Forfeiture of remaining leave – what employers need to know now

What did the Federal Labor Court (BAG) decide on 20.12.2022?

In its ruling(9 AZR 266/20), the Federal Labor Court (BAG) determined that leave is only time-barred if employers have transparently and unambiguously informed employees in advance of their existing leave entitlement and the possibility of it expiring. The BAG thus takes into account the previous decisions of the European Court of Justice (ECJ) on this issue.

What decision did the ECJ make on vacation expiry?

On 22.09.2022, the European Court of Justice (ECJ) ruled in a judgment(C-120/21 LB) that the automatic expiry of unused vacation entitlements at the end of the year, as stipulated by the German Federal Leave Act (BUrlG) in Section 7 para. 2 is contrary to European law. According to the ECJ’s ruling, a national law is only applicable in accordance with European law if it only permits the forfeiture of vacation entitlements without compensation in cases where employers have requested their employees to take vacation in good time.

How can employees be informed?

Employers must inform their employees transparently and in good time about the possibility of taking their remaining leave. Timely means that employees must also have the opportunity to take their vacation. The information from employers to employees should include the following:

• The number of vacation days to which the employee is entitled.
• A request to apply for leave in good time so that it can be taken before the deadline expires
• The information that the leave will expire without replacement if it is not taken within the specified period (three years according to the ECJ)

Information can be provided digitally via an Employee Self Service (ESS) in the form of an employee portal or an app, for example. This means that employers and employees always have the option of calling up current vacation entitlements, viewing vacation already taken and planned, and thus always having an up-to-date overview.