Employers are not obligated to notify employees of expiring vacation entitlements during long-term illnesses
Update Employment Law October 2019
In its July 24, 2019 judgment (Case: 5 Sa 676/19), Hamm State Labor Court issued a ruling as to whether employers are obligated to also notify employees who are out of work due to long-term illnesses that their vacation entitlement will expire by December 31 of the calendar year or by March 31 of the subsequent year if those employees fail to take their vacation days. The court denied this on convincing grounds. The final verdict, however, will come from the Federal Labor Court.
Facts of the case and course of proceedings
The parties dispute the existence of the plaintiff’s 2017 vacation entitlement. The plaintiff is an employee of the defendant in a hospital and has been continuously unable to work due to illness since 2017. Consequently, she was unable to take 14 days of her 2017 vacation time. It is undisputed that the defendant did not give any information on the potential expiry of her vacation entitlement.
With reference to the Federal Labor Court’s February 19, 2019 decision (Case: 9 AZR 541/15), the plaintiff argued that her remaining 2017 vacation time had not expired. The defendant would have had to notify her of the impending expiry in due time.
Paderborn Labor Court (Case 5 Sa 676/19) dismissed the complaint. According to the court, the vacation entitlement expired 15 months after the end of 2017 and therefore on March 31, 2019. This would also apply taking into account the judgement of the Court of Justice of the European Union of November 6, 2018 (Case C-569/16). While employers in principle need to request employees to take their annual leave as vacation days in due time, this obligation does not exist in cases of long-term illness. This requirement would make no sense, since the relevant employees are unable to go on vacation during their incapacity to work.
In her subsequent appeal before Hamm State Labor Court, the plaintiff additionally argued that the duty to notify her had continued to exist because the nature and duration of her further incapacity to work had not yet been established by the end of 2017. If this were to be viewed differently, it would constitute discrimination of workers who are incapacitated for work.
Hamm State Labor Court dismissed the appeal and initially fully concurred with the statements of the previous instance court.
It pointed out that the defendant had not even been able to provide the information required by the Federal Labor Court. In its February 19, 2019 decision, the Federal Labor Court requested the information to be specifically tailored to the facts of the respective case. In the event of permanent incapacity to work, however, vacation entitlements would not expire until 15 months after the end of the calendar year from which they are resulting. Therefore, in the plaintiff’s case, it would simply have been wrong to notify her of the impending expiry of her vacation entitlement at the end of the calendar year, or at the latest by March 31 of the subsequent year.
In the opinion of Hamm State Labor Court, there is also no disadvantage for employees who are incapacitated for work. Workers who are unable to work for an extended period of time are not comparable with workers who are able to work. Therefore, any difference in treatment does not constitute discrimination. It would only make sense to require employers to notify employees if they are in a position to react and actually take the vacation. This is not the case in the event of continuous incapacity to work.
The State Labor Court concludes that the plaintiff ignores the fact that her asserted vacation claims would already have expired even if the relevant information had been provided. In accordance with the judgement of the Court of Justice of the European Union of November 22, 2011 (Case C-214-10), this was the case 15 months after the end of the calendar year in which the vacation entitlement came into being. Accordingly, the vacation entitlement for 2017 expired in any event on March 31, 2019.
Tips for use in practice
Hamm State Labor Court’s decision is to be approved without reservation. According to the case-law of the Court of Justice of the European Union, the obligation to notify employees of the expiry of original vacation entitlements is not an end in itself. It is merely intended to ensure that employees are encouraged to actually take the vacation days to which they are entitled for the respective calendar year. This is not legally possible during periods of incapacity to work, however. Against this backdrop, it is difficult to see why employers should nevertheless be obligated to provide such information during this period.
Although Hamm State Labor Court did not allow an appeal for lack of fundamental significance, the case is now pending before the Federal Labor Court. It therefore remains to be seen whether the Federal Labor Court will concur with the legal opinion of the lower courts.
It is not only on the basis of the aforementioned decision of the Federal Labor Court of February 19, 2019 that employers are urgently advised to establish a practicable solution to ensure that employees are sufficiently informed of the potential expiry of their vacation entitlement as of December 31 of the vacation year or as of March 31 of the subsequent year at the latest. In this process, workers with long-term illnesses must be taken into account if employers want to avoid the accumulation of their vacation entitlements. As soon as their incapacity to work ends, they should be informed of the potential expiry of their vacation entitlement without delay, even outside the regular cycle.