Attention! Important new decision on accrual of paid leave in France
French law has traditionally provided that absences due to non-occupational illness are not taken into account when determining the amount of paid leave accrued, as they do not constitute a period of actual work. Periods of absence due to an occupational accident or illness lasting more than one uninterrupted year are not taken into account either. In broad terms, you do not accrue holiday while off sick unless it is work-related, and even then, for one year only. Where paid leave has not been granted by the employer, the employee’s claim is usually limited to a maximum of 3 years back in time.
However sensible that sounds on the general principle that holiday is a health and safety measure to allow recuperation from work, not absence from work, those provisions are in clear contradiction with European law (the Working Time Directive and Article 31 § 2 of the Charter of Fundamental Rights of the European Union), which — rightly or wrongly — does not contain any suspension of paid holiday accrual during sickness absence. As such that existing position has been regularly challenged by the European Court of Justice. Until now, domestic French law has stood its ground, but the French High Court has now issued several decisions upholding the primacy of European Union law.
In summary:
- Employees whose employment contract is suspended due to illness, whether occupational in cause or not, continue to accrue paid leave rights for the period of absence (Cass. soc. September 13, 2023, n° 22-17.340);
- For employees suffering an occupational accident or illness, the accrual of paid leave is no longer limited to the first year of absence (Cass. soc. September 13, 2023, n° 22-17.638);
- The 3 year limitation period for paid leave compensation only begins to run if the employer has taken the necessary measures to enable the employee to effectively exercise his paid leave rights (Cass. soc. September 13, 2023, n° 22-11.106).
Speaking to the Association des journalistes de l’information sociale in the immediate aftermath of the decisions, Labour Minister Olivier Dussopt said that the issue was being “investigated” by his department, and that a meeting with the President of the Republic and the Prime Minister would be held in the coming weeks. To date, no official measure has been taken yet by the Labour Ministry in response to those decisions, but why the urgent top-level meetings over a simple employment law case?
The combined effect of these decisions is still uncertain, but the real problem is likely to be not the calculation of holiday going forwards but what is now done about the past. We need to keep in mind that case law applies retroactively in France. As a result, because the existing holiday accrual rules referred to in the opening paragraph above were partially declared incompatible with the Working Time Directive, their disqualifying effect must be disregarded to guarantee the legal protection ensured by Article 31 § 2 of the Charter of Fundamental Rights.
The requirement of EU law to provide an effective remedy for breaches of that law would not be met if the employees who were denied any holiday accrual by that traditional approach could only claim loss of holiday (or pay) for a limited window backwards. Therefore it is now possible that employees or former employees could legitimately claim compensation for unaccrued paid leave whilst they were on sick leave, or whilst they were off because of an occupational accident or illness for more than one year uninterrupted, without those claims being limited in time to the last 3 years. However, according to the Senior Advisor to the French High Court, employees could potentially claim paid leave accrued during sick leave since 1st December 2009, the date on which the Lisbon Treaty came into force, giving binding legal force to the Charter, Article 31 § 2 of which has direct effect. It means that if you have had a particularly poor sickness record and had your holiday entitlement limited as a result, you may now seek compensation which healthier and more contributing colleagues cannot. Perhaps no wonder that the matter is being looked at with some trepidation at senior levels in government.
In any case, you should modify your payroll software settings as far as possible, either internally or with your payroll provider, to bring them in line with these new case law rulings, unless your collective bargaining agreement contains provisions in line with European Union law. Companies with operations in France should now think about how to solve the past and protect the future.