Conditions under which a limitation period can apply to unexpired leave
The previous report already included a question relating to the application of the limitation period to unexpired leave entitlement that was referred by the Federal Labour Court (Bundesarbeitsgericht, BAG) to the ECJ. In its judgement of 22.9.2022, the ECJ has now reached a decision in this matter.
The subject of this decision was a claim for payment in lieu of leave not taken in 2017 and previous years that the claimant had initially asserted by instituting proceedings in the competent labour court. The claimant was employed by the defendant in the period from 1.11.1996 to 31.7.2017. In view of the high volume of work, the claimant had not been able to take the leave to which she was entitled. The employer, against whom the complaint was filed, was of the view that the claims that had been asserted were already statute barred.
Decisions by the lower courts
After the court of first instance had dismissed the claim, the Higher Labour Court (Landesarbeitsgericht, LAG) in Düsseldorf had set aside that judgement and admitted part of the claim. The defendant had not complied with his duties of cooperation, specifically, the duty to inform employees about annual leave and request them to use it up. For this reason, the defendant had also not been able to invoke the time limitation. The defendant lodged an appeal with the BAG – this court suspended the ruling and referred to the ECJ for a preliminary ruling. The ECJ had to clarify whether or not leave entitlement that cannot expire because of the employer’s failure to comply with their duties of cooperation could, when taking into account the requirements under European law, expire by limitation.
The judgement of the ECJ
The Advocate General at the ECJ, in his opinion on the preliminary ruling, already held the view that the German limitation periods were contrary to EU law. Employers may however not invoke the time limitation of any leave entitlement if they have failed to comply with their duties of cooperation.
The ECJ, in its decision of 22.9.2022 (case: C-120/21), agreed with the opinion of the Advocate General. The ECJ came to the view that leave entitlement can indeed be subject to the standard limitation period of three years. Nevertheless, an employer can only invoke cessation of entitlement after expiry of the limitation period if employees have generally had the chance to use their holiday entitlement. Employees would only be put in such a position once they have been informed accordingly by their employers.
Please note: If employers comply with their duties of cooperation, then the statutory minimum leave entitlement can expire by limitation. The limitation period commences only after information about the entitlement to paid annual leave has been provided.