Vacation generally expires if it is not taken on time. However, employers must inform their employees of this legal consequence in good time. Otherwise, the entitlement does not expire. This is the message of the ruling by the Federal Labor Court (BAG) from February 19, 2019 (Ref.: 9 AZR 541/15), the reasons for which are now available.
Waiting does not eliminate vacation entitlements – the initial case
The decision is based on a lawsuit brought by a scientist against the Max Planck Society in Munich. The plaintiff had been employed by the company since 2001 and wanted to be paid 51 vacation days at the end of his employment. Due to tightly scheduled project phases, he was unable to take it and therefore did not even apply for it. When the case finally ended up before the BAG, the BAG referred the matter to the European Court of Justice (ECJ) due to the following problem:
Pursuant to Section 7 II 1 BUrlG, the plaintiff’s vacation entitlements expired at the end of 2013, as there were no grounds for transfer pursuant to Section 7 III 2 BUrlG. The BAG asked the ECJ whether Art. 7 I Directive 2003/88/EC or Art. 31 II of the EU Charter of Fundamental Rights might conflict with this national regulation.
Answer of the ECJ: Yes!
The ECJ ruling of November 6, 2018 (Ref.: C-684/16) was of course not quite so simple, but far more nuanced. However, the core statement was “yes”. Employers cannot cause their employees’ outstanding vacation entitlements to lapse at the end of the year by simply “doing nothing”. The employee must at least have been put in a position to actually take their entitlements before the end of the year.
The consequences of the ECJ ruling
After the ECJ issued its ruling, the case went back to the BAG. As expected, it agreed with the ECJ and ruled that employers had to inform their employees about outstanding vacation days and their impending expiry. It justified its decision by stating that the BUrlG intended to protect health by actually taking paid leave. This protective purpose is only promoted if the employer informs the employee of any remaining leave. This also includes a request to actually take the leave and a reference to existing deadlines for the expiry of leave entitlements.
However, it was still unclear whether these requirements were met in the case to be decided. The BAG referred the case back to the Munich Regional Labor Court (LAG). The parties were in dispute as to whether there had been an email from the company with a reference to the existing vacation entitlements. The BAG declared the existence or non-existence of such a reference to be decisive for the assessment of the case as a concretization of the ECJ ruling. Whether an email – if there was one – would be sufficient to meet the duty to inform is not yet clear. This will presumably depend on the content of the email. The ECJ also mentioned that the request to take leave must be made formally if necessary.
What is changing in practice? – Obligations of the employer
For employers, this case law means a certain amount of change and some additional work for HR departments. This is because the rule that leave must be taken and granted in the current calendar year so that it does not expire on March 31 of the following year previously even applied to leave that had been requested by the employee in good time but to no avail. Employees could then only claim compensation for damages in the form of substitute leave if other requirements were met.
From now on, employers have the following obligations to cooperate:
You bear the initiative burden. It must be pointed out “clearly and in good time”that vacation days are still outstanding. There must also be a “specific request”to take the leave. In addition, employees must be fully informed so that there is “complete transparency”. Above all, however, there must be no incentives for not taking leave.
If an employee was able to take their vacation during the calendar year, the requirements for “clear”notification are generally met if it is pointed out that vacation generally expires at the end of the year. It is advisable to write and archive notifications to the employee in future so that they meet the requirements of the BAG in the event of a dispute. The employer bears the burden of proof for the fulfillment of its obligations to cooperate.
In order to meet the requirements of “complete transparency”, it is probably not sufficient to show the existing vacation days in the monthly statements, as is already common practice in many companies. Information in the employment contract, an information sheet or a collective agreement is generally not sufficient either. The question of whether an individual notification of each employee is required or whether a uniform request is sufficient has not yet been clarified.
The BAG only clearly established that employers do not have to grant leave on their own initiative in order to prevent forfeiture. The LAG had initially assumed this.
Whether the employer has done everything necessary in the individual case to meet its obligations to cooperate must be determined taking all circumstances into account.
Can employees now accumulate mountains of vacation entitlements?
If an employer has not complied with its obligations to cooperate, the employee’s vacation that has not expired is added to the vacation entitlement for the new year. This raises the question of whether there can be an unlimited accumulation of vacation entitlements in the future.
The answer depends on the individual employer. Even leave from previous years that has not expired is not privileged. Employers can easily prevent the accumulation of vacation entitlements by fulfilling their obligations in the following year as explained above. In this case, the employee is obliged to take the vacation days already accumulated by the end of the year so that they do not expire.
Still many unanswered questions
Even after the ECJ and BAG rulings, questions remain unanswered not only with regard to the employee’s specific obligations to cooperate. Another important question that many employees are now asking themselves is: What about supposedly expired claims from previous years? Do the new requirements also apply to 2018? Until when can vacation entitlements be claimed retrospectively?
As the statute of limitations has not yet been the subject of the trial, there is still no clear answer to these questions.
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