The Federal Labour Court has ruled that the entitlement to payment in lieu of vacation, as a purely monetary claim under section 7(4) Federal Vacation Act (Bundesurlaubsgesetz, “BUrlG”), is subject to a cut-off period and may therefore expire. This decision also follows the Federal Labour Court’s case law where, under the law governing general terms and conditions, the requirements for transparency and exclusion clauses must meet the test of reasonableness and fairness.
Federal Labour Court, judgment of 24 May 2022 – 9 AZR 461/21
Background
The plaintiff worked as a paralegal for the defendant lawyer. Under the employment contract, a two-stage exclusion clause was agreed according to which all claims arising from the employment relationship would be forfeited if they were not asserted within a cut-off period of three months. This did not include claims for intentional or grossly negligent breach of duty or claims under the Minimum Wage Act (Mindestlohngesetz, “MiLoG”). The defendant terminated the employment relationship with effect as of 19 July 2019. Five months later the plaintiff then filed an action, served on 23 January 2020, demanding payment for 24 days of vacation in lieu of her annual vacation, arguing that her entitlement to such payment had not expired. According to the plaintiff, this did not conflict with the cut-off period stipulated in her employment contract since the relevant clause lacked transparency and was invalid. In particular, she said, claims arising from negligent injury to life, limb or health as well as claims expressly recognised or undisputed had not been explicitly excluded. In contrast, the defendant based its statement of defence on the argument that the provision on the cut-off period did stand up to legal scrutiny. Both the labour court and the higher labour court dismissed the action.
Decision
The Federal Labour Court agreed with the decisions handed down in the previous instances and dismissed the plaintiff’s appeal. It rejected any entitlement to payment in lieu of vacation on the grounds that such entitlement had already expired at the time the action was filed. Given that it was a purely monetary claim, an employee’s entitlement to payment in lieu of vacation could – so the Court – generally be subject to cut-off periods. This conflicted neither with the indispensable protection of statutory minimum vacation nor with Article 7 of Directive 2003/88/EC, as interpreted and laid down by the European Court of Justice. The provision on the cut-off period stipulated in the employment contract was not invalid for the mere reason that it did not clearly exclude the claims referred to in section 309, no. 7, letter (a) Civil Code (Bürgerliches Gesetzbuch, “BGB”). Given the special provisions of section 104 et seq. Social Security Code, Book VII (Sozialgesetzbuch, “SGB”), covering the typical liability scenarios encountered under labour law, the scope of application and hence the practical relevance of section 309, no. 7, letter (a) BGB in the employment relationship was clearly limited. In addition, no lack of transparency and therefore invalidity could be derived from the fact that recognised or undisputed claims were not explicitly excluded from the cut-off period. In order to comply with the requirement of transparency, possible waivers did not need a provision clarifying that an employee was not required to assert his or her claims within the cut-off period if the employer had waived them. Nor did the provision on the cut-off period ultimately lack transparency, the Court said, because it did not explicitly exclude vacation entitlements in the existing employment relationship. A careful and attentive employee would realise that it was not necessary to claim annual vacation in the first three months of the vacation year in order to prevent it from expiring.
Our assessment
We welcome the fact that the Federal Labour Court is staying its course regarding the requirements placed on exclusion clauses. It rightly emphasised the fact that employees may not always be spared thinking for themselves but that their exercise of care is the criterion by which the transparency of a regulation is assessed. It is precisely where exceptions to the forfeiture of claims are set out in excessive detail that such clauses risk becoming confusing and intransparent. Nevertheless, particular care must be taken when drafting and selecting exclusion clauses, as employers may face substantial payments to employees if these clauses turn out to be invalid. The Federal Labour Court has set out specific requirements for the validity of exclusion clauses in its established case law, which is further supported by this decision.
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