German Law Updates on Vacation Entitlements

by ZELLER & SEYFERT

Vacation days are an important component of any employment contract and the loss of paid vacation can mean the forfeiture of a significant sum. Whether you are negotiating a new employment contract or wrestling with a contract termination, it is important to understand your rights regarding vacation days and payout entitlements. Our legal team is experienced in German and European case law that may impact any employee or executive entitlements. We are abreast of local, federal, and European changes in the law that can impact the rights of executives and employees living in Germany and throughout the European Union.

German vacation days law and employee rights

According to Section 7 (3) German Bundesurlaubsgesetz (BUrlG), any leave granted that is not taken by the end of the year is forfeited. Previous case law indicated that this would apply even in cases where employees had requested the vacation days in time, but did not have success in obtaining leave. Under some circumstances, employees would be entitled to damages if the employment relationship was terminated before days leave is granted.

Does this mean that an employee never has the right to carry over vacation days or collect compensation after the end of the year? Not so fast…

New ruling from the Court of Justice of the European Union

German law has been updated to include two rulings from the Court of Justice of the European Union (EuGH, judgments dated 06.11.2018, ref. no. C-684/16, “Shimizu” and ref. no. C-619/16, “Kreuziger”), stating that it is up to the employer to determine the timing of the vacation, taking into consideration the wishes of the employee. This does not require the employer to grant the employee leave, however the burden of realizing the request lies with the employer.

In essence, this means that the employer is required "ensure in a concrete and fully transparent manner that the employee is actually able to take his paid annual leave by formally requesting him, if necessary, to do so.” These 2018 European Court of Justice Rulings strictly limit the forfeiture of employee vacation claims and they do not necessarily lapse simply because an employee did not request vacation.

These judgments have been confirmed by the German Federal Employment Court early in 2019 (Bundesarbeitsgericht (BAG), judgment dated 19.02.2019, ref. no. 9 AZR 541/15).

Will my benefits expire at the end of the year?

Previously, employees’ entitlement to vacation days expired at the end of the year if an employer had informed the employee about entitlements and the expiration. New laws require that employees are given clear notice of forfeiture and an opportunity to claim any unused vacation days. Whether your vacation days are forfeited depends on if your employer has given you explicit notice of their lapse.

Can I claim vacation day compensation if I am terminated?

In the BAG case ref. no. 9 AZR 541/15 the plaintiff sought to claim vacation entitlements after the employment relationship was terminated. The plaintiff claimed nearly EUR 12,000 for the 51 working days that went uncompensated as the employee did not take these vacation days during employment. The lower Employment Court granted the claim. So did the higher Employment Appeal Court, adding that the defendant had not given the employee the opportunity to take vacation in time and therefore owes compensation to the employee.

The defendant-employer was, however, successful before the Ninth Senate of the Federal Employment Court (BAG): The BAG held that if the new law is interpreted to conform with the EU case law, then the lapse of vacation is only possible if the employer previously requested the employee to take vacation and informed the employee clearly and in good time. This case has significant potential for future claimants who are terminated before they have the option of taking vacation days.

How do I claim compensation for unused vacation in Germany?

Depending on the circumstances of your case, you may have a claim for benefits for unused vacation days. If your employer has not given you a clear and timely notice that your leave will lapse at the end of the year or if you were terminated and unable to use your vacation days, you may be able to claim compensation. Similarly, if you are still employed but did not use vacation days from a previous year, you may have the right to compensation or to carry the vacation days over if you were not explicitly told that your days would lapse.

Consequences for employees and employers

These 2018 European Court of Justice Rulings strictly limit the forfeiture of employee vacation claims. The court has ruled that vacation claims do not lapse simply because an employee did not request vacation. Employers should be sure to inform employees about their potential forfeiture of vacation days and with adequate notice. Employees should be aware of their rights to collect compensation for unused vacation days at the end of the year, or at the time of contract termination should their employer fail to provide adequate and timely notice.

Employment law and vacation days attorneys in Germany
Berlin – Hamburg – Munich 
– Frankfurt

If you are having a dispute with your employer regarding unused vacation days, we at ZELLER & SEYFERT Attorneys at Law Partnership mbB can help. Our attorneys are experienced in helping executives and employees to negotiate employment contracts and to recover any payments for unused paid days after termination. We will review the facts of your case and apply the relevant laws in Germany and the European Union to protect your rights. Please contact Atty. Dr. Christian Zeller for any support with your executive or employment contract disputes. You may reach him via email (mail@zellerseyfert.com) or on +49 69 58 80 972-40 (Frankfurt am Main) or +49 30 40 36 785-80 (Berlin).

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