Following the most recent case law of the ECJ on the limitation of holiday entitlements, it was only a matter of time before the principles thereby established would also be reflected in Austrian case law. As a result, the principle hitherto firmly anchored in people’s minds (and strongly simplifying) – that holiday must be taken within three years, failing which it lapses – is largely undermined (OGH 27 June 2023, 8 ObA 23/23z).
The Supreme Court’s decision was based on facts in which the claimant had been employed by the defendant for around 17 years as a gamekeeper and later also as an estate manager. In the event of his absence, temporary staff were deployed, but they lacked the knowledge and experience to fully take over the claimant’s tasks. For this reason he worked for the defendant largely seven days a week in order to ensure the care of the animals and the maintenance of the estate operation.
During his employment relationship the claimant took only 121 days of holiday. The claimant was neither requested by the defendant to take his holiday nor alerted to the looming limitation. At the end of the employment relationship the claimant had (according to his submissions) an open holiday entitlement of 322.75 days. However, relying on § 4(5) UrlG, the employer paid only a holiday compensation payment for the holiday not yet time-barred from its point of view, i.e. for the holiday entitlement of the last three years before the end of the employment relationship. The claimant now also sought the holiday compensation payment for the remaining holiday which, according to his employer’s legal position, was already time-barred.
By law, every employee is entitled to paid annual leave under Article 31(2) of the Charter of Fundamental Rights (CFR). Under Article 7(1) of the Working Time Directive 2003/88/EC, the employee is entitled to a paid minimum annual leave of four weeks. Austrian employment law goes beyond the requirements of EU law by providing, under § 2(1) UrlG, for an annual holiday entitlement of at least 30 working days. Under § 4(5) UrlG, this holiday entitlement becomes time-barred two years after the end of the holiday year in which it arose. A total of three years is thus available for the actual taking of the leave in kind.
While the court of first instance still denied the claimant’s claim on the basis of this legal position, the Higher Regional Court granted his claim to that effect. The Supreme Court confirmed this decision and reasoned it by reference to the case law of the ECJ:
As early as 2018, in a much-noted decision on German holiday law, the ECJ had held that Article 31(2) CFR and Article 7 of the Working Time Directive preclude a limitation of the holiday entitlement where the employee, as the weaker party to the employment contract, did not actually have the possibility of taking the leave – for instance as a result of appropriate information provided by the employer. According to this case law, the task of ensuring that annual leave is actually taken may therefore not be shifted entirely onto the employee. Although, as already noted, these ECJ decisions concerned German legal provisions, they were also widely discussed in Austria, and even then considerable doubts were raised as to the tenability of the previous domestic case law on the limitation of holiday. For the time being, however, the Supreme Court still assumed that the three-year limitation under § 4(5) UrlG conformed to EU law, arguing that three years gave employees a reasonable period to enforce their holiday entitlement.
In the ECJ’s decision in Case C-120/21, LB v TO, it has now, however, been clarified that Article 7(1) of the Working Time Directive also precludes a national rule under which the entitlement to paid annual leave becomes time-barred after a period of three years where the employer has not actually put the employee in a position to exercise that entitlement.
As a result of this ECJ decision on a rule quite similar to § 4(5) UrlG, it is now also established – according to the Supreme Court – that the holiday entitlement secured under EU law (!) cannot become time-barred where the employer has not complied with its (now indisputably existing) duty to request and to inform vis-à-vis the employee. With the latest decision it is thus also clarified that the ECJ lays down, retroactively, a distinct obligation of conduct on the part of the employer in the form of a duty to request and to inform. The Supreme Court did not address the question of whether all of this also applies to the holiday entitlement not secured under EU law, i.e. going beyond the minimum amount of holiday under the Working Time Directive. A certain need for clarification therefore remains here.
For practice, this Supreme Court decision – in particular through the duty to request and to inform vis-à-vis the employee now expressly established also for Austria by the highest court – has serious consequences in many cases. For a breach of these duties entails considerable (financial) consequences. To that extent, in this area not only will the previous handling of open holiday entitlements have to be reviewed, but – where they do not already exist – (ideally automated) systems will also have to be considered in order to comply with the duty to request and to inform. We will of course be happy to support you in this!