Remaining leave only becomes time-barred under special conditions – that’s what the labor court decided. Employees can use it to have year-old claims paid out.

Update from December 20, 3:50 p.m .: As expected, the Federal Labor Court (BAG) decided today in a landmark judgment that employees’ remaining vacation time only becomes statute-barred if the employer has clearly and expressly informed their employees of the impending statute of limitations. Until now, the statute of limitations for remaining vacation time was three years. According to a BAG press release, the three-year statute of limitations begins “only at the end of the calendar year in which the employer instructs the employee about their specific holiday entitlement and the expiry periods and the employee nevertheless did not take the holiday of their own free will”.

If employers stand idly by while their employees’ vacation time expires, they can still claim the remaining vacation time years later. If employers fail to enable their employees to exercise their entitlement to holiday, they should not be rewarded for it, the court justified its decision. The judgment thus strengthens the rights of employees immensely. “Until now, some employers have relied on the three-year limitation period,” says Bonn employment lawyer Gregor Thüsing. “But that no longer applies automatically.”

The effects of the judgment can be seen in the case of a tax clerk from North Rhine-Westphalia, who initiated the process with her claim for payment of vacation days not taken: She receives 17,376.64 euros gross from her former employer.

Other employees with old vacation entitlements can now hope for similar payments: In its judgment, the BAG did not comment on the burden of proof, i.e. the question of who has to prove whether the employer has pointed out that his vacation has expired or not. A ruling by the European Court of Justice (ECJ) from 2018, which assigned this obligation to the employer, therefore remains decisive: In the event of a dispute, companies must be able to prove that they have instructed their employees, the ECJ ruled at the time and recommended that employers put this instruction in writing for better provability to perform. Employees with remaining holiday entitlements whose former employers do not have this evidence can hope for good chances in lawsuits.

Because remaining leave never expires without verifiable instruction from the employer, employees can also sue for decades-old claims with former employers. The companies are unlikely to have any records of vacation talks with employees who have long since left the company and can therefore hardly defend themselves.

Some experts therefore fear a wave of lawsuits. He fears “that there will now be numerous lawsuits about long-term employment relationships,” said the employer’s lawyer at the hearing. “Many employees are afraid to assert their rights in ongoing employment relationships,” says the lawyer for one plaintiff.

The BAG also ruled on the case of a severely disabled man who complained about the forfeiture of his holiday entitlements from several years in which he had worked little due to illness. Previously, vacation in similar cases expired 15 months after the end of the vacation year.

In the future, this will only apply if the employee was unable to work during the entire period in which he could have taken this holiday: i.e. the complete twelve months of the holiday year plus the following 15 months until the expiry date. Then the employer does not have to inform the employee about the end of his vacation, because he could not have taken it anyway. However, if the employee worked during this period, the holiday will not be forfeited unless the employer has enabled the employee to take his holiday during this period.

The BAG therefore awarded the plaintiff 24 remaining vacation days from 2014. His employer did not enable him to take vacation.

Today, the Federal Labor Court (BAG) in Erfurt made the judgment that many employees are eagerly awaiting: it decides under what conditions remaining vacation leave for employees in Germany becomes statute-barred. It is already clear that many employees can still hope to be paid out for years of claims.

The debate started with the case of a tax clerk from North Rhine-Westphalia who had not taken 101 vacation days over a period of several years due to a high workload. Your employer says they are expired and statute-barred. On the other hand, the woman complained – and her case drew wide circles: In September, the European Court of Justice in Luxembourg dealt with it, this Tuesday the Federal Labor Court in Erfurt. A fundamental judgment is expected as to when vacation in Germany will become statute-barred and whether employers can stand by and do nothing.

The federal labor judges are now dealing with several aspects of vacation: In the case of tax clerks, it is about the statute of limitations – according to experts, it has been three years in Germany, including for labor law issues. In another case – also from North Rhine-Westphalia – the judges are dealing with the complaint of a hospital employee who was ill for a long time and was only able to take part of her vacation that year. Has the remaining holiday really expired, as your employer thinks? That’s what she wants to know from the federal judges.

The direction of the judgment is already clear: In February 2019, the Federal Labor Court first laid down the obligations of employers when it comes to vacation – but only for the imminent forfeiture of vacation entitlements. Employers were obliged by the federal labor courts to inform employees about their holiday entitlement, to ask them to take their remaining holiday and to point out a possible forfeiture. In short: you have to play an active role. After all, employers would also have an interest in not accumulating vacation time in companies. However, the federal labor judges left it open how to proceed in the event of an imminent statute of limitations or illness. That should now be decided in a binding manner.

The Federal Labor Court has already submitted the two cases from North Rhine-Westphalia to the European Court of Justice (ECJ) in Luxembourg. He should examine whether European law allows a statute of limitations on vacation entitlement “if the employer has not actually enabled the employee to exercise his vacation entitlement through appropriate requests and instructions”. The decision was clear: No, said the court in September. According to the ECJ, leave cannot become statute-barred or expire in the event of a long illness if employers have not fulfilled their obligations.

Both specifications together give a clear picture: If employers do not inform employees that their vacation is about to expire, it will remain in effect forever. Experts are almost certain that the BAG will decide this today. Employees could then take remaining leave decades later or have it paid out.

It is interesting who the BAG ascribes the burden of proof to: If employees have to prove that their employer has not informed them of the approaching statute of limitations on vacation, very few of them are likely to be able to substantiate their claims with clear evidence. This means that the remaining vacation days that are due to expire would remain largely unattainable.

However, experts tend to suspect the opposite to our newspaper: Employers must prove that they have informed employees. Because this is likely to be difficult for them, especially with former employees, employees can sue for lost vacation under these conditions quite freely.

In Germany, employees and employers keep arguing about when vacation time expires or even becomes statute-barred. “This is often the case when you change jobs or when an employment relationship is terminated for another reason,” says Bonn employment lawyer Gregor Thüsing. In principle, vacation in the event of a long-term illness expires 15 months after the end of the vacation year. Holidays become statute-barred after three years. The issue now is whether the German statute of limitations is compatible with European case law or will be overturned if the employer is passive.

Employees who once had to let remaining vacation time expire can hope to be able to take their days off soon after all or to have them paid out: the Federal Labor Court (BAG) in Erfurt announced its judgment on Tuesday, December 20th in three lawsuits due to statute-barred vacation entitlements. It is already clear that the existing statute of limitations is at least partially overturned. Decades-old claims may become relevant again, even against former employers.

FOCUS online answers all the important questions about the upcoming verdict.

The most important consequence of the BAG ruling is that remaining vacation time only becomes statute-barred if employers ask employees beforehand to take this vacation, give them the opportunity to do so and point out the imminent limitation of their vacation entitlement. If you have not met these requirements, the remaining leave never expires.

So far, the Federal Holidays Act has required holiday entitlements to be taken in the current calendar year. Vacation leave may only be carried over to the first three months of the following calendar year if there are urgent operational reasons or personal reasons for the employee to justify this. The holiday finally lapses 15 months after the end of the holiday year.

If the BAG lifts the 15-month period in many cases, employees could still claim remaining vacation decades later or demand its payment.

The change takes place in the course of adapting German law to the requirements of the European Court of Justice (ECJ). The ECJ wants to strengthen employee rights when it comes to vacation issues, which is why the BAG first asked the ECJ for a preliminary ruling on the complaints mentioned. He emphasized that vacation only expires under certain conditions, and the BAG recognized this. Experts are therefore certain that the labor court will rule on December 20 according to the EU guidelines.

The ECJ justifies its view that employees are anyway in a weaker position compared to employers. Employers should therefore not be rewarded if they breach their information obligations or do not enable employees to actually take their vacation.

The example of one of the complaints about which the BAG appealed to the ECJ shows how much money the change could flush into the pockets of employees. According to a press release from the labor court, the plaintiff worked as a tax clerk from November 1996 to July 2017, accumulating 101 remaining vacation days. According to the specifications of the ECJ, she will probably be paid around half a year’s salary afterwards.

How much each employee receives himself can be calculated: The value of a vacation day depends on the daily earnings. Anyone who earns 3,000 euros a month (36,000 euros a year) and works full-time (around 200 days a year) earns around 180 euros a day. If he can still get ten vacation days paid out by his old employer, he will receive around 1800 euros gross. With 100 vacation days, it would be around 18,000 euros, i.e. around half a year’s salary.

That is the exciting question that the BAG has to clarify with its judgment on December 20th.

The tax clerk, who will probably get paid 101 vacation days, had taken precautions: According to the BAG, she had had her employer certify in writing that she had accumulated remaining vacation time due to the high workload, which should not expire. This allows the employee to provide unequivocal proof of vacation collection.

Most employees are likely to lack such clear evidence. Decisive for the effects of the judgment is therefore the determination of who has to prove whether the employer asked the employee to take his vacation and informed him of the impending statute of limitations.

It is still unclear how the court will decide on this issue. Typically, however, the burden of proof lies with the employer in similar scenarios.

Even if remaining vacation time will no longer become statute-barred in the future, it is still unclear whether this rule also applies to all remaining vacation time in the past. Employment lawyer Michael Fuhlrott believes that employees will soon be able to claim holiday entitlements that have been made for a long time. He said to “Bild” that after the verdict “employees can assert holiday entitlements from the last few decades – even against the ex-employer.”

However, the year 2018 is likely to play a decisive role: In this year, the ECJ committed itself for the first time to the case law that initiated the current debate. Employees should be able to claim vacation days that expired after this date more easily than vacation days that expired before that.

It seems possible, for example, that employers will only have to prove from 2018 that they have informed employees that their vacation days will expire. “Only those who can provide proof that they have been a company since 2018 can invoke the statute of limitations,” judges the legal specialist portal Legal Tribune Online (LTO).

According to the LTO, whether a wave of lawsuits about holiday pay will soon roll over Germany depends on who the BAG places the burden of proof for informing the employer on the holiday statute of limitations.

Since the burden of proof is likely to fall on the employer, and employees may be able to assert claims that are decades old, employers are likely to present demands from employees who have long since left the company. In these cases, it is often difficult for them to bear the burden of proof. A wave of lawsuits from employees who want to take advantage of this does not seem unlikely.

According to the LTO, it will also be interesting to see whether exclusion periods in employment contracts limit compensation requirements. If the rules against vacation pay lose their validity as a result of the judgment, other compensation exclusions could possibly also become invalid. It seems conceivable that overtime will no longer become statute-barred, or only under certain conditions. Such details are likely to occupy the courts for some time.

If employees fall ill in the long term, vacation will in future expire 15 months after the end of the year instead of three years as before: According to the ECJ, one must recognize the difficulties that arise for the employer if employees are absent for a long period of time and vacation entitlements accumulate. It is therefore fundamentally correct that in the event of illness, holiday entitlements can only be transferred for 15 months and then expire. However, this does not apply to claims from the period before or after the illness in which the employee actually worked.

One of the three plaintiffs is therefore likely to fail before the BAG: He is claiming holiday entitlements that he did not take due to prolonged illness. Employees must have worked in the year from which they have leave left over.

Theoretically, the BAG could also determine in its judgment that the specifications cannot be adopted into German law. Then everything would remain the same with the holiday rules, but the EU could initiate infringement proceedings. However, experts such as the LTO consider this result to be unlikely. The requirements could certainly be incorporated into German law.

Surf tip: Work – take vacation days with you into the new year – you need to know that