The Netherlands: State Liable for Late Implementation of EC Directive on Holidays

Netherlands

State Liable for Late Implementation of EC Directive on Holidays

On October 15, 2013 the Court of Appeal in The Hague confirmed a Judgment of the District Court of The Hague that held the State of the Netherlands liable for the damages that employees had suffered as a result of the late implementation of Article 7 of the EC Working Time Directive (2003/88/EC) in the Dutch holiday legislation.

History
On 1 January 2012, following the decision of the EC Court of Justice in Schultz - Hoff (ECJ January 20, 2009/C-350/06; C-520/06), Article 7:635 paragraph 4 Dutch Civil Code was deleted. This article contained a limitation of accrual of statutory holidays for employees during illness (only for the period of the last six months ) and was incompatible with Article 7 of the Working Time Directive.

Also, as of 1 January 2012, Article 7:640a Dutch Civil Code was introduced, setting a time period of six months after the last day of the calendar year in which a holiday entitlement was acquired, to take these holidays on pain of forfeiture of the entitlement. This amendment had immediate effect .

Judgment (s) District Court of The Hague ( February 6, 2012 and March 28, 2012)
The employees, who, upon termination of their employment (prior to 1 January 2012) had only received compensation for the holidays accrued during the last six months of their illness, argued that the State had acted wrongfully by not adapting Article 7 of the Directive in the Dutch holiday legislation in a timely fashion. The District Court in The Hague granted their claim. Firstly, ruling that the conflict between Article 7:635 paragraph 4 Dutch Civil Code and the Directive did not result from exceeding the implementation period, but from an incorrect interpretation of the Directive (that Article 7:635 paragraph 4 Dutch Civil Code would be consistent with the Directive).Secondly, the Court considered that in such a case the State may be liable if it had manifestly and gravely disregarded the scope of its discretion (the so-called Francovich- standard (ECJ November 19, 1991). The Court ruled that the latter was the case. Already in 2001, after the ECJ's BECTU judgment (ECJ June 26, 2001), it should have been clear to the State that its view was incorrect and the Court considered that the reasonable period of time that was allowed to the State to implement the Directive in the Dutch holiday legislation had long since expired.

The State appealed against these judgments.

Court of Appeal
The Court of Appeal considered that under Dutch law enacting and maintaining national legislation that is in conflict with higher rules and regulations is wrongful. By issuing and maintaining such national legislation the State is liable for damages and obliged to pay compensation.

The State has lodged an appeal with the Supreme Court of the Netherlands.