After job changes or terminations, there are often disputes about outstanding holiday entitlements that employees want to have paid. In a landmark decision, the Federal Labor Court ruled on Tuesday that a statute of limitations of three years continues to apply to claims for financial compensation for vacation not taken after the end of an employment relationship. The Erfurt judges thus provided clarification in German vacation law. A case from Lower Saxony was negotiated.
Employees who had hoped that the statute of limitations for compensation claims would also be abolished following a holiday ruling by the highest German labor judges in December were disappointed. However, the court granted a transition period from 2018 to 2021 for old cases, as the presiding judge Heinrich Kiel made clear.
Employers must indicate holiday entitlements
The judges were reacting to the case law on the expiry of holiday entitlements that has changed in recent years. The European Court of Justice ruled on this in 2018, followed a year later by the Federal Labor Court. Normally, the periods begin at the end of the calendar year in which holiday entitlements are disputed.
Shortly before Christmas, the Federal Labor Court ruled that vacation in an existing employment relationship cannot become statute-barred if employers do not comply with their obligation to provide information. They must inform their employees of their holiday entitlements and warn that they will be forfeited if no holiday request is made. A ECJ decision was thus implemented in German law.
Some employers feared a flood of lawsuits because of the payment of outstanding holiday entitlements from employment relationships that had ended years ago. Employees would sue for money for open holiday entitlements, especially after the end of employment – in ongoing employment, concern for the job plays a greater role, explained the Bonn employment lawyer Gregor Thüsing.
Kiel justified the existence of the three-year limitation period for compensation claims from terminated employment relationships with the fact that it is not about the important recreational purpose, but a “pure monetary claim”, i.e. financial compensation for vacation. In addition, after the end of the employment relationship, there is no longer any pressure for employees to possibly forgo vacation.
A flight instructor and pilot from Lower Saxony provided the precedent for the decision, who demanded a total of 44,899 euros from his employer for unused vacation from 2010 to 2015 – with success for some of the years. He was awarded 37,416 euros.
