Limitation of holiday entitlement

Created by Mag. Bianca Holzer |
Employment Law for Companies

1. Facts of the case

An employee was employed as a wildlife ranger and later also as an estate agent by an employer for 7 days a week. The employee was the only one who had the necessary training and experience to take care of the game. The employment relationship was terminated by the employer on 31.12.2020.

During his employment, the employee took only 121 days of holiday between 2003 and 2020. He was not requested by the employer to use up his leave and was not informed of the impending limitation period. Only a part of the holiday compensation was paid to him late.

The employee sued for default interest from the paid holiday replacement entitlement as well as for a further holiday replacement entitlement. The employer objected to the time-barring of the compensation for holiday entitlement which had not been paid out as holiday compensation.

2. Legal opinion of the Supreme Court (OGH 8 ObA 23/23z)

According to Art 31 (2) GRC (Charter of Fundamental Rights), every employee has the right to paid annual leave. According to Art 7 para 1 of the Working Time Directive (RL 2003/88/EC), the employee is entitled to a minimum paid annual leave of 4 weeks. 

The Austrian Holiday Act (UrlG) provides for an annual holiday entitlement of at least 30 working days according to § 2 para 1 UrlG. According to § 4 para 5 UrlG, this holiday entitlement expires after 2 years from the end of the holiday year in which it arose. The transfer of unused holiday entitlements to the following holiday years is only possible as long as they are not time-barred. A total of 3 years is thus available for the actual consumption of leave.

Upon termination of the employment relationship, the employee shall be entitled to a compensation payment for the unused holidays from previous holiday years in the amount of the outstanding holiday remuneration pursuant to § 10 para 3 UrlG, provided that the leave entitlement has not yet become time-barred.

According to the European Court of Justice (ECJ-684/16; C-619/16; C-120/21) and the Austrian Supreme Court (9 ObA 88/20m; 8 ObA 23/23z), the employer has a "duty of care for leave". I.e. the employer must request the employee to use up his leave or inform him clearly and in good time that if he does not take his leave, it will expire at the end of the permissible carry-over period. The employee must thus be put in the actual position of being able to take his paid annual leave. Otherwise, the employer could evade his obligation to request and inform the employee and would also be enriched by the expiry of the leave. 

If the employer does not do so, the employee's holiday entitlement is not time-barred. This means that the employee's holiday entitlement cannot be time-barred if the employer does not comply with his duty to request and inform the employee.

In the case at hand, the employer did not ask the employee to use up his leave and did not inform him of the impending limitation period. In doing so, he had breached his obligation to ensure that the employee actually used up his annual leave, which prevented the holiday entitlement from becoming time-barred. The employee was entitled to the corresponding holiday compensation.

3. Conclusion

The employer must take care to ask his employees to use up their leave and to inform them clearly and in good time of the impending expiry of their leave at the end of the carry-over period. Otherwise, the employees' holiday entitlements shall not become time-barred and the employer shall pay out the corresponding holiday compensation with the final payout upon termination of the employment relationship, if any.