Judgment;Summary — ECLI:EU:C:2021:960
Date: 2021-11-25
Language of the case: German
Court formation: Seventh Chamber
Subject matter: Approximation of laws;Social Policy;Free movement of workers;Fundamental rights;Charter of Fundamental Rights
Procedure: Reference for a preliminary ruling
Origin: Austria

Summary C-233/20 — 1 
Case C-233/20 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged: 
4 June 2020 
Referring court: 
Oberster Gerichtshof (Austria) 
Date of the decision to refer: 
29 April 2020 
Applicant and appellant in the appeal on a point of law: 
WD 
Defendant and respondent in the appeal on a point of law: 
job-medium GmbH in liquidation 
  
Subject matter of the main proceedings 
Action for payment of an allowance in lieu of annual leave of EUR 322.06 plus 
interest 
Subject matter and legal basis of the reference 
Interpretation of EU law, in particular Directive 2003/88/EC, Charter of 
Fundamental Rights, Article 267 TFEU 
Questions referred for a preliminary ruling 
I.1 Is a provision of national law under which no allowance in lieu of annual leave 
is payable in respect of the current (last) working year, where the worker 
unilaterally terminates (‘withdraws from’) the employment relationship early 
without cause, compatible with Article 31(2) of the Charter of Fundamental 
Rights of the European Union (2010/C 83/02) and Article 7 of the Working Time 
Directive (Directive 2003/88/EC)? 
EN 
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1.2. If the answer to that question is in the negative: 
1.2.1. Is it necessary to verify additionally if the worker was unable to use up his 
annual leave? 
1.2.2. If so, what are the criteria for that verification? 
Provisions of Community law cited 
Charter of Fundamental Rights of the European Union, in particular Article 31 
Directive 2003/88/EC of the European Parliament and of the Council of 
4 November 2003 concerning certain aspects of the organisation of working time 
(‘Directive 2003/88’), in particular Article 7 
Provisions of national law cited 
Urlaubsgesetz (Law on Annual Leave), BGBl 1976/390, in particular 
Paragraphs 2, 4, 7, 10, 12 
Brief summary of the facts and procedure 
1 The applicant was employed by the defendant from 25 June 2018 to 9 October 
2018. On 9 October 2018, he terminated the employment relationship through 
unjustified early withdrawal. The right to annual leave acquired for the period of 
employment was 7.33 working days, of which he had taken four days. Therefore, 
he had 3.33 working days of remaining annual leave on the date that the 
employment relationship ended. The defendant, citing Paragraph 10(2) of the Law 
on Annual Leave, under which no allowance in lieu of annual leave is payable in 
the event of unjustified withdrawal on the part of the worker, did not pay the 
applicant any allowance in lieu of annual leave. 
2 The court of first instance dismissed the action. The reasons it gave for that 
judgment were, essentially, that it cannot be inferred from Article 7(2) of 
Directive 2003/88 that a worker has a right to an allowance in lieu of annual leave 
irrespective of how the employment relationship employment is terminated. Any 
such approach would be disproportionate. It would have an unreasonable adverse 
impact on the employer. In the event of unjustified early withdrawal on the part of 
the worker, since the employment relationship ends immediately, the employer 
can no longer ensure that the worker uses up his right to annual leave and put him 
in a position actually to exercise that right. The restriction on the right in 
Paragraph 10(2) of the Law on Annual Leave, under which no allowance in lieu of 
annual leave is payable in the event of unjustified withdrawal on the part of the 
worker, is a practice adopted in the Austrian legal system for the purposes of 
Article 7(1) of Directive 2003/88. 
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3 The appeal court upheld that decision. It held that it does not follow from the case-
law of the Court of Justice of the European Union that the loss of the right to an 
allowance in lieu of annual leave where the employment relationship is terminated 
through withdrawal on the part of the worker without cause, as enacted in 
Paragraph 10(2) of the Law on Annual Leave, is contrary to Article 7(2) of 
Directive 2003/88 and Article 31(2) of the Charter. On the one hand, the Court 
pointed out in more recent case-law that Article 7(2) of Directive 2003/88 lays 
down no condition for entitlement to an allowance in lieu other than that relating 
to the fact, first, that the employment relationship has ended and, second, that the 
worker has not taken all annual leave to which he was entitled on the date that that 
relationship ended. The Court also found that the reason that the employment 
relationship ended does not affect the right to an allowance in lieu. On the other 
hand, the Court has not yet addressed a situation in which the employment 
relationship was terminated through unjustified early withdrawal on the part of the 
worker. 
4 According to the appeal court, termination of an employment relationship with a 
right to remaining annual leave is not in fact the only condition for the right to 
compensation. The Court has ruled that a worker released from work on full pay 
prior to entry into retirement has no right to compensation for that period of time. 
In Kreuziger and MPG, the Court held explicitly that it cannot be inferred from its 
case-law that the worker is still entitled to an allowance ‘irrespective of the 
circumstances underlying the worker’s failure to take paid annual leave’. Article 7 
of Directive 2003/88 does not preclude ‘national legislation which lays down 
conditions for the … right to paid annual leave, including even the loss of that 
right …, provided, however, that the worker who has lost his right to paid annual 
leave has actually had the opportunity to exercise the right’. This is in keeping 
with those judgments in which, referring to the fact that the onset of incapacity to 
work due to illness cannot be foreseen, the Court has admitted the right to 
compensation where annual leave could not be used up on account of that illness, 
but denied any such right where the leave could not be used up because the 
worker had been released from work. 
5 According to the appeal court, the Court had established a more refined system in 
Kreuziger and MPG. That system was based initially on the classification of the 
worker’s right to paid annual leave as an important principle of EU social law. 
The right to annual leave seeks to enable workers both to rest from carrying out 
the work they are required to do under their contracts of employment and to enjoy 
a period of relaxation and leisure. That is incompatible with the introduction of 
any incentive not to take leave or encouraging workers not to take leave. The right 
to compensation at the end of the employment relationship might be one such 
incentive for workers. 
6 The employer is required to ensure, specifically and transparently, that the worker 
is actually given the opportunity to take the paid annual leave to which he is 
entitled. To that end, the employer must encourage the worker, formally, if need 
be, and in accordance with the standards developed by the Court, to use up his 
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annual leave, while informing him, accurately and in good time, that if it will be 
lost otherwise. The burden of proof that it exercised all due diligence in that 
respect falls on the employer. If the employer exercised the due diligence required 
of it but the worker deliberately did not use up his annual leave, Article 7 of 
Directive 2003/88 does not preclude the loss of an allowance in lieu of annual 
leave not taken. 
7 The employer is always able to exercise due diligence where it can foresee when 
the employment relationship or reference period will end, for example in the case 
of entry into retirement (King, Maschek) or expiry of a fixed term (MPG), as well 
as where the employment relationship is terminated, whether by the employer or 
the worker, subject to a period of (commensurately long) notice. If the employer 
cannot foresee when the employment relationship will end, it has limited 
opportunity to encourage the worker actually to exercise his right to annual leave. 
As, according to Paragraph 4(3) of the Law on Annual Leave, a minimum of six 
working days must be taken where the annual leave is taken in parts, the employer 
has no opportunity for effective encouragement where less annual leave remains. 
8 According to the appeal court, precisely in the event that the worker withdraws 
without cause, the employer is not able to foresee the end of the employment 
relationship. Therefore, as a rule, it cannot be accused of any failure to exercise 
due diligence. Conversely, the worker is responsible for any unlawful conduct 
and, already pursuant to the general principles of law, he cannot derive any right 
from such conduct. The purpose of Paragraph 10(2) of the Law on Annual Leave 
is also to prevent workers from acting unlawfully. In any event, an employer 
cannot be criticised for failing to provide the worker (preventively) with 
information on the consequences of his unlawful conduct. Moreover, the right to 
an allowance in lieu of annual leave even in the event of early withdrawal without 
cause is liable to encourage workers to refrain deliberately from taking annual 
leave and subsequently to withdraw from the employment relationship without 
cause in order to deny the employer the opportunity to demand that the worker use 
up his annual leave and thereby to increase his remuneration upon termination. 
This would conflict with the purpose of annual leave. It is true that the employer is 
unable to foresee that the employment relationship terminates also in the event of 
the worker’s death. However, that is not the same as unjustified withdrawal, as it 
is an imponderable event that is beyond the control of both the worker and the 
employer. 
9 The Supreme Court has to rule on the applicant’s appeal on a point of law against 
the judgment of the appeal court upholding the judgment delivered at first 
instance. 
Principal arguments of the parties to the main proceedings 
10 By his action, the applicant seeks payment of an allowance in lieu of annual leave 
of EUR 322.06 plus interest. The applicant himself puts forward that he 
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terminated the employment relationship through unjustified early withdrawal. At 
the hearing, he argued that Paragraph 10(2) of the Law on Annual Leave, under 
which no allowance in lieu (of annual leave) is payable if the worker withdraws 
early from the employment relationship without cause (‘unjustified withdrawal’ or 
‘withdrawal without cause’), infringes Article 31(2) of the Charter of 
Fundamental Rights of the European Union (‘the Charter’) and Article 7 of 
Directive 2003/88/EC and therefore does not apply. 
11 The defendant contends, with reference to Paragraph 10(2) of the Law on Annual 
Leave, that the action should be dismissed and that that provision does not conflict 
with EU law. 
Brief summary of the basis for the reference 
Observations on the Law on Annual Leave: 
12 Under Paragraph 10(1) of the Law on Annual Leave, any annual leave not taken 
on the date that the employment relationship ended is to be compensated by an 
allowance in lieu of the leave corresponding to the period of employment in that 
leave year compared to the full leave year. Paragraph 10(2) of the Law on Annual 
Leave lays down an exception where the worker withdraws early without cause 
and therefore terminates the employment relationship. 
13 ‘Withdrawal’ is the early termination of the employment relationship by means of 
a unilateral declaration of intent by the worker which must be received (but, as it 
is unilateral, need not be accepted). Where the worker has cause for withdrawal, it 
is referred to as justified withdrawal (with cause); otherwise, it is referred to as 
unjustified withdrawal (without cause). One important example of cause for 
withdrawal is where the worker cannot continue to work without damaging his 
health or where the employer is guilty of violence, acts that offend public 
morality, or serious defamation of the worker or his relatives. Generally speaking, 
cause exists where, at the time of withdrawal, the worker cannot reasonably be 
expected to maintain the employment relationship, not even for the period of 
notice. The employment relationship is then also terminated through withdrawal 
where withdrawal was unjustified. However, a worker who withdraws without 
justification is in breach of his contract with the employer. 
14 According to Paragraph 10(2) of the Law on Annual Leave, only unjustified 
withdrawal results in the loss of the allowance in lieu of annual leave provided for 
in Paragraph 10(1) of the Law on Annual Leave. 
15 Paragraph 10(2) of the Law on Annual Leave is a punitive provision. It is intended 
to discourage workers from terminating their contracts early without justification 
by removing their right to an allowance in lieu of annual leave should they do so. 
The fact that an employer which loses a worker through unjustified withdrawal on 
the part of the worker need not compensate him for any (part of the) annual leave 
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not taken in the current year is simply a reflex effect. It provides the employer 
with a degree of financial relief in the event of unjustified withdrawal, which will 
put the employer in an unexpected, and hence incalculable, situation often to its 
detriment. 
The position under EU law 
16 Under Article 31 of the Charter, the right of every worker to paid annual leave is 
one of the fundamental rights of the European Union and it is legislated in greater 
detail in Article 7 of Directive 2003/88. Directive 2003/88 treats entitlement to 
annual leave and to payment on that account as being two aspects of a single right. 
It also governs the right to an allowance in lieu of annual leave not taken on the 
date that the employment relationship ended. 
17 The Court expressly noted in the judgment in Case C-341/15, Maschek v Stadt 
Wien that ‘Article 7(2) of Directive 2003/88, as interpreted by the Court, lays 
down no condition for entitlement to an allowance in lieu other than that relating 
to the fact, first, that the employment relationship has ended and, second, that the 
worker has not taken all annual leave to which he was entitled on the date that that 
relationship ended’ (paragraph 27). 
18 The Court concluded from this that ‘it follows, in accordance with Article 7(2) of 
Directive 2003/88, that a worker who has not been able to take all his entitlement 
to paid annual leave before his employment relationship has ended, is entitled to 
an allowance in lieu of paid annual leave not taken’. The Court further expressly 
noted that, in that respect, the reason for which the employment relationship has 
ended is not relevant (paragraph 28), from which it concluded that ‘the fact that a 
worker terminates, at his own request, his employment relationship has no bearing 
on his entitlement to receive, where appropriate, an allowance in lieu of paid 
annual leave which he has not been able to use up before the end of his 
employment relationship’ (paragraph 29). 
19 According to the judgment of the Court in Case C-619/16, Kreuziger v Land 
Berlin, ‘it cannot be inferred from the Court’s case-law … that Article 7 of 
Directive 2003/88 should be interpreted as meaning that, irrespective of the 
circumstances underlying the worker’s failure to take paid annual leave, that 
worker should still be entitled to the right to annual leave referred to in 
Article 7(1), and, in the event of the termination of the employment relationship, 
to an allowance by way of substitution therefor, pursuant to Article 7(2)’ 
(paragraph 37). The Court in that judgment held that ‘Article 7 of Directive 
2003/88 must be interpreted as precluding national legislation … in so far as it 
entails that, in the event that the worker did not ask to exercise his right to paid 
annual leave prior to the termination of the employment relationship, that worker 
loses — automatically and without prior verification of whether the employer had 
in fact enabled him, in particular through the provision of sufficient information, 
to exercise his right to leave prior to the termination of that relationship — the 
days of paid annual leave to which he was entitled under EU law on the date that 
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that relationship ended, and, accordingly, his right to an allowance in lieu of paid 
annual leave not taken’ (paragraph 56). 
20 According to the judgment of the Court in Case C-684/16, Max-Planck-
Gesellschaft v Tetsuji Shimizu, ‘any interpretation of Article 7 of Directive 
2003/88 which is liable to encourage the worker to refrain deliberately from 
taking his paid annual leave during the applicable authorised reference or carry-
over periods in order to increase his remuneration upon the termination of the 
employment relationship is … incompatible with the objectives pursued by the 
introduction of the right to paid annual leave’ (paragraph 48). 
21 In its judgment in Case 8 ObA62/18b, the Supreme Court found, with reference to 
several judgments of the Court (Kreuziger v Land Berlin, C-619/16, 
paragraphs 41 and 42; Max-Planck-Gesellschaft v Tetsuji Shimizu, C-684/16, 
paragraph 35; and Schultz-Hoff v Deutsche Rentenversicherung, C-350/06 and 
C-520/06, paragraph 43), that national legislation which attaches ‘terms’ to the 
right to paid annual leave conferred under Directive 2003/88 that include the loss 
of that right at the end of a reference or carry-over period is not precluded and 
may be regarded as permissible, provided the worker actually had the opportunity 
to exercise his right up to that point. 
22 If a provision of national law cannot be interpreted in keeping with Article 7 of 
Directive 2003/88 and Article 31(2) of the Charter, a national court hearing a 
dispute must disregard that provision of national law and ensure that the worker 
receives an allowance in lieu of annual leave not taken. 
Reasons for the questions referred: 
23 The Court has not yet held whether (and, if so, on what conditions) a worker who 
unilaterally terminates his employment relationship early without cause, thus in 
breach of his contract (‘unjustified withdrawal’), has a right under EU law to an 
allowance in lieu of annual leave not taken. Under Austrian law (Paragraph 10(2) 
of the Law on Annual Leave), a worker in that situation has no right to an 
allowance in lieu of annual leave not taken in the current leave year. 
24 In terms of the conformity with EU law of Paragraph 10(2) of the Law on Annual 
Leave, the various schools of thought in Austria can be summarised as follows: 
(a) Mair argues that Paragraph 10(2) of the Law on Annual Leave conflicts with 
the Court’s findings in Maschek. According to Mair, the Court unequivocally 
noted that the only condition for entitlement to an allowance in lieu of annual 
leave not taken provided for in Article 7(2) of the Working Time Directive is the 
fact that the employment relationship has ended and the worker has not taken all 
the annual leave to which he was entitled in natura. The way in which the 
employment relationship ended has no bearing on that entitlement. He notes that, 
however, as Paragraph 10(2) of the Law on Annual Leave lays down as a 
condition for entitlement to an allowance in lieu of annual leave that the 
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employment relationship may not end in a particular way, namely through 
unjustified early withdrawal on the part of the worker, that provision infringes 
Article 7(2) of the Working Time Directive. 
(b) Mayr/Erler refer to the Court’s case-law that the way in which the 
employment relationship ended is not relevant. In their opinion, it necessarily 
follows from this that the loss of the allowance in lieu of annual leave in the event 
of unjustified withdrawal infringes Article 7(2) of Directive 2003/88/EC. They 
conclude that an allowance in lieu of annual leave is payable even in the event of 
unjustified withdrawal, as Paragraph 10(2) of the Law on Annual Leave must be 
disregarded, especially since, according to the Court’s case-law, Article 31(2) of 
the Charter – on which Article 7 of the Directive is modelled – takes precedence. 
(c) Erler took the same view in a previous paper in which, however, he noted 
that failure to comply with EU law should be limited to the four weeks’ minimum 
annual leave entitlement provided for in EU law. 
(d) Reissner considers that Paragraph 10(2) of the Law on Annual Leave gives 
cause for concern under EU law as, according to the Court, it follows from 
Article 7(2) of Directive 2003/88 that workers have a right to compensation for 
annual leave not taken irrespective of how the employment relationship ended. 
(e) Auer-Mayer likewise contends that Paragraph 10(2) of the Law on Annual 
Leave is ‘problematic under EU law’, as the Court has expressly found that, as 
regards the entitlement to an allowance in lieu of annual leave, the reason for 
which the employment relationship has ended is not relevant. 
(f) By contrast, Ludvik considers that Article 7 of Directive 2003/88 does not 
preclude national legislation providing for the loss of the right to an allowance in 
lieu, provided the worker had the opportunity to exercise the right conferred under 
the directive. Ultimately it does not follow from Article 7 of Directive 2003/88, 
according to the Court, that that provision should be interpreted as meaning ‘that, 
irrespective of the circumstances underlying the worker’s failure to take paid 
annual leave, that worker should still be entitled to the right to annual leave 
referred to in Article 7(1), and, in the event of the termination of the employment 
relationship, to an allowance by way of substitution therefor, pursuant to 
Article 7(2)’ (Kreuziger v Land Berlin, C-619/16, paragraph 37). It is therefore 
possible, in conjunction with the derogations provided for by the various Member 
States, to modify the right to leave/an allowance in lieu, within certain limits, to 
the worker’s detriment. In the event of early and unjustified withdrawal on the 
part of the worker, termination takes immediate effect and it is no longer possible 
to use up remaining leave. Therefore, the loss of any allowance in lieu of annual 
leave not taken is permissible. Paragraph 10(2) of the Law on Annual Leave is not 
inconsistent with the Court’s case-law. The loss of the right to an allowance in 
lieu of annual leave under Paragraph 10(2) of the Law on Annual Leave is of a 
punitive nature. However, it only applies where the worker terminates the 
employment relationship early without cause. If the right to an allowance in lieu 
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were not lost, situations could arise in which a worker need not expect any form of 
penalty. But according to the Court’s case-law, any interpretation of Article 7 of 
Directive 2003/88 which is liable to encourage the worker to refrain deliberately 
from taking his paid annual leave in order to increase his remuneration upon 
termination of the employment relationship is incompatible with the objectives 
pursued by the introduction of the right to paid annual leave. 
Considerations 
25 On the one hand, the Court has noted that Article 7(2) of Directive 2003/88 lays 
down no condition for entitlement to an allowance in lieu other than that relating 
to the fact, first, that the employment relationship has ended and, second, that the 
worker has not taken all annual leave to which he was entitled on the date that that 
relationship ended (Maschek v Magistratsdirektion der Stadt Wien, C-341/15, 
paragraph 27). On the other hand, it has ruled that it cannot be inferred from its 
case-law that Article 7 of Directive 2003/88 should be interpreted as meaning that, 
irrespective of the circumstances underlying the worker’s failure to take paid 
annual leave, that worker should still be entitled to the right to annual leave 
referred to in Article 7(1), and, in the event of the termination of the employment 
relationship, to an allowance by way of substitution therefor, pursuant to 
Article 7(2) (Kreuziger v Land Berlin, C-619/16, paragraph 37). The Court also 
took into consideration whether the employer had put the worker in a position to 
use up his leave, for example through the provision of sufficient information 
(Kreuziger v Land Berlin, C-619/16, paragraph 56). Furthermore, according to the 
Court, any interpretation of Article 7 of Directive 2003/88 which is liable to 
encourage the worker to refrain deliberately from taking his paid annual leave 
during the applicable authorised reference or carry-over periods in order to 
increase his remuneration upon the termination of the employment relationship is 
incompatible with the objectives pursued by the introduction of the right to paid 
annual leave (Max-Planck-Gesellschaft v Tetsuji Shimizu, C-684/16, 
paragraph 48).  
26 A worker’s unjustified withdrawal from the employment relationship typically 
occurs suddenly and unexpectedly for the employer. Contrary to all other cases in 
which the employment relationship ends, a worker who withdraws without 
justification deprives himself of the opportunity to use up his annual leave in 
natura. It is only in the event of unjustified withdrawal on the part of the worker 
that the employment relationship is terminated with the worker being also in 
breach of contract. Prior to withdrawal, the worker only has a right to (paid) 
annual leave in natura. Were he to acquire a right to an allowance in lieu of 
annual leave by terminating the employment relationship through unjustified 
withdrawal, that would infringe the general principle of law that no-one should 
acquire a claim through unlawful action. Ultimately, the idea that the primary 
function of paid annual leave is to maintain the worker’s health would be flouted 
if a worker could obtain an allowance in lieu of his right to annual leave as a result 
of withdrawing without justification. Thus, the main question referred to the Court 
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aims to establish whether or not Paragraph 10(2) of the Law on Annual Leave in 
toto gives cause for concern with EU law. 
27 If the Court answers the main question in the negative, the question arises as to 
whether and how the employer should put the worker in a situation to use up his 
annual leave, as required by the Court, where the worker withdraws unexpectedly, 
for the employer, and without justification. Account would also have to be taken 
of the fact that a worker who withdraws without justification has not given a 
period of notice during which often remaining annual leave is or can be used up.