How to Pass on Vacation Time

According to a ruling by the European Court of Justice on June 12, 2014, an employee does not lose their entitlement to paid annual leave upon death. The previously held view in Germany to the contrary is thus no longer valid.

Those who die no longer need rest. This view, which was recently even upheld by the Federal Labor Court, no longer applies. The widow of an employee who died in November 2010 challenged this restrictive interpretation. Her husband had been employed by a company since 1998. Due to illness, he had been able to work only intermittently since 2009. When he died the following year, he still had 140.5 days of unused vacation time. His widow demanded financial compensation for the vacation entitlement. The case went all the way to the Hamm Regional Labor Court, which stayed the proceedings and referred the matter to the European Court of Justice.

Reasons for the Judgment

According to established European case law, every employee’s right to paid annual leave is a particularly significant principle of social law. It is also undisputed that an employee is entitled to financial compensation for unused vacation if their employment relationship ends and it is therefore no longer possible for them to take their vacation. Financial compensation is essential to ensure the practical effectiveness of the right to paid annual leave. If the entitlement were to lapse upon the employee’s death, this would result in an unforeseeable event—one beyond the control of either the employer or the employee—retroactively leading to the complete loss of the entitlement to paid annual leave. The judges further held that such compensation for unused vacation cannot be made contingent on a corresponding request having been submitted in advance (i.e., while the employee was still alive).