According to the ruling of the European Court of Justice (ECJ of 6 November 2018 - Case C-684/16), which was already enacted in 2018, employees' remaining holiday entitlements no longer expire automatically after one year if he/she has not been informed in time by his employer of the impending expiry. In the case that the employer does not inform the employee about the expiry, the holiday entitlement continues to exist beyond 31 December of each year. This can lead to extensive costs for the employer if significant holiday (compensation) claims are pleaded - especially after the termination of an employment.
In avoidance of this and to be able to invoke the forfeiture of holiday entitlements, employers should ask their employees in time to take the outstanding holiday and draw attention to the forthcoming forfeiture.
To ensure "timeliness", action should be taken in the upcoming weeks – not later than the beginning of the last quarter of 2020. The employees should be requested in writing if possible, but in any case by e-mail, to take any remaining annual leave in good time and should be informed about the impending expiry in accordance with § 7 Abs. 3 German Holiday Act (Bundesurlaubsgesetz). Only abstract information (e.g. in an employment contract, an information sheet or a works agreement) are not enough. The employee must be informed individually how many days of leave he or she is still entitled to. If possible, employees should acknowledge receipt of the letter or e-mail, e.g. by using the read confirmation function or by sending an e-mail reply. The acknowledgements of receipt should be carefully archived for verification purposes.
An exception are the cases of so-called long-term illness. In this case, the employer is only obliged to inform the employee about the specific holiday entitlement and the expiry dates when the employee regains his/her ability to work and is able to take the holiday.
At the moment it is still unclear what consequences the ruling will have for assumed forfeited holiday entitlements from the previous years. Especially for the year 2018 the court has not yet made any statements regarding a possible protection of employees' legitimate expectations. However, it is not unlikely that the courts will award assumed forfeited holiday entitlements. Therefore it is all the more important for the future to prevent employees from belated claiming for a compensation.
Originally published 21 July 2020.
Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.
© Copyright 2020. The Mayer Brown Practices. All rights reserved.
This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.