Holiday limitation period – employer’s obligation to request and inform

In its recent decision on 8 ObA 23/23z, the Austrian Supreme Court (OGH) held that the holiday entitlement guaranteed under EU law is only time-barred if the employer has requested the employee to take the holiday and has pointed out the limitation period.

If the employer fails to comply with the request and notification obligations specified by the Supreme Court, the holiday does not expire and can therefore be used up in kind during the ongoing employment relationship or must be taken into account as part of the holiday compensation payment upon termination of the employment relationship. The Supreme Court hereby follows the European Court of Justice (ECJ).

Under Austrian law, holiday entitlement is generally five weeks or six weeks after 25 years of service. European law also provides for a minimum holiday entitlement of four weeks in the Working Time Directive (Directive 2003/88/EC of the European Parliament and of the Council of 4 November 2003 concerning certain aspects of the organisation of working time). Furthermore, the European Charter of Fundamental Rights also stipulates that every employee is entitled to paid annual leave, without specifying a minimum entitlement.

Under Austrian law, holiday entitlement generally expires two years after the end of the holiday year in which the holiday was taken. Outstanding holiday entitlements can be carried over to the next holiday year if they are not yet time-barred. Employees must therefore use up their holiday within three years. When the employment relationship is terminated, old holiday entitlements for previous holiday years must be compensated, provided they are not yet time-barred.

According to the Austrian Holiday Act, holiday consumption must be agreed between the employer and the employee; however, the law does not stipulate any information or request obligations with regard to the limitation period for holiday entitlements or holiday consumption vis-à-vis employees.

However, such obligations now result – for the holiday entitlement of four weeks guaranteed under EU law – from the aforementioned decision of the Supreme Court. Accordingly, employers are obliged to ask their employees to use up unused holiday entitlements and to point out that they would otherwise be time-barred. The fact that it would have been possible to use up leave or that the employee would have been granted leave upon request was not considered sufficient by the Supreme Court with regard to the statute of limitations.

Conclusion

If the employer does not fulfil its obligation to request and inform, this means, according to the aforementioned Supreme Court case law, that outstanding holiday entitlements to the extent of the holiday entitlement under EU law (i.e. four weeks per holiday year) are not time-barred. However, holidays in excess of this (the fifth and sixth week of holiday) are not covered by the notification and request obligations; there is no explicit statement on this by the Supreme Court.

In practice, it is advisable to adequately document the requests and information given to employees in this regard and to make a note of them in the personnel files.