of the employee to receive a compensation for the unused leave upon a subsequent termination of his/her employment.

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The Court held that national court practice may not allow an employee, who was unlawfully dismissed and then reinstated back to work to be deprived of his/her entitlement to annual paid leave for the period between the date of the unlawful dismissal and the date of returning to work. Further, the Court held that, in case of subsequent termination of employment, it is also inadmissible to deprive the employee from his/her entitlement to receive compensation for unused annual paid leave accrued in that same period.

However, the Court clarified that if the employee started work for another employer within the period he/she was unlawfully dismissed, the employee cannot claim from the initial employer neither annual paid leave entitlement, nor compensation upon termination of employment for the period the individual was employed by another employer.

The Judgment of the Court is contrary to the position on the present matter established in domestic court practice. According to Bulgarian courts, since the employee does not actually work for the employer in the period between the unlawful dismissal and the reinstatement to work, the employee is not entitled to annual paid leave or compensation for unused leave for that period, respectively.

The Judgments of the Court are obligatory for all courts and other institutions in the Republic of Bulgaria. Bulgarian courts will have to hence forth interpret and apply Bulgarian legislation in consonance with the judgement of the Court and acknowledge the entitlement of unlawfully dismissed employees to annual paid leave and compensation for unused annual paid leave.

How can we help?

KPMG team remains at your disposal should you have any questions or need of assistance concerning the impact of the judgment.

© 2020 KPMG Bulgaria EOOD, a Bulgarian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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