Expiration of holiday entitlements: BAG appeals to European Court of Justice
It is common for disputes to arise under employment law concerning compensation in lieu of holiday entitlements. According to German law, holidays that have not been taken expire at the end of the reference period.
GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: In principle, employees are entitled to a certain number of holidays per year. The issue of whether employees are entitled to compensation of lieu of this if they do not take full advantage of their right to apply for leave of absence is contentious.
According to German law, employees need to request leave of absence for holidays if this entitlement is not to expire without being replaced at the end of the reference period. The employer, on the other hand, is not obligated to set holidays for the employee of its own accord. Having said that, the Bundesarbeitsgericht (BAG), Germany’s Federal Labour Court, has raised the issue of whether European regulations preclude the application of this national rule and appealed to the Court of Justice of the European Union (CJEU) to clarify the matter.
The case in question concerns a worker who was employed for more than 12 years in total as a researcher on the basis of several fixed-term employment contracts. A few weeks before the employment relationship finally came to an end, the employer prompted the researcher to make use of his outstanding holiday entitlement. However, the latter only spent two days on vacation and asked his employer to cash out or compensate him for the remaining 51 holidays.
The courts of lower instance granted his claim for payment in lieu of holidays. The Bundesarbeitsgericht, on the other hand, expressed doubts, stating that according to German case law holiday entitlements expire at the end of the leave year. It went on to say that holiday entitlements generally lapse in the absence of grounds justifying their transfer pursuant to sec. 7 para. 3 sent. 2 of the Bundesurlaubsgesetz (BurlG), Germany’s Federal Holiday Act. Moreover, the employer is not obliged to grant leave of absence if no request for leave is made, or force the employee to go on holiday. The Court held that whether European law precludes the application of these rules under German law has yet to be clarified by the CJEU. The CJEU has since been called on to provide definitive clarity in relation to this issue.
When it comes to legal disputes relating to the workplace or drafting detailed employment contracts, lawyers who are experienced in the field of employment law can offer advice.
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