See below this judgement from 20 December 2022 on the forfeiture and limitation of annual vacation entitlements.

Summary

• On 20 December 2022, the German Federal Labour Court (“BAG”) ruled that the entitlement to statutory minimum vacation is only subject to the three-year year statute of limitation if the employer has (i) previously informed its employees about their specific vacation entitlements and that the vacation will lapse if they do not take it and (ii) the employee then freely decides to not take them (See judgment - 9 AZR 266/20).
• If the employer fails to do so, the corresponding vacation claims of the employees from earlier years can still be asserted.
• The employer cannot rely on the regular three-year statute of limitation period (Sections 195, 199 German Civil Code (“BGB)”) as the statute of limitation period only begins at the end of the calendar year in which the employer properly informed the employees.
• With guidance by the European Court of Justice (“ECJ”), the BAG is thus continuously implementing an employee-friendly interpretation of national vacation law.
• Employers must pay attention to explicitly pointing out existing vacation entitlements of employees in a timely manner and to remind employees of their expiration in a documented way.
• Otherwise, there is a risk that employees will accumulate endless vacation days over the years, which must be either granted or paid out at the end of the employment.
• So far only the BAG press release of the judgement...

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