Limitation of holiday claims – the next surprise for employers?

It is not that long ago that the Advocate General's Opinions of March and May 2022 on the expiry of untaken paid annual holiday caused a stir (Opinions of 17 March 2022 - C-518/20; C-727/20 and 5 May 2022 - C-120/21, respectively). With today's rulings, the ECJ is now further strengthening employee rights in accordance with the Advocate General's position while at the same time significantly restricting employer rights (ECJ, rulings of 22 September 2022 - C-120/21, C-518/20, C-727/20).

Almost two years after the BAG’s referral of questions on the expiry of claims to (payment in lieu of) holiday, one thing is certain: the claim to (payment in lieu of) holiday only becomes time-barred if the employer has fulfilled its obligation to indicate that the holiday must be taken. Otherwise, the employer cannot plead the three-year limitation period.  

Legal action was taken by a tax specialist who, after termination of her employment, demanded payment in lieu of unused annual holiday totalling 101 days of holiday from the years 2013 to 2017. 

ECJ agrees with the opinion of the Advocate General: expiry only in case of positive knowledge

Following the Advocate General's opinion, the ECJ confirmed the expected concern that the employee’s positive knowledge of the circumstances giving rise to his holiday claim is necessary for the three-year limitation period to commence. Germany's national statute of limitations is therefore contrary to the requirements of the Working Time Directive, when this leads to the expiry of the holiday claim of an employee who has not been clarified as to the situation. It is therefore the responsibility of employers to inform their employees of any impending expiry of holiday claims and to document this. Only then can the regular limitation period begin to run.

And what about employees on long-term sick leave?

In two further parallel cases referred by the BAG, the ECJ also ruled that the following distinction applies to employees on long-term sick leave: if an employee is continuously incapacitated for work, the 15-month expiry period remains in effect. If, on the other hand, the employee has been fit for work during the current calendar year, the employer also has to fulfil its information obligations in case of employees on long-term sick leave. If the employer does not fulfil this obligation, the residual holiday of this holiday year does not expire after the 15-month expiry period in case of the employee's illness or reduced earning capacity.

Practical implications for employers

Today's judgements from Luxembourg have been eagerly awaited in Germany for years. The ECJ's previous case law on employers' obligations to provide information in connection with residual holiday claims has posed challenges for employers over recent years and directly raised the question of the limitation period of such claims. As a result of the ECJ's rulings, employers will doubtlessly now have to prepare themselves for a flood of lawsuits for claims to (payment in lieu of) holiday from the past. From now on at the latest, it will be all the more important to document and store the notices to employees of existing residual holiday claims in future, so that corresponding evidence can be provided.

Back to list