On 6 November 2018, the EJC ruled on the cases of two plaintiffs from Germany. The first plaintiff was a trainee lawyer who was employed with the city of Berlin for his legal preparatory service. During the last months of his service he did not take any paid leave, but claimed financial compensation from his employer for the leave not taken after the end of his preparatory service.
The second plaintiff was employed by a research institute. Two months in advance of the end of his employment relationship, his employer requested him to take his remaining leave. However, the employer did not request the employee to take the leave within a fixed period of time. The employee did not take the leave, but requested financial compensation from his employer after the end of his employment.
The German courts which were involved in the two cases wanted to know from the EJC whether national law, under which the annual leave entitlement is lost if the employee has not applied for taking the leave before the end of the employment relationship, is contrary to EU law. The ECJ ruled that according to EU law an employee does not automatically lose his entitlement to the statutory minimum paid annual leave and to financial compensation for the leave not taken because he has not applied for the leave before the end of the employment relationship. These entitlements can only be lost if the employee was given the opportunity by the employer, e. g. by providing appropriate information, to actually take the leave in time. The employer is obliged to provide evidence for granting the employee such opportunity.
According to the ECJ, the reason for this is that the employee is the weaker contracting party and may, therefore, be discouraged from explicitly asserting his rights, because demanding his rights could adversely affect his working relationship. However, the loss of the entitlement to annual leave and financial compensation for annual leave not taken is justified if the employer can prove that the employee has voluntarily and in full knowledge of the facts waived his right to take paid annual leave and was given the opportunity by the employer to actually take his leave on time.
In practice, this new ruling of the EJC means that employers should monitor the outstanding holidays of their employees even closer. German law provides that the employee’s statutory holiday claims are generally forfeited at the end of each calendar year or by 31st March of the following year at the latest. According to the ruling of the EJC, this will only apply in the future if the employer expressly requested the employee to take his outstanding leave, even stating a certain timeframe, and the employee still did not take the leave.