Never-ending leave entitlement?

Created by Gabriele Heise | |  Labor Law

“Consulting the law facilitates the finding of justice.” What sounds like a matter of course has no longer been applicable to vacation laws for some time now.

Almost none of the provisions provided by the German Federal Leave Act can be taken literally any longer. Both the European Court of Justice (“ECJ”) and the German Federal Labor Court (“BAG”) have further developed the laws and have set new standards for vacation laws with their decisions – most recently with regard to a possible forfeitability of leave entitlements.

What happened?

Pursuant to Art. 7 Sec. 3 BUrlG (German Federal Leave Act), the statutory leave must be granted and taken during the calendar year; a carry-over to the following calendar year is only possible for urgent operational or personal reasons (such as sickness). If the leave has not been carried over, it will be forfeited. In accordance with such provision, the German Federal Labor Court, for many years, has affirmed the forfeiture of remaining leave entitlements. Now, it had some doubt as to whether such forfeiture regulation complies with the provisions pursuant to European law. Therefore, it has requested a ruling on such question from the ECJ.

In 2018, the ECJ had already taken the view that an exercise of the leave entitlement must not entirely be left to the employee. Rather, it was the employer’s responsibility “to specifically and transparently enable the employee to actually take its paid time off by (formally, if applicable) requesting the employee to do so. Employer’s failure to do so will not result in a forfeiture of the leave entitlement; the leave entitlement will continue to apply after the end of the relevant calendar year.

In the meantime, the BAG has implemented the ECJ’s provisions with its decision of February 19, 2019 (9 AZR 541/15). According to such decision, the leave entitlement will generally only be forfeited if the employee has previously specifically been requested by the employer to take his paid time off together with a clear and timely notification that otherwise the employee’s leave entitlement will be forfeited at the end of the calendar year. The BAG has not specified the date and scope of such request by the employer.

It should not be sufficient to merely include the reference to the leave entitlements’ forfeiture in the employment contract or an annex to the contract. A general notification to the staff, for example, on a bulletin board or on the intranet should not meet the requirements as well.

If an employer wants to make sure for the leave entitlement to be generally forfeited at the end of the year and to not continue to exist for an unlimited period of time, he will need to do more than issuing a general notification as to the forfeitability.

Practical Tip 

In order to make sure that any possible remaining leave entitlements will actually be forfeited at the end of the year, the employer should, by means of an individual letter the receipt of which should be acknowledged, inform all employees about their existing leave entitlements, request them to take their paid time off and inform them about the entitlements’ forfeiture by no later than at the end of September. If, in an individual case, the employer has doubts as to whether an employee is able to comprehend the German version of such letter, he should have it translated into the respective employee’s mother tongue and attach such translation to the German letter. Even if this is tedious and requires more effort – due to the ECJ’s and the BAG’s case law, an employer will have no other chance in order to definitely avoid for the leave entitlement to apply for an indefinite period of time which must be granted or compensated by the employer.