On Dec. 20, 2022, the German Federal Labor Court (Bundesarbeitsgericht, BAG) issued two important decisions on untaken paid leave with significant implications for all employers in Germany:

First, the BAG ruled that paid annual leave entitlement is not subject to the statutory three-year limitation period if the employer does not effectively allow the employees to take their annual paid leave, following a judgment by the European Court of Justice (CJEU) dated Sept. 22, 2022.

Secondly, the BAG also decided that the paid annual leave entitlement acquired before an employee becomes sick does not lapse after 15 months in cases where the employees are not permitted to take such paid leave, following another judgment by the CJEU dated Sept. 22, 2022.

With these two decisions, the BAG confirms and implements a previous judgment of the CJEU dated Nov. 6, 2018, in which the CJEU ruled that employees' mandatory claims to paid leave will not be subject to lapse if their employers did not explicitly ask the employees in good time to take paid leave during the calendar year, effectively enabling the employees to take paid leave before the end of such year. Since the statutory paid annual leave entitlement is based on an EU regulation, the BAG applies these principles to German statutory paid annual leave.

What Should Employers Do?

1. Employers should ask their employees to take at least their statutory annual leave (20 days in the case of a five-day work week) within a calendar year.

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