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Germany: An employee’s entitlement to paid annual leave only expires at the end of the calendar year, if the employer has previously informed the employee of his specific holiday entitlement and the expiry periods, and the employee has still voluntarily not taken the holiday

The plaintiff was employed by the defendant as a scientist for over 12 years. After the employment relationship was terminated, the employee demanded compensation for 51 days of paid leave not taken in 2012 and 2013. During this period, the employee did not submit an application for leave for any of these days.

According to previous German case law, the employer was not obligated to expressly notify the employee of outstanding leave entitlements as a requirement for the expiry of such entitlement. Following the recent rulings of the European Court of Justice on the subject, which were included in our previous newsletters, this case law has now changed. Pursuant to the German Federal Vacation Act, the minimum annual vacation entitlement is four weeks based on a five-day work week. The law provides that it is up to the employer to determine the period of vacation, taking the employee’s wishes into account.

Based on the specifications from the European Court of Justice, the Federal Labor Court now ruled that it is the employer’s responsibility to actually enable the employee to take his annual leave. The employer is obliged to inform the employee clearly and well in advance that the entitlement to paid annual leave will expire at a certain point in time, if it is not taken. The entitlement to paid annual leave only expires if the employer has expressly requested the employee to take leave, and has informed him that the entitlement to paid annual leave will otherwise lapse.

Regarding the case at hand, the Federal Labor Court referred the case back to the Regional Labor Court, which has to determine whether the employer fulfilled his obligations as detailed above in the concrete case. This means that the employer’s specific obligations and duties regarding the employees’ holiday claims are still largely undetermined. We expect that the case law of the next years will shape the requirements more exactly. For the time being, employers should closely monitor the outstanding holiday entitlements of their employees and should notify employees in writing or text form of outstanding holiday claims, and the expiry periods towards the end of each calendar year, requesting them to take their holidays in kind.