Payment of Holidays during Third Year of Illness

Under European jurisprudence, holidays shall be paid out according to the wage the employee would have received if he/she would have normally worked. The fact that the employee would not have received any wages if he would not have taken the holidays -since it involved taking holidays during the third year of illness, in which case the employee is no longer entitled to wages- is actually irrelevant.

An employee of a bank had become incapacitated for work due to illness.
After his labour incapacity had lasted for 104 weeks, the UWV granted the employee a WGA benefit. As a self-insurer, the bank had to pay the WGA benefit itself. The employee was considered to be fully incapacitated for work. Pursuant to the CLA, an employee who is fully but not permanently incapacitated for work will remain employed by the employer and will be entitled, among other things, to a supplement to the WGA benefit of up to 75% of the wages. The CLA also stipulates that the same rules for accruing and taking holidays will apply to an incapacitated employee and to those who are not incapacitated.
During the third year of illness, the employee asked for payment of nearly 500 holiday hours. When the bank failed to do so, he said that he wanted to take his holidays so that they could be paid out. A bit later, the bank stated that the employee was no longer entitled to the holidays because they had already been taken. According to the bank, payment of the holidays taken was inappropriate, since during his holiday the employee had received what he would have received if he had not taken a holiday.

Then the employee claimed payment of the holidays from the Sub-district Court.
The Sub-district Court supported the bank's statement that, for taking holidays, the employee should be put in the position he would have been in if he had not taken holidays and that the employee was not entitled to payment of holidays since he would not have been entitled to wages without taking the holidays either.
Yet, the Sub-district Court granted the claim because the situation should be regarded as synonymous with the situation on termination of the employment contract, in which case the employee is entitled to payment of holidays.
The bank disagreed with the decision.
On appeal, the bank argued that the employment contract had not been terminated and that the situations could not be equated. Since the holidays had already been taken, there was nothing left to be paid, according to the bank. The Court assumed that the holidays had been taken. Thus, the statutory prohibition on paying holidays during the employment was irrelevant, according to the Court of Appeal. The Court deduced from case law of the Court of Justice of the European Union that, when a financial payment for the holidays is made, the employee should be put in the same position as if he had worked. Therefore, according to the Court of Appeal, the holidays have to be paid according to the full, regular wages.

The bank had also argued that the holiday payment should be deducted from the WGA benefit and from the supplement to the WGA benefit. But according to the Court, there was no legal basis to do this. According to the Court, in any case, the provision in the law that enables deduction of benefits under statutory insurance policies from wages does not provide this basis, if only, because this provision only applies during the first two years of illness.
The Court of Appeal granted the employee's claim.

Under the law, financial payment of holidays is only permitted at the end of the employment contract. Since the CLA in the above case stipulated that the employment contract would not be terminated, it was the employee who undertook to take the holidays.
There is no legal provision specifying the amount according which holidays should be paid. Usually this is not at issue, of course, but this changed, once the bank started to make the comparison with the wage that the employee would have received if he had not taken a holiday. The Court of Appeal rightly states that the holidays must be paid out, invoking the explanation given by the European Court to the European Working Hours Directive, underlying the holiday arrangement in Dutch law. The Court of Appeal could have reached the same conclusion by a different reasoning. The Court of Appeal could also have argued that the employee had worked extra hours in the past, by not taking paid holidays, for which payment was still due.
The settlement of the payment of the holidays with the WGA benefit and the supplement to the WGA benefit, as put forward by the bank, has not entirely correctly been judged by the Court of Appeal. As for the settlement of the paid holidays with the supplement to the WGA benefit, the Court rightly pointed to the lack of a legal basis. The provision in the Civil Code referred to by the Court of Appeal concerns the settlement of the WGA benefit against the wage and not the settlement of the wage against the WGA benefit, as advocated by the bank. The fact that the first two years of illness had passed is, therefore, irrelevant.
When it comes to the settlement of paid holidays with the WGA benefit, the Court of Appeal should have declared itself incompetent since it is for the Administrative Court to assess whether the payment of holidays had generated wages that, under the WIA, should have been settled with the WGA benefit.