Residual leave and labor law what employers should know impulse

When does remaining leave expire? In which cases can employees carry it over into the new year?? And what applies in the event of prolonged illness? The most important regulations at a glance.

Contents: What you can expect in this article

When does the remaining leave of the employees expire??

Many employees ame that the remaining leave will not be used until the 31st day. March of the following year. However, this is a mistake: According to the Federal Vacation Act, vacation must be taken in the current calendar year – unless otherwise stated in the employment or collective agreement. The annual leave of 2021 therefore expires in principle on 31 March of the following year. December 2021.

Literally, the German Federal Vacation Act (BUrlG), section 7, paragraph 3, states in this regard: "Vacation must be granted and taken in the current calendar year. Carrying over vacation to the next calendar year is only permissible if justified by urgent operational reasons or reasons relating to the employee."

Important ruling of the European Court of Justice

The judges from the European Court of Justice (ECJ, Ref.: C-619/16, C-684/16)) have tightened the requirements for the forfeiture of vacation in 2018. Although the Federal Leave Act still states that vacation must be taken in the current calendar year, the rule may no longer be applied so strictly: Thus, employers must now notify their employees in writing in a timely manner that vacation must be taken by 31. December or by 31 December at the latest. March of the following year must be taken, because otherwise it expires. The employer must prove that it has complied with its duty to inform, ruled the Federal Labor Court in the wake of ECJ case law (Az.: 9 AZR 541/15).

If this information is not provided, the leave is not forfeited – even if the employee has not applied for leave at all. The vacation can therefore be taken over into the next year. This is also possible if there are other good reasons: "This can be the major project that has to be completed before the end of the year," explains Cologne-based labor lawyer Nele Urban – or even a long illness (see below). Once transferred vacation can not simply be taken away from the employee in the next year, if, for example, framework conditions have changed.

Advice from a lawyer

To avoid carrying over vacation to the new year, Hamburg labor lawyer Henning Muller of the Altenburg law firm advises entrepreneurs to follow the guidelines of the Federal Labor Court in the context of the duty to notify. According to this ruling, the employer must refer to a "concretely" designated vacation entitlement of a specific year when fulfilling its obligations to cooperate.

It can fulfill its co-operation obligations according to Mueller for example by the fact that it communicates to the employee at the beginning of the calendar year in text form, how many working days vacation are entitled to it in the calendar year to request it to request its annual vacation in such a way in time that it can be taken within the current vacation year, and it over the consequences instructs, which occur, if this does not request the vacation in accordance with the request.

In addition it is meaningful to let the coworkers in the third quarter an updated communication regarding the still open vacation claims in text form send, says attorney Mueller.

Duty of care

In addition, the employer has duties of care towards its employees. He must ensure that an employee takes at least the legally required minimum vacation per year, ruled the Berlin-Brandenburg Regional Labor Court in 2015 (Az.: 10 Sa 86/15). This amounts to 24 days for a six-day week and 20 days for a five-day week. Otherwise they violate their duties to protect employees. Accordingly, in the same year the LAG Munich (Az.: 8 Sa 982/14). The ECJ ruling from 2018 confirmed this legal opinion.

What does it mean for employers when employees carry over vacation into the new year?

For each day of vacation that an employee takes with him into the new year, companies must form provisions in their balance sheet – in case an employee with remaining vacation is dismissed or the company files for insolvency. This has an impact on the annual financial statements: the provisions reduce the taxable profit. If the company is in the red, the employer should try to ensure that the employees carry over as little remaining leave as possible into the new year – otherwise the deficit in the balance sheet will be even greater.

How can employers calculate the provisions for remaining vacation??

Contrary to what many entrepreneurs believe, vacation accruals are not based on an employee's gross salary. The decisive factor for the amount of accruals is rather the so-called vacation pay – and this is measured differently under commercial and tax law.

Vacation accruals are almost always higher in a company's commercial balance sheet than in its tax balance sheet. One reason for this: the sum of residual leave entitlements may be divided by 250 working days as a lump sum in the case of a five-day week under tax law; under commercial law, the actual working days serve as the basis. And these are after deduction of vacation-. Sick days usually less than 250. In addition, under commercial law, not only the gross salary is taken into account, but also future salary increases and special bonuses.

In general, vacation accruals can be calculated either as an average value or for each employee individually. "The individual calculation is much more accurate and, for small companies with few employees, not much more time-consuming than the average calculation," says Wittenberg tax consultant Gaston Winterfeld. You can calculate the amount of your vacation accruals yourself with the help of our quick check.

How long does the employee have after the transfer to take the remaining leave?

If the remaining vacation is carried over into the new year for operational reasons, the employee gains time until the 31st day of the new year. March of the following year – this is also regulated in the German Federal Leave Act (Bundesurlaubsgesetz – BUrlG), Section 7, Paragraph 3: "In the event of a transfer, the leave must be granted and taken in the first three months of the following calendar year."

There is no further extension of the deadline. However, employers are of course free to grant their employees residual leave even after this date.

In the case of illness and parental leave, the cut-off date is 31. March not.

Which regulations on residual leave apply in the event of long illness?

If an employee is unable to take his or her vacation due to illness, it does not expire at the end of the year as it would otherwise – this was decided by the European Court of Justice (ECJ) in 2009 (Ref. C-350/06, C-520/06).

However, the ECJ limited this ruling in 2011 and declared a collectively agreed provision to be lawful, according to which vacation accrued during sick leave expires 15 months after the end of the vacation year (Az. C-214/10). Referring to this judgment, the Federal Labor Court ruled in 2012 that leave after a long illness expires on 31. March of the year after next expires. (9 AZR 353/10). Employers must therefore make provisions for the remaining vacation of long-term sick employees for two years; because that is how long the vacation entitlement lasts.

What regulations apply to residual leave in the case of parental leave?

If an employee goes on parental leave and has not taken all of his or her vacation days beforehand, these days are carried over to the period after parental leave. This is regulated by section 17, paragraph 2, of the Federal Parental Allowance and Parental Leave Act. "If the employment relationship ends during parental leave or is not continued following parental leave, the employer must pay out any leave not yet granted," it continues.

Employers must therefore also set aside provisions for the remaining vacation of employees on parental leave.

For a comprehensive overview of regulations on parental leave, see our article "Parental leave and maternity protection: what employers must consider when employees become parents".

Do employees generally have the right to have their remaining vacation paid out to them?

Good news for bosses: there is no right to vacation payout – so no one has to fear that employees will bunker down their vacation and present the bill for their work zeal at the end of the year. Because according to the wish of the legislator vacation is to serve the recovery – a payment of the vacation is not intended in the federal vacation law.

What happens to the remaining vacation when an employee dies??

However, there are exceptions. In November 2018, the ECJ ruled in a judgment (Az.: C-569/16, C 570-16) that the heirs of a deceased employee are entitled to financial compensation for the vacation not taken.

What happens with the remaining leave in the case of a dismissal?

And also in the case of a dismissal remaining vacation can be paid out. If the employment relationship has lasted longer than six months before a boss gives notice to the employee, the employee is entitled to full annual leave- even in the case of termination without notice. If an employee can no longer take his remaining vacation days in full, the employer must pay them to him.

Important: Employers are obliged to hand over to the employee a certificate of the vacation granted or settled in the current calendar year when the employment relationship ends.

How much remaining vacation can the employee claim at all if he or she quits?

The remaining leave to which an employee is entitled in the event of termination is often calculated incorrectly. Because, what many do not know: if an employee retires in the second half of the year (that is, after 30. June of a calendar year) from the company, he has in principle Entitlement to full annual leave. In the first half of the year, he is only entitled to one-twelfth of his annual leave for each full month he works for the company.

Meier GmbH has agreed with employee Schmidt 24 days of annual leave in the employment contract. Mr. Schmidt takes no vacation in the current year and quits. His entitlement to residual leave is ..

… 2 vacation days if the employment relationship ends at the end of January … 4 vacation days (2 per month) if the employment relationship ends at the end of February, etc. .. 24 vacation days (full annual vacation), if the employment relationship ends at the end of July

What applies in the event of termination with immediate release with regard to remaining leave?

There are high legal hurdles for termination without notice. Therefore, it is common practice to give the employee alternative ordinary notice of termination and immediately release him/her from work with accrual of vacation entitlements – quasi as a precautionary measure in case the termination without notice is shot down.

The claim to remaining vacation does not expire thereby, however, d a the employer by a release for the period after entrance of the notice without notice can grant vacation only then effectively, if he pays the vacation remuneration before beginning of vacation to the employee or promises without reservation. T his is regularly not done by the employer in the case of dismissals without notice, the employee has, according to a ruling of the Federal Labor Court (Ref.9 AZR 455/13), the employee is entitled to have the remaining vacation time paid out.

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