European Court Of Justice Finds That There Is Not An Automatic Start Of The Limitation Periods For Paid Annual Leave Days

• Published date: 27 October 2022
• Subject Matter: Employment and HR, Employee Benefits & Compensation
• Law Firm: Ogletree, Deakins, Nash, Smoak & Stewart
• Author: Sophie Reimann

Paid annual leave days in Germany have been the subject of several recent decisions by the European Court of Justice (ECJ), with the Luxembourg-based judges regularly opposing previous case law of the Federal Labor Court regarding paid annual leave. The ECJ's concerns have centered on the forfeiture provisions in Germany's Federal Paid Leave Act, among other things. The ECJ'and subsequently the Federal Labor Court'consider an employer to be under an obligation to inform employees about existing paid annual leave entitlements, as well as their forfeiture, and to request that they be claimed (as we reported in March 2019). Only then is there any forfeiture at all. In three recent decisions, the ECJ has once again comprehensively dealt with an employer's obligations in connection with paid annual leave entitlements.

No Automatic Start of the Limitation Period for Annual Paid Leave

The decision of the ECJ of September 22, 2022'C-120/21, in which the ECJ ruled on the limitation period for paid annual leave claims'is likely to be particularly explosive and momentous. Under the case law of the German labor courts, the start of the three-year limitation period for paid leave claims has thus far not depended on whether an employer has fulfilled its obligations to inform employees and cooperate with regard to annual paid leave requirements. The ECJ once again took a different view and ruled that the statute of limitations for the leave does not begin to run if an employer has not fulfilled its aforementioned obligations.

The decision was based on the following facts:

An employee sued for compensation for her paid annual leave from previous years, which she was unable to take in full due to the large volume of work. The employer had not fulfilled its obligations to inform and cooperate in connection with the leave. Nevertheless, the employer invoked the statute of limitations for the employee's claims insofar as they arose more than three years ago. After the legal dispute reached the Federal Labor Court, the court referred the matter to the ECJ for a preliminary ruling.

The ECJ has now ruled that the German law regarding the statute of limitations for paid annual leave is not compatible with the European Working Time Directive. The ECJ held that employers must inform employees of their rights and of the...