Acquisition of paid leave: a potential big bang

The French Labour Code provides that:

• Any absences due to non-occupational illness do not give the employee entitlement to paid leave, except in the case of an already established practice or a more favourable collective bargaining agreement.
• Time off work due to an accident at work or an occupational illness is, however, treated as actual time worked for the acquisition of paid leave, and this in a limit of up to one year.

There has however, long been a discrepancy between French and European law on the issue of paid leave entitlement for employees off on sick leave.

In three rulings all dated 13 September 2023, the Cour de Cassation decided to bring French law into line with European and Community law by laying down the following principles:

• Employees are entitled to paid holiday leave during the period when they are off work due to illness, and this regardless of whether the illness is work-related or not.
• The one-year limit on the period of time off work due to an accident at work or an occupational illness that entitles an employee to paid leave is no longer in force.
• The commencement of the period of limitation for paid leave compensation must be fixed at the expiry of the legal or contractual period during which the paid leave could have been taken, provided that the employer can prove that the steps legally required to be taken in order to ensure that the employee can effectively exercise his right to leave have indeed been enacted.

This major ruling is all the more significant in that it has retroactive effect and is intended to apply to all employment relationships, including those predating the rulings of 13 September.

In a ruling dated 27 September 2023, the Paris Court of Appeal also endorsed the position of the Court of Cassation on the subject of an employee’s accrual of paid holiday leave during periods of absence from work due to ordinary illness.

Another important point to be noted from these rulings concerns the types of leave concerned. Contrary to European law, this entitlement is not limited solely to the acquisition of annual paid holiday leave, but  also to any nature of contractual leave.

These case law rulings can therefore be invoked by both current and former employees or those deemed as such (in the case of reclassification of a service provider's contract), including in disputes relating to periods prior to the recent rulings. This is the case regardless of whether the legal texts have been adapted by the French legislator or not.

Such an assessment would have to take into account the specific assumptions inherent to each company, and should also be performed for any ongoing litigations.

In conclusion, employers will have to address new issues relating to contract terminations and disputes as well as the adaptation of their company policy on the accrual of paid leave, more particularly on the policy on the deferral of paid leave in company agreements.