Forfeiture of vacation only upon notice by the employer

In two recent decisions, the ECJ has further tightened the conditions for the limitation and forfeiture of vacation entitlements. The decisions were based on three cases from Germany.

In the first case, an employee who had regularly not taken all her vacation days over many years sought compensation for the vacation days not taken after termination of the employment relationship. The employer invoked the statute of limitations. The question to be clarified was whether the vacation days not taken can only be claimed retroactively within the framework of the regular limitation period of 3 years, or whether the employee is also entitled to compensation for vacation claims beyond the German limitation periods. The ECJ ruled in favour of the employee that an employer can only invoke the statute of limitations for vacation claims if it has actually put the employee in a position to claim the vacation, i.e. has sufficiently informed the employee of his vacation entitlement in advance and requested him to claim it.

The other two cases concerned employees who had been incapacitated for work for a long period of time before termination of their employment relationship. They demanded compensation for vacation entitlements they had acquired in the period before they became ill or incapacitated, i.e. during periods of actual employment. The employer invoked a forfeiture of these vacation entitlements because the carryover period of 15 months after the end of the vacation year had already expired.

It is now settled case law that in cases where employees are unable to take their vacation for health reasons, vacation entitlements expire 15 months after the end of the respective vacation year if the inability to work continues. However, no differentiation was previously made as to when the vacation entitlements had arisen, namely whether they had arisen during the incapacity for work or before.

Here, too, the ECJ ruled that vacation entitlements that arose before the onset of incapacity for work or disability only expire if the employer had actually enabled the employee to take the vacation beforehand, i.e. had sufficiently informed him of his vacation entitlement and requested him to take it.

The question remains for employers as to how they can sufficiently fulfill their obligation to inform and request. It is certain that simply stating in the employment contract that vacation entitlements must be taken, as they may otherwise be forfeited, is not sufficient. Nor is it sufficient to provide general annual information to all employees to take their vacation in due time. Rather, the notice to employees must be individualized. Each employee must be informed individually how much vacation is still outstanding in the calendar year and from any previous years, and under what conditions the annual leave entitlement will expire. When and how often such a reference must take place in the year or which legal consequences e.g. with the incorrect computation of vacation claims etc. occur, is not yet clarified and will surely still occupy the industrial tribunals in the future.

Since the employer bears the burden of proof that he has sufficiently informed the employees, it is advisable to send a written notice, which must be acknowledged by the employee, or an e-mail, the receipt of which must be confirmed.

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