Expiry of vacation entitlements at the end of the year

According to the wording of Section 7 BUrlG, vacation leave must be granted and taken in the current calendar year. Carryover to the following calendar year should only be possible in exceptional cases if this is justified by urgent operational or personal reasons relating to the employee. This also means that vacation days not taken may be forfeited.

Employees often do not get to actually use up their annual leave in the current calendar year. This could happen more frequently now - in times of short-time working. For a long time, employees had to ensure that their old vacation entitlements did not expire in the following year and were therefore lost. Since a landmark ruling by the Federal Labor Court in February 2019, this has changed to some extent.

BAG changes its case law in 2019

Accordingly, the leave entitlement only expires automatically if the employer has expressly requested the employee to take the remaining leave and also informs the employee that otherwise the remaining leave will expire on a certain date. With this decision, the BAG is changing its case law and implementing the corresponding requirements of the ECJ from a recent ruling.

According to the old case law of the Federal Labor Court, vacation days from the previous year could expire even if the employee had applied for them in good time but the employer did not grant them. However, this case law contradicts current EU law. This is now a thing of the past.

Employer must take action on vacation at the end of the year

Vacation days can now only be forfeited if the employee was actually able to take them. This is only the case if the employer, if necessary, specifically requests the employee to take the leave and also clearly and promptly informs the employee that the unused leave days will expire at the end of the carry-over period or the employment relationship. This also applies during short-time work.

However, this does not mean that the employer must grant the employee leave on their own initiative without an application. A number of requirements can be derived from this with regard to company practice, which must be observed.

A general notice addressed to all employees is not sufficient to meet the requirements of the BAG. This expressly requires a specific notice to the employee concerned. Therefore, if you want to be on the safe side, you should send a separate notification with the relevant information to each employee in addition to stating the remaining vacation days on the pay slip.

The point in time at which this request and instruction must be made has not yet been clarified with legal certainty. The BAG has not yet provided any further details on what exactly is meant by the requirement „in good time“. It seems doubtful that a notification at the beginning of the year is sufficient. This should therefore be done by mid-November of the current year.

In addition to these requests and instructions, employers must also document these processes. If a dispute arises in court, the employer must be able to provide evidence of the procedures in case of doubt.