Limitation of Claims for holiday leave according to Sections 194 et seq of the German Civil Code? - Request for a Preliminary Ruling to the ECJ

According to recent developments in the case law of the European Court of Justice (ECJ) and the German Federal Labor Court (BAG), entitlements for holiday leave can only lapse if the employer has fulfilled his obligation to cooperate, i.e. has informed the employee of the lapse in a timely, complete and correct manner. The BAG has now addressed the ECJ with the question, which has not yet been conclusively clarified and which will subsequently arise, as to whether entitlements for holiday leave that have not lapsed are subject to the statutory limitation periods.

Facts

The plaintiff was employed by the defendant from November 1, 1996 to July 31, 2017 as an assistant tax consultant and accountant. Her vacation entitlement amounted to 24 days of paid holiday leave per calendar year. In a letter dated March 1, 2012, the defendant certified to the plaintiff that the remaining holiday leave entitlement of 76 days from the calendar year and previous years did not expire on March 31, 2012, because the plaintiff was unable to take her vacation due to the high workload in the defendant's office. In her action before the Labor Court, filed in February 2018, the plaintiff requested financial compensation for a total of 101 days of holiday leave for 2017 and previous years. The defendant raised a plea of limitation in the appeal instance.

The plaintiff argues that she is entitled to the aforementioned holiday leave compensation claim for the years 2011 to 2017. The defendant had not complied with his obligation to cooperate as an employer, which is why, according to the current ruling of the BAG, her vacation entitlement did not lapse under Section 7 para. 3 of the German Federal Holiday Leave Act (Bundesurlaubsgesetz – BurlG). The defendant is of the opinion that a transfer of the vacation to the subsequent years did not occur. In the later course of the proceedings he raises in particular the objection of the statute of limitations. He is of the opinion that the regular limitation period of three years within the meaning of Section 195 of the German Civil Code (Bürgerliches Gestzbuch – BGB) had already expired at the time when the action was filed to the court.

The first-grade local labor court dismissed the action with regard to the compensation claim for the most part. The appeal lodged by the plaintiff at the Düsseldorf Regional Labor Court (LAG Düsseldorf) was largely successful.

Reasons for the decision

The LAG partially upheld the plaintiff's appeal. The decisive legal question with regard to the applicability of the statute of limitations according to Sections 194 et seq BGB to the entitlement for holiday leave was rejected by the court with reference to the current ruling of the BAG in accordance with European law.

The plaintiff's claims for holiday leave had not lapsed according to Section 7 para. 3 BurlG. If Section 7 para. 1 (1) and para. 3 BurlG is interpreted in conformity with the applicable European Directive, the employer is obliged to cooperate according to the current ruling of the ECJ and the BAG. Accordingly, the entitlement to the statutory minimum vacation can only expire at the end of a calendar year or any other permissible transfer period if the employer has previously enabled the employee to exercise his or her vacation entitlement and the employee has not taken the vacation of his or her own free will. According to the BAG, the employer must, if necessary, formally request the employee to take his or her vacation and inform him or her clearly and in good time that the holiday claims expire at the end of the calendar year or the transfer period. If the employer does not comply with this obligation to cooperate, the entitlement for holiday leave does not lapse but is added to the vacation entitlement arising in the following year.

The defendant had not complied with his obligation to cooperate as described above. This would only have been the case if, first, he had made the plaintiff aware of how much remaining holidays she was entitled to in his view, second, he had called upon her to take these remaining holidays promptly and, third, he had informed her clearly and in good time that the holidays would otherwise lapse at the end of the calendar year or the transfer period. In particular, in the opinion of the BAG it is irrelevant in this regard whether the employee herself is already aware of the remaining holiday entitlements which were due to her. In order to link the holiday entitlement to the specific calendar year, the employer must rather take the initiative actively.

The holiday entitlements did, moreover, not become time-barred even when the employment relationship was terminated in 2017. According to Section 195 BGB, the regular limitation period is three years and, pursuant to Section 199 para. 1 no. 1 BGB, begins at the end of the year in which the claim arose. Accordingly, for the holiday entitlements which arose at the earliest at the end of the year 2011, the statute of limitations would have come into effect at the end of December 31, 2014 and for the subsequent holiday entitlements in stages in the years 2015, 2016 and 2017. In the opinion of the LAG, the statutory limitations according to Sections 194 et seq. BGB already fails because of Section 7 para. 3 BurlG, as a more specific provision, supersedes the general civil law provisions. In any case, however, according to the opinion of the LAG the same standard should be applied to the statute of limitations in view of the above-mentioned application of Section 7 para. 1 and para. 3 BurlG in conformity with the European Directive. The core idea of employee protection behind the European law-compliant case law on the transfer of the vacation entitlement must also be taken into account in the question of the statute of limitations according to the LAG. Therefore, it would not be compatible with Art. 7 (1) of the European Directive 2003/88/EC if the employee could no longer assert his holiday entitlement after the third year following the vacation year, even though the employer had failed to comply with his obligation to cooperate not only once but continuously.

Practical Advice

With this ruling, the LAG ties in with the trendsetting ruling of the BAG with regard to the application of Section 7, paras. 1 and 3 BurlG in conformity with the European Directive, from which the described obligation of the employer to cooperate was developed. In the decision described above, the LAG Düsseldorf continues the development of this issue in line with the principles the BAG had set out in the past year in consideration of the requirements of the European law as interpreted by the ECJ. In doing so, the LAG transfers the legal evaluations to the problem of the limitation of holiday entitlements and draws the parallel to the obligation to cooperate, which has been emphasized repeatedly, insofar as the obligations of the employer developed for this purpose would in fact be undermined if limitation periods applied.

The revision was admitted because of the fundamental meaning of the legal question. Also the BAG found the question if the statute of limitations of holiday entitlements applies was relevant for the decision and consequently submitted it to the ECJ for a preliminary ruling. A Supreme Court decision on the question of whether holiday entitlements are subject to the statutory limitations despite violation of the employer's obligation to cooperate is therefore currently still to be awaited.