On your mark! Get set! Vacation! FAQs on German Vacation Law (Part 2)

In the midst of the vacation season, many employers in Germany are prompted to address old and new questions surrounding the issue of vacation. This Insight series, "On your marks! Get set! Vacation!" is designed to help employers keep track of recurring issues and answer important questions about German leave law. In Part 2, we look at the:

Must-Knows in the Current Employment Relationship

Question 1: Do employees have to be informed about existing vacation entitlements?

Yes! Otherwise, a forfeiture of the employees’ (remaining) vacation entitlements is virtually impossible.

According to the case law of the European Court of Justice (ECJ) and the Federal Labor Court (BAG), employers are obliged to ask their employees to take their vacation. Vacation not taken no longer expires automatically on December 31 of the vacation year or by March 31 of the following year. Rather, employers must have enabled their employees to actually take the vacation in good time beforehand (for a detailed description of the employer's obligations to cooperate, see our blog post "Please take your vacation"). Employers should therefore:

  • not only request their employees take their vacation in good time in the respective vacation year (i.e., the current calendar year), but also
  • check in good time whether their employees may still be entitled to remaining vacation from the previous year and request that they take their vacation by March 31, pointing out that vacation entitlements may otherwise be forfeited.

The later will regularly occur if individual employees are unable to work due to urgent operational reasons (e.g., considerable personnel bottlenecks or workload) or personal reasons (e.g., illness), so that it was not possible for individual employees to fully utilize their existing vacation entitlement by the end of the year.

Otherwise, the remaining vacation entitlement will be added to the newly accrued vacation entitlement of the following year and there is a risk of accumulating considerable vacation entitlements.

Question 2: Are employees on long-term sick leave also entitled to vacation?

Yes! If an employee is permanently or long-term ill, vacation entitlement nevertheless arises at the beginning of the respective calendar year. This applies even if an employee has been unfit for work from the beginning of the year until the end of the employment relationship. This is because the vacation entitlement does not arise in return for work performed. Rather, the accrual of the entitlement to vacation depends solely on the (legal) existence of the employment relationship.

Since employees who are continuously incapacitated for work cannot take their vacation during their illness, they are granted a longer period (in deviation from the principle according to which vacation must be taken in the current calendar year) to "make up" for the vacation. However, to prevent vacation entitlements from accumulating for years due to illness, the Federal Labor Court has ruled that vacation entitlements of long-term sick persons expire 15 months after the end of the respective vacation year, i.e., someone who was continuously sick in 2021 can still claim the vacation entitlement for the year 2021 until March 31, 2023. If, on the other hand, the employee is incapacitated for work from January 1, 2021 up to and including the end of March 31, 2023, the vacation entitlement for 2021 shall lapse in its entirety (BAG, ruling dated August 7, 2012 - 9 AZR 353/10).

Question 3: Do the obligations to cooperate also apply to the vacation entitlements of employees on long-term sick leave?

Whether employees on long-term sick leave must also be informed of their vacation entitlement is a hotly debated issue. So far, there is no right or wrong answer here. This is because the European Court of Justice is currently dealing with this question (after the Federal Labor Court had already submitted this question to it for clarification in July 2020 (ECJ submission dated July 7, 2020 - 9 AZR 245/19 (A)). Since a request to take leave only makes sense if the employee is actually able to comply with it and take the leave, it is more than questionable whether employees who have been on long-term sick leave must also be informed about the leave to which they are still individually entitled. This is all the more true since employers must inform employees who are ill about their existing vacation entitlement after their return to work anyway (see above) in order to cause the vacation to expire at the next possible time. However, in his opinion of March 17, 2022, the ECJ Advocate General stated that leave should not be forfeited even in the event of prolonged illness under certain circumstances. Accordingly, employers must do their part to ensure that leave can be cancelled and must inform employees of the relevant deadlines (Case C-518/20 and C-727/20). The judgment is eagerly awaited.

Question 4: Do the obligations to cooperate also apply with regard to additional leave for severely disabled employees pursuant to Section 208 (1) SGB IX?

In principle, yes! In a ruling of November 30, 2021 (9 AZR 143/21), the German Federal Labor Court decided that the employer's obligations to cooperate also apply to the statutory additional leave for severely disabled persons pursuant to Section 208 (1) SGB IX.

But: This does not apply if the employer did not know about the severe disability and the resulting entitlement to additional leave, the severe disability was not obvious, and it was therefore not possible for the employer (despite all due care) to fulfill its obligations to request, inform, and enable the employee to take their leave. In this case, employers do not have to point out "out of the blue" that additional leave may exist. Because—according to the Federal Labor Court—it is at the discretion of the employee to inform the employer about the severe disability and therefore the ability to take the additional leave.

Question 5: May granted leave be revoked?

No, revocation of leave once granted is generally not possible. Only in rare exceptional cases are employers entitled to revoke leave that has already been granted. This applies even more so if the leave has already been taken. In this case, the revocation of leave is almost impossible. Thus, the employee cannot be recalled from vacation. Corresponding agreements are invalid. If, on the other hand, an emergency arises, it may be possible to revoke the leave by way of exception. In this case, however, employers must then bear the full costs incurred by the employee and, if applicable, their close family members.

Question 6: When must leave be granted in arrears?

In the event an incapacity for work or a cure falls within the period of the granted leave, these periods shall not be counted against the vacation entitlement. However, this only applies insofar as the employee can provide proof of incapacity for work for the relevant period. Only then are these periods not to be considered as fulfillment of the vacation entitlement and must be granted subsequently. Employers should therefore first obtain a certificate of incapacity for work before granting additional leave. In addition, the following applies: The employee may not arbitrarily extend the leave or "attach" it to the illness.

In Part 3 of the Insight series, we will look at the "must-knows" on the topic of "vacation" upon termination of employment.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.