Where is the journey going? – Current developments in vacation law

Hardly any other area of labour law was as comprehensively and as fundamentally the subject of jurisdiction as vacation law this year alone. Not only Erfurt, but increasingly also Luxembourg is the source of these influences.

Just Tuesday last week, the Federal Labour Court (Bundesarbeitsgericht – BAG) ruled that employees are not entitled to statutory vacation during the release phase of partial retirement models as they are not obliged to work (BAG, decision of September 24th, 2019 – 9 AZR 481 / 18).

We would like to take the recent BAG-decision as an opportunity to give you an overview of the most important developments in vacation law, all of which have a direct impact on the existing employment relationship and are therefore of direct relevance to labour law practice.

1. No automatic forfeit of vacation: employer’s duty to inform

The most important and at the same time most drastic change in vacation law was the restriction of the principle according to which vacation forfeited automatically at the end of the year, at the latest however by March 31st of the following year. However, the BAG held that vacation not taken in the vacation year or within the transfer period can only then be forfeited if the employer has informed the employee clearly and in good time of the impending forfeiture. Employers must exercise due diligence to enable their employees to actually take annual vacation (BAG, decision of February 19th, 2019 – 9 AZR 541/15).

The Higher Labour Court of Cologne (decision of April 9th,. 2019 – 4 Sa 242/18) took the BAG ruling one step further and stated that this obligation to provide information applies not only to the current calendar year, but also to previous years. If the employer was unable to prove that he had exercised all due diligence in fulfilling his burden of initiative, the forfeiture of the vacation entitlement at the end of the entitlement period or the permissible transfer period or upon termination of the employment relationship would violate EU law.


Employers should therefore timely remind their employees to take their vacation in the current year and inform them of the possible forfeiture if they do not use it, e.g. in the form of a notice at the beginning of the calendar year and shortly before the end of the third quarter of the year.

2. Heritability of the vacation entitlement

The right to vacation experienced a further U-turn when the BAG referred the question of whether successors of a deceased employee can demand financial compensation for the statutory minimum vacation not taken by the deceased employee to the European Court of Justice (ECJ). The ECJ ruled: In case the employment relationship ends due to the death of the employee and the employee is still entitled to vacation claims, these are transferred to the employee’s successors (ECJ, decisions of November 6th, 2018 in Cases C-569/16 and C-570/16). Until now, according to German understanding, the vacation claim – in contrast to the vacation compensation claim – could not be inherited as a highly personal claim. However, according to the ECJ, the already obtained entitlement to paid vacation cannot be withdrawn retroactively.


The decision of the ECJ applies in principle only to the statutory minimum vacation under the Federal Leave Act (Bundesurlaubsgesetz – BurlG), but not to additional vacation under a collective agreement or an employment contract. For the latter, the heritability of vacation entitlements can be excluded.

3. Determination of vacation entitlement in the event of a change in the number of working days during the year

The BAG also corrected its – still fairly recent – jurisdiction on the determination of the statutory vacation entitlement in the event of a change in the distribution of working hours during the year.

Only in 2017, the BAG refused to interpret a collective bargaining vacation regulation in case of a change in the distribution of working time during the year as meaning that the vacation entitlement determined each calendar year is to be divided into time periods and thus to be calculated as the sum of several (partial) vacation entitlements (BAG, decision of March 14th, 2017 – 9 AZR 7/16).

The BAG has now resigned from this jurisdiction and is thus fully in line with the ECJ. In case the number of weekly working days changes during the year, the vacation is to be determined for each period according to the number of weekly working days agreed for the period in proportion to the agreed number of weekly working days.


In order to determine the amount of the vacation entitlement, the number of days per week on which the employee is obliged to work must therefore first be determined. In case of a change in weekly working days during the year, the vacation entitlement for the respective calendar year has to be converted taking into account the individual periods of work and the number of days of the week that are allocated to them.

  • No statutory vacation entitlement for unpaid special leave

No vacation during special leave: if the employee does not work throughout a calendar year because of an agreed special leave, there is also no entitlement to vacation (BAG, judgment of March 19th, .2019 – AZR 315/17).

Until now, it has been settled case-law that vacation entitlements also arise during an inactive employment, since there is no reciprocal relationship between entitlement to vacation and the performance of work.


The turnaround of the BAG should in particular simplify the agreement of so-called sabbaticals. Employers are therefore not obliged to grant employees vacation in the amount of the statutory minimum vacation after their return. However, it is advisable to include an explicit provision to this effect in the sabbatical agreement. If the employee is not on special leave during the entire calendar year, the vacation entitlement is again determined by time periods.

4. No vacation during the passive phase for block model partial retirement

Considering the two previous decisions, the most recent ruling of the BAG on vacation law is not surprising either: the BAG not only rejects an employee’s vacation entitlement during the passive phase for partial retirement models, but also confirms the determination of the vacation entitlement according to time periods in the case of changes in weekly working hours during the year (BAG decision of September 24th, 2019 – 9 AZR 481 / 18).

In the case decided by the BAG, the plaintiff employee and the defendant agreed to continue the employment relationship as block model partial retirement.

During the work phase, the employee performs his full work in advance for the subsequent passive phase. To the extent of the employee’s work in advance, the employee acquires, not only claims to subsequent payment of remuneration, but also a corresponding claim to exemption from the obligation to work and thus a time credit. An employee in the passive phase who is released from work for the entire calendar year therefore has no entitlement to vacation due to a lack of work obligation.


Employers therefore must not grant vacation during the passive phase in partial retirement or compensate such with termination of employment. In case the passive phase starts during the year, the vacation entitlement is to be determined by time periods according to the number of workdays. These principles apply to both the employee’s statutory and contractual vacation entitlement.

Related Posts