Global Compliance Desk – Germany

Germany: Case Law on the Carry Forwarding of Annual Leave and Employer Obligation to Inform 

As per the European Court Of Justice Decision (ECJ of 6 November 2018 – Case C-684/16), where the employee who was employed from August 1, 2001, to December 31, 2013, filed a suit against the employer for the claim of compensation with respect to the vacation, he has not taken due to his involvement in various projects of the employer, accounting for a total of 51 vacation days from 2012 to 2013 with an amount of 11,979.26 Euros, it was decided that employee’s remaining holiday entitlements do not expire after one year if, the employee has not been informed beforehand by the employer about the employee’s entitlement to his/her vacation and expiration date of such vacation.

German Vacation Law 

Section 7(3) of the Federal Holiday Act (Bundesurlaubsgesetz, ‘BUrlG’) stipulates that holidays that are not granted and taken by the end of the year expire. The Act does not expressly impose any obligation on the employer to notify its employees about their vacation entitlements or the potential forfeiture of unused vacation entitlements.

Previously, unless an employee files an application for annual leave with the employer, he loses his entitlement to availing the annual leave. In case, the application was not accepted by the employer, the employee could claim the damages if the vacation was not taken after the end of the calendar year or paid out if the employment had terminated.

According to a recent decision by the German Federal Employment Court (BAG) in Max-Plank-Gesellschaft Zur Frderung der Wissenschaften e.V. / Tetsuji Shimizu, an employer must inform the employees of the outstanding vacation. In cases, where the employer does not perform his obligation to inform the employees beforehand along with the deadline within which the vacation shall be taken by the employees, and the employee has not been granted the full leave entitlement, that entitlement to annual vacation will not expire at the end of the year, rather this will be added to the entitlement of the new vacation year.

Further, employees can claim the old vacation entitlements in the new year, which will not be limited to a certain period. The court also ruled that in cases, where the employer informs the employee of the deadline for the entire vacation (old and new), such vacation entitlements may expire at the end of the year.

Conclusion

The decision of the courts lays down the obligation for the employer to inform the employees with respect to their vacation entitlements within a reasonable period of time within which employees are able to take the vacation along with the expiry date of such vacation. The onus of proof that the employee was provided sufficient time to take the vacation lies on the employer.

Hence, employers are advised to maintain complete records of such communication with all employees. An employer shall communicate the entitlements to the employee in writing and if possible, shall collect acknowledgment of such letter/ email for verification purposes in the future.

The legal consequence of not informing the employees in advance of the annual vacation entitlements may land the employers in the courts for recovering the damages.