German employers ‘must give notice of holidays expiring’, court rules

Employers in Germany often set strict deadlines for taking annual leave - but a new court ruling states that these deadlines could be invalid if employees don't inform their workers of the rules.

A daily planner with a reminder of an upcoming holiday
A daily planner with a reminder of an upcoming holiday. Photo: picture alliance/dpa/dpa-tmn | Zacharie Scheurer

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.

READ ALSO: Why German employers will soon have to record staff working hours

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.

Financial compensation

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.

READ ALSO: Bildungsurlaub: What is Germany’s ‘education holiday’ and how can I use it?

The entrance to the European Court of Justice in Luxembourg.

The entrance to the European Court of Justice in Luxembourg. Germany’s three-year cap on untaken leave is compatible with EU law. Photo: picture alliance / dpa | Nicolas Bouvy

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.  

READ ALSO: Which public holidays are coming up in Germany?

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Will German employers really have to monitor staff working hours?

An overhaul in the way working hours are tracked in Germany is on the cards following a recent court decision. But it remains unclear what it actually means for the world of work. The Local asked experts what's going on, and what happens next.

Will German employers really have to monitor staff working hours?

What’s happening?

Last week, the Federal Labour Court (BAG) declared that employers in Germany should be recording the working hours of all employees.

READ ALSO: Why German employers will soon have to record staff working hours

The decision brings into force a 2019 ruling by the European Court of Justice (ECJ), which stated that employers in member states should be implementing systems to record how many hours per week employees were working, which until now, has not been brought into law by the German government.

The main reason for this, according to the ECJ, is to protect staff from excessive working hours and unpaid overtime. 

What are the consequences of the ruling?

Labour Law specialist Dr. Michael Fuhlrott explained to The Local that the ruling has an immediate legal effect: the court decided that the ECJ ruling means that the German Occupational Health and Safety Act must now be interpreted in such a way that it includes an obligation to record working hours.

“In other words, the obligation applies directly, to every company with immediate effect,” Fuhlrott said.

Updating the German law book to include the original judgement of the European Court of Justice from 2019 had been on the coalition government’s agenda for some time, but was put on hold due to the pandemic. When a relevant case came to the Federal Labour Court, the judges took the opportunity to address this gap in the law.

An electronic clock for recording working hours on display in the Chemnitz Industrial Museum. Photo: picture alliance/dpa/dpa-Zentralbild | Jan Woitas

But in the absence of a written law, it’s unclear exactly how the new rules will be enforced. 

Dr. Fuhlrott said: “There is currently a high degree of uncertainty as to how the ruling is to be understood. We will have to wait for the court’s exact reasoning. In view of this current lack of clarity, companies should first wait for the exact reasoning behind the decision and then consider how to respond to it.”

It seems unlikely, for example, that the decision will give employees a right to take legal action against employers for not enforcing mandatory working time logs. But what could happen, is that authorities could start to check up on companies to see if they are keeping tabs on their staff’s working hours. Though in the absence of clear government regulations, this also seems unlikely. 

READ ALSO: Jobs in Germany: Should foreign workers join a union?

One thing that is clear, however, is that the federal government is now under pressure to define exactly how the law will work. 

Speaking to the Süddeutsche Zeitung, Labour Lawyer Philipp Byers said “it creates enormous legal uncertainty, which the German government must now urgently address.”

When it comes to bringing in new legislation to incorporate the ECJ decision, it’s likely that there will be a little bit more room for manoeuvre when it comes to defining exactly how the law will work. 

It may be possible that companies that operate on a “trust model” will be able to keep some degree of flexibility in the way time recording is carried out.

A spokesman for the German Labour Ministry told the Local that any further consequences of the ruling can only be fully assessed after the court publishes its reasoning for the decision. That is expected in the coming weeks. 

“The Federal Ministry of Labour and Social Affairs will examine this and is working on a corresponding draft law,” a spokesman said. 

What’s the reaction from people in Germany?

Following the decision, a survey conducted by the opinion research institute Civey for T-online, showed that the majority of Germans see the development as a good thing.

In answer to the question, “How do you view the fact that all employees will have to record their working hours in the future?” 61 percent of respondents answered either “very positively” or “positively” while only 22 percent responded with the answer “negatively” or “very negatively”. A total of 17 percent were undecided.

However, there is lots of disagreement on the ruling. On the one hand, it could strengthen workers’ rights and help prevent unpaid overtime, while on the other, it introduces a significant bureaucratic hurdle for workers and organisations which have previously operated on a  “trust model” of timekeeping. 

A woman works from home in her living room in Stuttgart. Photo: picture alliance / dpa | Daniel Naupold
A man sits with a laptop and a screen at a table in front of a window in his home office. Photo: picture alliance/dpa | Fabian Strauch

The shift towards working from home also throws up possible advantages and disadvantages for the new rule. On the one hand, it may mean that employees working from home will now have to document every minute they are not actually working, while on the other hand, those for whom working from home means more overtime will be fairly compensated. 

READ ALSO: Nearly a quarter of employees in Germany ‘continue to work from home’

North Rhine-Westphalia’s labour minister Karl-Josef Laumann (CDU), welcomed the decision and called for the ruling to be implemented quickly.

“Now the years of back and forth between the Federal Ministry of Economics and the Federal Ministry of Labor must come to an end and it must be clearly stated in the reform of the Working Hours Act that hours must be recorded,” he said.

However, the employers’ association BDA slammed the ruling from the court, calling it “hasty and not well thought out”.

BDA CEO Steffen Kampeter said in a statement last week that the decision “overburdens employees and companies” without anything legally being set in stone.

“This decision must not be allowed to call into question proven systems of trust-based working time that are desired by employees,” Kampeter said. 


Working time recording – (die) Arbeitszeiterfassung

Federal Labour Court – (das) Bundesarbeitsgericht

Trust model – (das) Vertrauensmodell

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