Same holiday pay for all – ECJ strengthens the rights of temporary agency workers

On 12 May 2022, the European Court of Justice (ECJ) handed down its preliminary ruling in a case involving two temporary agency workers in Portugal (Case No. C-426/20). They had been assigned to the user undertaking for two years based on temporary employment contracts. At the end of the assignment, the employees still had paid leave and holiday pay owed to them. A dispute arose between the user company and the employees about which rules applied to this settlement: a special rule for temporary agency workers which would grant the workers fewer days of paid holiday and less holiday pay in the specific circumstances, or the general statutory leave rules for employees in Portugal, which would grant the workers the same level of leave as they would have received had they been employed directly by the user undertaking.

While the special rule for temporary agency workers calculates leave and holiday pay on a pro rata basis depending on the duration of the contract, the general statutory rule grants a full year’s leave for each year of employment that commences at the start of the calendar year, as well as pro rata leave where the employment relation-ship starts or ends during the year. The user undertaking took the view that the special rule for temporary agency workers applied and sought to compensate only the lower level of leave and holiday pay accordingly. The national court sought a preliminary ruling from the ECJ on whether the special rule for temporary agency workers was contrary to Directive 2008/104/EC of the European Parliament and of the Council of 19 November 2008 on temporary agency work (Directive 2008/104/EC).

The ECJ held that the equal treatment principle established in article 5 of Directive 2008/14/EC applies, which provides that at least those substantial terms and condi-tions of employment that would apply had the workers been employed directly by the user undertaking will apply, including the payment in lieu of paid annual leave that is not taken and the payment of holiday pay. Accordingly, a national rule, which would pay temporary agency workers less than directly employed employees, will be contrary to Directive 2008/104/EC.

This ruling should be interesting for temporary agency workers working in Germany. Under § 7 (4) of the Federal Leave Act (Bundesurlaubsgesetz, BUrlG), leave not taken by the end of the employment relationship will be compensated where could not be taken because the employment relationship ended. In light of the judgment of the ECJ, the equal treatment principle will need to be taken into account when calculating any payment in lieu of leave as well as any holiday pay in accordance with § 11 (1) of the BUrlG. Temporary agency workers must at least be put in the same position as they would have been in, had they been employed directly by the user undertaking during the period of employment.

Julia Meler