In the midst of the vacation season, many employers in Germany are prompted to address old and new questions surrounding the issue of vacation. This Insight series: "On your mark! Get set! Vacation!" is designed to help employers keep track of recurring issues and answer important questions about German vacation law. In Part 1, we look at:

Must-Knows at the Beginning of the Employment Relationship

Question 1: Should the employment contract explicitly distinguish between statutory leave and contractual (additional) leave?

Our recommendation is “Yes!” Even though the distinction between statutory (minimum) leave and contractual (additional) leave is not mandatory, making such distinction regularly works in favor of employers.

In addition to the statutory minimum leave of 24 working days (for a 6-day week) or 20 working days per calendar year (for a 5-day week), it is not uncommon for employers to grant their employees so-called contractual additional leave. This regularly amounts to 5 to 10 working days and should be explicitly distinguished from the statutory minimum leave. This can be seen in the following examples:

• If an employment relationship is terminated by the employee in July of a calendar year, the employee shall be entitled to full annual leave from their employer. This entitlement always exists if the employment relationship ends in the second half of a calendar year. If no distinction is made in the employment contract between statutory (minimum) leave and contractual (additional) leave, they shall be treated equally. Thus, in the event of termination of the employment relationship in the second half of the calendar year, the employee shall not only be entitled to the full statutory minimum leave entitlement of 20 or 24 working days but shall also be entitled to the full contractual additional leave entitlement in the agreed amount. In the event of termination of the employment relationship, the person giving notice will be entitled to these vacation days or will be able to assert a correspondingly higher vacation compensation claim.

If, on the other hand, a distinction is expressly made between the two types of leave, it may be agreed that the employee is entitled only to a pro rata leave entitlement with regard to the contractual leave amount if the employment relationship is terminated in the second half of the calendar year.

• If a differentiation is made between minimum and additional leave in the contract, the employer also has the option of allowing the leave to lapse or to be carried over to the following year.  Deviating from Section 7 (3) of the German Federal Leave Act (BUrlG), the parties can agree to exclude a transfer to the following year of the contractual additional leave.

What employers should consider if they want to grant their employees in Germany trust leave (i.e., an unlimited number of vacation days) has been summarized by our colleagues here.

Question 2: Must newly hired employees be granted full annual leave?

As is often the case, it depends on the individual situation. On the one hand, it depends on when the employee started working. On the other hand, it depends on whether the newly hired employee has already taken leave with their previous employer.

• If an employee does not start work until the second half of the year, they shall acquire only a pro rata vacation entitlement against the new employer. If, for example, the employment relationship does not begin until August 1, 2022, and, after fulfillment of the waiting period, the parties agree upon a vacation entitlement in the amount of 30 working days/calendar year (or in the amount of 20 + 10 working days, cf. question 1), the vacation entitlement for the calendar year 2022 against the new employer shall be 12.5 working days. Therefore, the full annual leave does not have to be granted.

• The full annual leave does not have to be granted even if the employee has already been granted leave by a previous employer. Employees should only be entitled to the full annual leave entitlement once in the leave year (i.e., in the calendar year). In order to exclude so-called double claims, the Federal Vacation Act stipulates that the vacation entitlement does not exist if and to the extent that the employee has already been granted vacation for the current calendar year by a previous employer. Employees must also accept that vacation days which the previous employer has compensated are taken into account. To prove how many vacation days have already been granted to the employee by the former employer, a so-called vacation certificate can be submitted (see also question 3).

Question 3: Can newly hired employees be required to submit a leave certificate?

Even if the answer here is "no," companies are not without protection. Employees are not obliged to present the vacation certificate (issued by the old employer) to the new employer. However, the new employer can refuse to fulfill the vacation entitlement accruing to them on the grounds that the employee has already taken the full annual vacation. If the employee claims the vacation, the employer must prove the assertion that the employee has already taken the full or a proportionate annual vacation. However, the employee then has a duty to cooperate, which must usually be fulfilled by submitting the leave certificate.

In Part 2 of this Insight series, we will look at the "must-knows" on the topic of "vacation" during ongoing employment.