Everything will be better in the new year!

With a look at the “crisis year” 2022, which has just passed, this hope is all too understandable.

However, it is already becoming apparent that the saying “Everything will be even more challenging in the new year” is likely to be more accurate – especially in the HR departments.

As if the upcoming reviews of short-time work benefits and bridging aid and their possible repayment were not challenging enough, a decision by the Federal Labor Court has made the subject of vacation even more challenging.

There was actually reason to celebrate at the turn of the year.

On January 1, 60 years ago, the Federal Holidays Act (BUrlG) came into force - to this day one of the central pillars of German holiday law.

The BUrlG regulates, among other things, that vacation leave must always be granted and taken in the current calendar year and that a transfer to the next calendar year is only "permissible" for urgent reasons.

In any case, leave not taken expired after three years.

So there was a maximum time limit for taking holiday entitlements with you.

Reclaiming short-time work benefits as a risk

However, the Federal Labor Court (BAG) has now decided that employees' holiday entitlements only become time-barred if the employer has regularly pointed this out.

For companies, this means that they have to be even more active when planning their employees' vacations - especially to protect themselves against the financial risks of vacation.

A company must set aside financial reserves for every day of vacation that an employee does not take in the current fiscal year.

Because if this employee resigns or is dismissed and he can no longer take his vacation, the vacation must be compensated financially.

These provisions are a burden on the company's balance sheet.

It is therefore clear that companies will now place even greater emphasis on ensuring that their employees do not accumulate holiday entitlements indefinitely.

However, this is far from the only challenge.

In view of the lack of economic recovery, the Federal Cabinet has extended the relief on short-time work benefits until mid-2023.

Numerous companies have already benefited from these rules in the past two years.

However, the necessary reviews of approved short-time work benefits are now pending.

In addition to the enormous administrative effort, a possible reclaim of short-time work benefits involves a not inconsiderable financial risk.

Difficulty due to repayment of aid?

Because the short-time allowance was mostly approved without the consultations of the employment agency, which usually take place in advance, and the companies paid the money received directly to the employees on short-time work.

Of course, this money is no longer available to the companies and in view of the multi-permanent crisis, the reviews come at the worst possible time for them.

But not only short-time work, but also the government aid packages have kept the number of insolvencies at a low level during the Corona crisis.

Now, however – also fundamentally correct – many companies are due to repay the aid that has been granted.

The information must be available by June 30 at the latest.

However, the economic and financial recovery phase is still a long time coming - contrary to what was thought with the bridging aid.

This can lead to companies that are basically healthy or capable of being restructured getting into financial difficulties as a result of the repayment.

The authors are specialist lawyers for labor law at Schultze & Braun.