Unused leave no longer expires automatically due to European legal requirements
By Pascal Verma, nbs partners
German vacation law provides in § 7 para. 3 of the Federal Vacation Act (BUrlG) that in a running employment relationship unused leave expires at the end of the calendar year. The holiday entitlement is linked to the respective calendar year for which it arises. Since 2009, the European Court of Justice (ECJ) has issued various verdicts that have resulted in a change in the system of German vacation law. This series also includes the ECJ’s verdict dated 06/11/2018, C-684/16.
Up to this ruling, the Federal Labor Court (Bundesarbeitsgericht - BAG) had made exceptions to the fact that vacations expire after the end of the calendar year in only two cases:
- if the holiday cannot be taken during the holiday year due to urgent operational or personal reasons, the holiday could be taken at any time until 31/03 of the following year;
- if the employee applied for the granting of the leave but the employer nevertheless did not grant any leave; in this case the BAG granted a substitute leave which also led to the transfer of the leave claim (see BAG, ruling dated May 17, 2011, 9 AZR 197/10)
The ECJ´s verdict dated 06/11/2018 had the consequence that German labour court case-law had to adapt and downgrade the expiry of leave at the end of the calendar year from the normal case to the exceptional case. In its verdict dated 19/02/2019, 9 AZR 541/15, the BAG therefore concluded that the vacation only expires at the end of the calendar year if the employer fulfils an obligation to the employee. According to the BAG verdict, the employer’s obligation is fulfilled if the employer expressly and transparently informs the employee about his existing leave entitlement, requests him to apply for the existing leave in time so that the leave can be granted within the calendar year and informs him that the existing leave will expire if it is not applied for in accordance with the request. If this requirement is not fulfilled, the employee’s vacation does not expire, despite a provision to the contrary in the Federal Vacation Act (BUrlG).
Pascal VermaGGI member firm
Auditing & Accounting, Tax, Law Firm Services
T: +49 40 44 19 60 01
nbs partners is a multidisciplinary association of certified public accountants, lawyers, and certified tax advisors with a focus on the audit and advisory of small, mid-size and large entities, as well as international groups and high-net-worth individuals.
Pascal Verma is Attorney-at-Law specialised in Labour Law and Partner at nbs partners. He specialises in advising employers on labour law and companies on data protection law.
Published: Labour Law Newsletter, No. 08, Spring 2020 l Photo: m.mphoto - stock.adobe.com