When does vacation expire? – Federal Labor Court decides

The Federal Labor Court has made its ruling on holiday entitlement. Accordingly, vacation days no longer expire automatically.

The fact is: vacation not taken does not automatically become statute-barred after three years. The Federal Labor Court determined this in a landmark ruling. Above all, the court is making employers more responsible.

-Federal Labor Court / Press release / Limitation of vacation claims-

An employee's legal right to paid annual leave is subject to the statute of limitations. However, the three-year limitation period only begins at the end of the calendar year in which the employer informed the employee of his specific vacation entitlement and the expiry dates and the employee nevertheless did not take the vacation of his own free will.

The defendant employed the plaintiff as a tax clerk and accountant from November 1, 1996 to July 31, 2017. After the termination of the employment relationship, the defendant paid the plaintiff EUR 3,201.38 gross in compensation for 14 days of vacation. The defendant did not comply with the plaintiff's further demand to compensate for vacation amounting to 101 working days from previous years.

While the labor court dismissed the lawsuit filed on February 6, 2018 - insofar as it was relevant to the appeal proceedings - the state labor court awarded the plaintiff 17,376.64 euros gross in compensation for a further 76 working days. The State Labor Court did not consider the defendant's objection that the vacation claims asserted were time-barred to be valid.

The defendant's appeal was unsuccessful before the Ninth Senate of the Federal Labor Court. (Section 214 Paragraph 1, Section 194 Paragraph 1 BGB) do apply to the statutory minimum vacation. However, if Section 199 Paragraph 1 of the German Civil Code (BGB) is interpreted in accordance with the guidelines, the regular limitation period of three years does not necessarily begin at the end of the vacation year, but rather only at the end of the year in which the employer informs the employee about his or her specific vacation entitlement and the expiry periods The employee nevertheless did not take the vacation of his own free will.

The Senate has thus implemented the requirements of the Court of Justice of the European Union based on the preliminary ruling of September 22, 2022 (- C-120/21 -) . According to the case law of the Court of Justice, the purpose of the statute of limitations, namely to ensure legal certainty, takes second place in the present case to the aim of Article 31(2) of the Charter of Fundamental Rights of the European Union, which is to protect the health of the employee through the possibility of recourse . The guarantee of legal certainty should not serve as a pretext for allowing the employer to rely on its own failure to enable the employee to actually exercise his right to paid annual leave. The employer can ensure legal certainty by fulfilling its obligations towards the employee.

The defendant did not enable the plaintiff to exercise her vacation entitlement by fulfilling the obligations to request and inform her. The claims therefore did not expire at the end of the calendar year (Section 7 Paragraph 3 Sentence 1 BUrlG) or of a permissible transfer period (Section 7 Paragraph 3 Sentence 3 BUrlG), nor could the defendant successfully argue that the vacation not granted was already during the current one The employment relationship expires after three years. The plaintiff asserted her claim for compensation for her vacation within the statute of limitations of three years.

Source: Federal Labor Court, judgment of December 20, 2022 - 9 AZR 266/20 -
Lower court: Düsseldorf Regional Labor Court, judgment of February 21, 2020 - 10 Sa 180/19 -
Note: Request for a preliminary ruling from the Senate, decision of September 29, 2020 - 9 AZR 266/20 (A) – (see also press release No. 34/20 of September 29, 2020)

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