Dear clients,

According to previous case law, leave not taken in the current calendar year expires at the end of the calendar year, but no later than 31 March of the following year. Existing leave that could not be taken because of the termination of the employment relationship had to be compensated. This is no longer the case!

In its rulings of 20 December 2022, the Federal Labour Court ruled that leave only expires or becomes time-barred if companies have previously and demonstrably expressly informed their employees in good time about the open days of leave and the expiry periods and the employee nevertheless did not take the leave of his or her own free will. In the absence of corresponding notices, claims from earlier years can now still be asserted. Employers may no longer rely on the three-year limitation period in these cases. The statute of limitations does not begin to run until the employer has given the notice.

The consequences of this new case law are serious for employers!

In the future, employers must meticulously fulfil their duty to inform. In future, the employer must inform each individual employee of his or her outstanding holiday entitlement in a verifiable manner and confirmed by the employee’s signature, both at the beginning of the holiday year and in good time before the end of the holiday year so that it can still be taken.

If employers do not fulfil these obligations, they may incur additional costs for holiday pay or holiday compensation that cannot be estimated. In this respect, noting the days of leave on the wage or salary slip is not sufficient.

Only with a verifiable note are the expiry and limitation periods set in motion.

As a result, according to this latest case law, the keeping of holiday accounts is indispensable. Only in this way is it possible for the employer to completely record all holiday entitlements and, based on this, to comply with his new obligation to notify.

Please contact us if we can support you in the implementation of the latest case law or in a legal review of the past, e.g. in the context of payroll accounting (leave accounts). Our payroll administrators and clerks will be happy to advise and support you by telephone on +49 (0) 351 – 43 83 70 8-0 or at info@riediger-legal.com.

Your team at RIEDIGER. legal | tax