The EU annual leave entitlement under Directive 2003/88/EC guarantees every worker a minimum of 4 weeks (20 days) of paid annual leave per year — the entitlement cannot be replaced by a payment in lieu, accrues during periods of illness and parental leave, and must be actually taken by the worker. The Directive sets the floor, and most EU member states provide more generous entitlements through national law or collective agreements. The CJEU has interpreted the Directive strictly to ensure the leave is a genuine rest period, not a financial transaction.
This guide covers the Directive’s annual leave provisions, the CJEU rulings that shape the entitlement, accrual and carry-over rules, and how member states implement the minimum.
Key takeaways
- Every worker is entitled to 4 weeks (20 days) of paid annual leave per year under Article 7 of Directive 2003/88/EC.
- Leave cannot be replaced by payment in lieu — the worker must actually take the leave (CJEU Schultz-Hoff ruling).
- Leave accrues during illness and other absences — the employer cannot reduce the entitlement because the worker was sick.
- Carry-over is permitted only in exceptional circumstances (e.g. long-term illness) and cannot become permanent.
- Member states can and do provide more — the 4-week minimum is rarely the actual entitlement in practice.
The Directive’s provisions
Article 7 of Directive 2003/88/EC is the operative text:
“Every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and/or practice.”
Key elements:
- Minimum 4 weeks: 20 days for a 5-day working week, 24 days for a 6-day week
- Paid: The worker must receive normal or average remuneration during leave
- Conditions: Member states can set conditions for entitlement (e.g. qualifying periods, notice requirements) but must not make the entitlement illusory
- Cannot be replaced: The leave must be taken; a payment in lieu does not satisfy the Directive
CJEU rulings on annual leave
The CJEU has issued several landmark rulings that shape the interpretation of the Directive:
Schultz-Hoff v. Deutsche Rentenversicherung (C-350/06, 2009)
The CJEU held that:
- Annual leave is a fundamental right of EU law
- The right to leave cannot be replaced by a payment in lieu during employment
- On termination, accrued but untaken leave must be paid out in full
- Workers who are ill during their leave period are entitled to reschedule the leave
This ruling is the cornerstone of EU annual leave law — it establishes that leave is for rest, not for financial compensation, and that employers must ensure leave is actually taken.
Commission v. United Kingdom (C-212/11, 2013)
The CJEU held that:
- The UK’s practice of paying a “rolled-up” holiday pay (including a 12.07% holiday pay element in hourly wages) was not compliant with the Directive
- Workers must receive their normal remuneration during leave, not an averaged or rolled-up figure
- The UK’s practice of requiring workers to accrue leave before taking it was also non-compliant
King v. The Sash Window Workshop (C-214/16, 2018)
The CJEU held that:
- Where a worker is prevented from taking leave due to the employer’s failure to inform them of their right, the worker can carry over leave indefinitely
- On termination, the worker is entitled to payment in lieu of all accrued untaken leave
- The employer bears the burden of proving it enabled the worker to take leave
Max-Planck-Gesellschaft v. Schulte (C-569/16, 2018)
The CJEU confirmed that:
- National laws that automatically extinguish untaken leave at the end of a carry-over period are not compliant unless the employer has demonstrably encouraged the worker to take leave
- The employer must proactively inform the worker of their leave balance and encourage them to take it
Accrual during illness and absence
The CJEU has consistently held that annual leave accrues during periods of illness:
- A worker who is ill during a leave period is entitled to reschedule the leave for a later date
- A worker who is ill throughout the leave year retains the right to the full annual entitlement
- The employer cannot reduce the leave entitlement because the worker was sick
This principle also extends to maternity leave, parental leave, and other forms of statutory leave — the worker accrues annual leave during these periods.
Carry-over and expiry
The Directive allows member states to set rules on carry-over and expiry, subject to the CJEU’s interpretation:
| Scenario | Carry-over permitted? |
|---|---|
| Worker unable to take leave due to illness | Yes — leave must be rescheduled |
| Worker unable to take leave due to employer’s failure | Yes — leave carries over indefinitely |
| Worker able to take leave but chose not to | Only if employer actively encouraged leave-taking |
| End of employment | Yes — all accrued untaken leave must be paid out |
The employer bears the burden of proving it encouraged the worker to take leave. Failure to do so means the worker can carry over leave indefinitely and claim payment on termination.
Member state implementation
The 4-week minimum is rarely the actual entitlement in practice:
| Country | Statutory minimum | Common actual entitlement |
|---|---|---|
| Germany | 20 days | 28–30 days (collective agreements) |
| France | 25 days (5 weeks) | 25–30 days |
| Netherlands | 20 days | 25–30 days (CAO agreements) |
| Spain | 22 days | 22–30 days |
| Italy | 20 days | 26–30 days (national contracts) |
| Ireland | 20 days | 20–25 days |
| Belgium | 20 days | 20–30 days |
| Sweden | 25 days | 25–30 days |
The gap between the Directive’s minimum and the actual entitlement in most member states is significant — the Directive is a floor that national law and collective agreements build upon.
Employer obligations
Six core duties apply to EU annual leave management:
- Grant at least 4 weeks of paid annual leave per year
- Pay normal remuneration during leave — not a reduced or averaged rate
- Encourage leave-taking — proactively inform workers of their entitlement and encourage them to take it
- Allow carry-over in exceptional circumstances — but do not allow indefinite accumulation
- Pay out accrued leave on termination — at the worker’s normal or average rate
- Apply the correct national law — the law of the country where the worker performs the work
Common pitfalls
1. Paying in lieu of leave during employment
The CJEU requires that leave is actually taken. Paying in lieu of leave during employment is a breach of the Directive.
2. Not encouraging leave-taking
The employer must proactively encourage workers to take their leave. Failure to do so means the worker can carry over leave indefinitely.
3. Reducing leave for illness
Annual leave accrues during illness. The employer cannot reduce the leave entitlement because the worker was sick.
4. Automatically extinguishing leave
National laws that automatically extinguish untaken leave at the end of a carry-over period are non-compliant unless the employer can prove it encouraged leave-taking.
5. Not paying out accrued leave on termination
All accrued but untaken leave must be paid out on termination at the worker’s normal or average rate.
For more EU context, see our guide to EU Working Time Directive and EU sick leave directive.
A leave management system that tracks annual leave accrual, ensures leave is actually taken, and processes carry-over and payment on termination keeps your EU annual leave compliance aligned with the Directive and CJEU rulings.
Frequently asked questions
How much annual leave are EU workers entitled to?
Every worker is entitled to at least 4 weeks (20 days) of paid annual leave per year under Directive 2003/88/EC. Most member states provide more through national law or collective agreements.
Can an employer pay in lieu of leave during employment?
No. The CJEU has consistently held that annual leave must be actually taken. A payment in lieu does not satisfy the Directive’s requirements.
Does annual leave accrue during illness?
Yes. Annual leave accrues during periods of illness and other absences. The employer cannot reduce the leave entitlement because the worker was sick.
What happens to untaken leave on termination?
All accrued but untaken leave must be paid out on termination at the worker’s normal or average rate.
Can leave be carried over to the next year?
Carry-over is permitted only in exceptional circumstances (e.g. long-term illness, employer’s failure to enable leave-taking). Indefinite carry-over is not permitted.
Sources
- Directive 2003/88/EC — Article 7
- CJEU — C-350/06 (Schultz-Hoff)
- CJEU — C-214/16 (King)
- CJEU — C-569/16 (Max-Planck)
- European Commission — Working Conditions
Last updated: 26 July 2026. This article is general guidance, not legal advice. Annual leave entitlements vary by member state — confirm current requirements with the national labour authority in the applicable country.