Is unexpired leave subject to the standard limitation period?

Issue

The claimant was employed by the defendant in the period from 1.11.1996 to 31.7.2017. The claimant’s annual paid leave entitlement was 24 working days. On the 1.3.2012, the defendant certified to the claimant that the claimant’s remaining leave entitlement of 76 days from 2011 and previous years would not expire on 31.3.2012 because the claimant had not been able to take her holiday due to the high volume of work. In 2012 to 2017, the defendant granted the claimant leave on 95 working days. In February 2018, the claimant asserted a claim for payment in lieu of the remaining leave entitlement of another 101 days from 2017 and previous years. The defendant argued against this by invoking the limitation period. The  standard limitation period of three years, under Section 195 of the German Civil Code, for the claim that had been asserted had already expired prior to the termination of the employment relationship. 

Decisions by the lower courts

The Higher Labour Court (Landesarbeitsgericht, LAG) in Düsseldorf admitted part of the claim and ordered the defendant to make a payment in lieu of 76 leave days from 2013 to 2016. The claimant was able to provide indisputable evidence for (only) these 76 leave days. The defendant had not complied with his duties of cooperation (to inform about annual leave and request people to use it). The claimant’s entitlement to leave had therefore also not expired. Statutory leave may only expire by the end of the year or by 31.3 of the subsequent year if the employer has requested their employees to take their leave in good time and has pointed out that otherwise the leave will expire at the end of the year. Furthermore, the Higher Labour Court held the view that the employer would not be able to invoke the limitation period if they had not complied with their duties of cooperation in subsequent years, too. 

The defendant lodged an appeal with the BAG against this. The latter suspended the ruling and referred to the ECJ for a preliminary ruling on the question of whether or not leave entitlement that cannot already expire, in accordance with Section 7(3) of the German Federal Act Regulating Holiday Time, because of the employer’s failure to comply with their duties of cooperation could, at least, when taking into account the requirements under European law, expire by limitation. The appeal proceedings at the BAG have been suspended until the ECJ has issued its ruling. 

Opinion of the Advocate General at the ECJ

In his opinion on the preliminary ruling, the Advocate General at the ECJ held the view that the German limitation periods were contrary to EU law. At any rate, if the employer has failed to comply with the duty, which is incumbent on them, to inform employees of the (statutory minimum) leave that they should take. It is only through information provided by the employer that employees find out about their entitlement to paid annual leave. Once information about the entitlement to paid annual leave has been provided the limitation period then commences. 

Please note: Until the ECJ makes a final decision it would be advisable, purely as a precautionary measure, to provide information about annual leave that still has to be taken and combine this with a request to also take this leave. Otherwise the minimum leave will expire neither at the end of the year nor within the standard limitation period of three years.