If the parties to the employment contract agree on unpaid special leave for a certain period of time, the entitlement to statutory leave will be reduced on a pro-rated basis.
Federal Labor Court, March 19, 2019 – 9 AZR 315/17
With its March 19, 2019 decision, the Ninth Senate of Germany’s Federal Labor Court is changing its prior jurisdiction on the issue of reducing employees’ entitlement to leave in the event of unpaid release from work (special leave). In its May 06, 2014 judgement (9 AZR 678/12), the court had still held that only the legal existence of the employment relationship and the one-time completion of the 6-month waiting period were necessary for the statutory leave entitlement to arise. The Federal Labor Court had pointed out that the Federal Leave Act thereby neither tied the entitlement to leave to meeting the main duties arising from the employment relationship nor ordered the reduction of the leave entitlement in the event of suspension of the employment relationship. Only special statutory provisions would provide for leave reductions. If the employment relationship was suspended on the basis of an agreement between the parties to the employment contract, the statutory entitlement to leave would not generally be prevented from arising nor would the employer be entitled to reduce the statutory leave. These principles no longer apply. In the recently decided case, the plaintiff had worked at her employer’s firm for many years. As requested, the employer had granted unpaid special leave from September 01, 2013 to August 31, 2015. After the end of the special leave, the plaintiff demanded that her employer grant the statutory minimum leave of 20 working days for 2014.
The Labor Court dismissed the complaint, the Regional Labor Court amended the decision and ordered the defendant to grant 20 working days of leave. The appeal lodged against that decision was successful before the Ninth Senate of the Federal Labor Court. The plaintiff is not entitled to paid annual leave for 2014. In its grounds for the decision, the Federal Labor Court stated that, according to Section 3(1) Federal Leave Act, the entitlement to paid annual leave is 24 working days if the work is evenly distributed over 6 days a week. This corresponds to a statutory annual leave entitlement of 20 days for a 5-day week. If an employee’s working time is distributed over fewer or more than 6 working days in the calendar week, the number of leave days must be recalculated, taking into account the work rhythm relevant for the year of the leave to grant all employees an equivalent annual leave period. If an employee is on special unpaid leave during the year, in whole or in part, it needed to be taken into account that the parties to the employment contract had temporarily suspended their main duties by agreeing special leave when calculating the duration of the leave. As a result, for lack of a duty to work, employees are not entitled to annual leave for a calendar year during which they are continuously on unpaid special leave.
The Federal Labor Court’s change in jurisdiction is to be welcomed. It had already been difficult to convey that employees who had not worked during the entire year due to a special leave provision should still enjoy the statutory entitlement to annual leave. Whereas previously, when special leave was agreed, it had only been possible to reduce the leave entitlement exceeding the statutory periods by agreement, this now also applies directly to the statutory minimum leave. It remains to be seen whether this jurisdiction will also apply to other forms of unpaid leave in the future.