Following several cases before the ECJ which have given German holiday entitlement law an impulse in a new direction, the Federal Labour Court has ruled in a further decision (dated 7 August 2012; 9 AZR 353/10), which accounted for the requirements of European law, that the loss of the holiday claim in case of an employee’s long-term illness is lawful upon the expiry of 15 months after the end of the year in which the holiday accrued.

The Federal Labour Court’s decision was based on the appeal on points of law by the sued employer, whose employee – after having left the employment relationship in 2009 following a long-term illness – sued for € 18,841.05 in remuneration for 149 days of holiday from the years 2005 to 2009. The previous instances had always ruled in the claimant’s favour, albeit that the courts had limited the remuneration of the statutory holiday entitlement by reducing the amount of the claim to about € 13,500.

The Federal Labour Court exclusively acknowledged the remuneration of the holiday for the years 2008 and 2009 and explicitly stated that in cases of employees incapacitated from work on grounds of a long-term illness, Sec. 7 para. 3 sentence 3 German Federal Holiday Entitlement Act [Bundesurlaubsgesetz, BUrlG] - pursuant to which a transferred holiday entitlement must be granted and taken during the first three months of the following calendar year - must be interpreted in conformity with Union law to the effect that the holiday claim expires 15 months after the expiry of the year in which the holiday accrued. With this, the financial risk – particularly with a view to reserves – has finally become terminable