In 2009 the European Court of Justice and, in line with its
decision, the Federal Labour Court (Bundesarbeitsgericht,
"BAG") re-regulated German holiday legislation with
respect to the loss of holiday claims of employees unable to work
on grounds of a long-term illness. As opposed to providing the
expected legal clarity, this decision triggered a number of
follow-up questions with which enterprises found themselves
directly confronted. On 9 August 2011 the Federal Labour Court
reached decisions that are of practical relevance to at least two
partial aspects, as well as dispelling uncertainties existing in
In one case (docket no. 9 AZR 253/10) the Federal Labour Court ruled that, with the date of the employee's departure from the company, the claim to compensation in lieu of holiday of an employee unable to work on grounds of a long-term illness is subject to the individually and collectively agreed preclusive periods in the form of a purely monetary claim. This also includes payment in lieu of the statutory minimum holiday. Employees unable to work due to a long-term illness who leave the company are therefore obliged to assert compensation claims within the preclusive period applicable to them.
In a second case constellation (docket no. 9 AZR 425/10) the Federal Labour Court ruled that an employee unable to work on grounds of a long-term illness cannot assert a holiday claim for past years if he is able to take his carried-over holiday after returning to work following his illness during the ongoing holiday year. Holiday not taken by 31 December, respectively within the carry-over period by 31 March of the following year, expires automatically. Both decisions can certainly be welcomed, since they provide clarity in two problem areas of relevance.
Before the year is out, the ECJ will also decide whether a limitation of the carry-over period to 18 months is permissible for employees absent from work on grounds of a long-term illness. At least, this was what was highlighted by the Advocate General of the ECJ in her final speech on 7 July 2011 in the "Schulte" case (C-214/10). Should the core statements of her speech ultimately be reflected in the ECJ's decision, then it could be possible to word expiry clauses concerning the holiday claims of employees absent from work on grounds of a long-term illness in a legally valid form in future. This would distinctly reduce the currently existing financial burden upon enterprises.
Equally of relevance in connection with holiday claims is a further judgement of the Federal Labour Court of 20 September 2011 (docket no. 9 AZR 416/10). According to this judgement, with the death of an employee his holiday claim expires as opposed to being converted into a compensation claim pursuant to sec. 7 para. 4 German Federal Holiday Benefits Act (Bundesurlaubsgesetz, "BUrlG") which could transfer to the heirs. In the case underlying the decision, the heirs of a deceased employee who had been unable to work due to illness for a full year prior to his death demanded the settlement of his holiday claim from the employer. Whereas the Labour Court (Arbeitsgericht, "AG") had dismissed the case, the Regional Labour Court (Landesarbeitsgericht, "LAG") granted the heirs a settlement of 35 days' holiday. The Federal Labour Court, however, shared the opinion of the Labour Court and established that an employee's holiday claim expires with his death and hence the heirs have no claim to compensation therefor.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.