Paid leave and sick leave of non-occupational origin: reversal of case law

Wednesday 15 November 2023

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In three major decisions on September 13, 2023, the Social Division of the French Supreme Court (“Cour de cassation”) ruled out the application of the French Labor Code's provisions on the acquisition of paid leave during non-work-related sick leave, in favor of European law. Due to these rulings, any absence from work due to illness or accident, whether work-related or not and for any length of time, must give rise to paid leave. A strict interpretation of the decisions should lead employers to recalculate the paid leave entitlements of their employees on sick leave, both for the current vesting period and for previous periods. In any case, in the absence of legislative intervention, these rulings are a source of considerable legal uncertainty for employers.

Incompatibility of French labor law with European law

Until now, there have been discrepancies between European Union law and French law in terms of the calculation of employees' annual vacation entitlement.

The provisions of the French Labor Code

Under article L.3141-3 of the French Labor Code, employees are entitled to 2.5 days' paid vacation per month of actual work. Acquiring paid vacation days is therefore subject to the condition of actual work.

A subsequent article lists the periods deemed to be equivalent to actual work which grant the entitlement to paid leave, draws a distinction between periods of suspension of the employment contract due to an accident or illness of occupational origin and those due to an accident or illness of non-occupational origin.

In fact, under the terms of the first provision, only periods of suspension of the employment contract due to an accident or illness of occupational origin are deemed to be equivalent to actual work and therefore eligible for accruing paid leave.

Accordingly, article L. 3141-5 of the French Labor Code prohibits an employee from acquiring paid leave during a period of absence from work due to a non-work-related accident or illness.

The provisions of the European directive

Article 7 of EU Directive 2003/88/EC of November 4, 2003 provides for an entitlement to 4 weeks' paid leave per year, without making any distinction between the occupational or non-occupational origin of accidents and illnesses, or their duration.

However, to produce effects in French law, France would still need to transpose this directive into its domestic law, something the French legislator has failed to do to date.

In a decision dated November 6, 2018 (case C-684/16), the Court of Justice of the European Union clarified, however, that Article 31§2 of the Charter of Fundamental Rights of the European Union, under which every worker has the right "to an annual period of paid leave", can be directly invoked by an employee and, as a result, the national judge must set aside national regulations where they do not comply with Article 31§2 of the aforementioned Charter.

This 2018 decision is in line with established European case law, which considers that no distinction can be made between employees who are ill and other workers in terms of paid leave (ECJ, judgment of January 20, 2009, Schultz-Hoff and others, C-350/06, points 37 to 41).

The Supreme Court’s jurisprudence reversal

The legislator's wait-and-see attitude in this area must necessarily be noted, as the aforementioned Directive 2003/88CE has never been transposed, even though the Supreme Court has been calling for French law to be brought into line for 10 years now in its annual reports.

In response to two appeals invoking the application of European Union law, the three widely-published rulings by the Social Division of the Supreme Court on September 13, 2023 drew conclusions from this development in European case law brought about by the decision of November 6, 2018 (case C-684/16 cited above) and deemed it necessary to bring its case law on the calculation of paid leave entitlement into line with European Union regulations, while maintaining the annual entitlement to 5 weeks' paid leave.

The French Supreme Court ruled that articles L. 3121-3 and L. 3141-5 of the Labor Code were contrary to EU law, and that absences due to non-occupational accidents or illnesses should be included in the calculation of the accrual paid leave.

The Supreme Court also set aside the one-year limit for periods of absence due to industrial accidents or occupational illnesses, and further ruled that the limitation period for a claim for paid leave starts to run when the employer has taken the necessary measures to enable the employee to effectively exercise his right to paid leave.

However, this obligation to regularize the situation only concerns days acquired during non-work-related sick leave, and not leave available to employees during the reference year but not taken. Unless there is a provision in the agreement or a unilateral commitment by the employer authorizing a carryover, these days are, in principle, lost.

Consequences for companies

Clearly, the case law resulting from the rulings of September 13, 2023 is the source of considerable legal uncertainty for companies, as a strict interpretation of this case law should lead them to recalculate the paid leave entitlements of their employees on sick leave, both for the current vesting period and for previous periods.

However, the significance of these rulings should not be overestimated since, unlike its previous case law, the Supreme Court this time relied on the Charter of Fundamental Rights of the European Union without stipulating that a specific period must allow the acquisition or non-acquisition of paid leave.

It should also be remembered that, in accordance with the principle of the separation of powers and the provisions of Article 5 of the Civil Code, judges are forbidden to issue general and regulatory rulings on cases submitted to them. Thus, however influential they may be, the decisions handed down by the Supreme Court have, in principle, no effect other than on the parties to the case.

Consequently, even if we cannot deny the importance of the effects of this reversal of case law in the context of industrial tribunal disputes concerning the acquisition of paid vacation, it would be excessive to seek to automatically regularize all employees' vacation accounts, a fortiori retroactively.

In fact, the intervention of the legislature seems absolutely necessary and should, in the interests of legal certainty, make it possible to reconcile European law and French law, as was the case in particular with fixed-rate annual agreements.