Whether it’s a heavy workload or prolonged illness, there are plenty of reasons that holiday days can end up going unused. In many cases, they simply expire at the end of the calendar year – but are there some cases in which they shouldn’t expire at all?
According to a new decision by the European Court of Justice (ECJ) – the highest court in the EU – some workers may be entitled to compensation for their “expired” holidays after all.
In a landmark ruling based on a dispute in Germany, the ECJ has stated that deadlines for taking holidays are only valid from the date when the employer tells their employees about the rules. It means that if workers are unaware that they have to use their annual leave within a certain time, these holiday days can still be taken after the supposed deadline has passed.
The latest decision comes on the back of a similar ruling by Germany’s Federal Labour Court in 2019, which obliged employers to remind their workers to take their holiday before it expired.
The Labour Court said that the reminders should be addressed directly to the employee in writing and should inform them explicitly that their holiday days could expire if the employee decided not to take them.
Law firm dispute
In the latest case in question, a tax clerk who worked at a law firm from 1996 to 2017 claimed she was entitled to financial compensation for several days of holiday.
Her contract entitled her to 24 days of annual leave, which she said she was unable to take over a number of years because she had too much work to do.
At the beginning of March 2012, her employer certified that she was entitled to a total of 76 days of remaining leave from 2011 and previous years.
This did not expire on March 31st 2013 as usual because she had not been able to take it “due to the heavy workload in the office”, the ruling explained.
In the following years, the employee once again did not take the full amount of annual leave she was entitled to. During this time, the employer did not remind her to take her holidays, nor did he indicate that the entitlement to leave could be forfeited if she did not take it.
After the tax clerk left the firm in July 2017, she received just €3,201.38 for 14 days of leave that hadn’t been taken in 2017.
According to the employee, at least 101 further days of leave were unaccounted for. In a court complaint, she demanded full compensation for these additional days of unused holiday.
However, her previous employer argued that the time limit for taking the holiday days had expired.
The case was initially heard by Solingen Labour Court and then by Düsseldorf Regional Labour Court. It subsequently ended up before the Federal Labour Court, who asked the ECJ to provide an opinion on whether Germany’s three-year cap on taking annual leave was compatible with European law.
According to the ECJ, the time limit isn’t problematic. However, it can only apply from the date that the employee is informed about the rule.
That means that, if workers are unaware that their holiday days can expire, the days can be still be taken after the three-year time limit is up.
“Indeed, since the employee is to be regarded as the weaker party to the employment contract, the task of ensuring that the right to paid annual leave is actually exercised should not be shifted entirely to the employee,” the judgment from Luxembourg states.
The former law firm employee is now likely to be entitled to a hefty payout from her previous employer. In its own judgement, the Federal Labour Court declared that the complainant was entitled to compensation for 76 days of leave at a rate of €228.64 per day.
This equates to a payout of around €17,400 plus interest.