A recent decision by the German Federal Labour Court (BAG, 30.11.2021 – 9 AZR 225/11) will have significance for employers who have made use of short-time work. Individual working days which are lost due to short-time work, have to be taken into account when calculating annual leave. As a result, employees might have to adjust the amount of annual leave that they believe is due to them.
Facts of the case
The dispute arose as to whether the defendant employer was entitled to reduce the plaintiff’s amount of annual vacation where the reduction was short-time work “zero” (Kurzarbeit Null). Short-time work is a temporary reduction in the normal working hours in a company. By agreeing to short-time work “zero”, the parties agree to a complete temporary suspension of work. In 2020, short-time work was introduced at the defendant’s company as a result of the COVID-19 pandemic and the plaintiff agreed to its introduction. No provision was made for holiday entitlement. The defendant employer reduced the holiday entitlement by 3/12 for the period of three full months in which the plaintiff was on short-time work “zero”. In her action, the plaintiff sought a declaration that she was entitled to an unreduced holiday entitlement for the year 2020 on the grounds that working days lost due to short-time work were to be regarded as “working days” under law relating to holiday entitlement. The defendant employer argued that short-time workers should be treated in the same way as part-time employees. Because the performance obligations are suspended during short-time work, no holiday entitlement arises for this period and the holiday could be pro-rated. The lower courts dismissed the claim.
The appeal to the Federal Labour Court was dismissed. The Court ruled that working days that are not worked due to the introduction of short-time work must be taken into account when calculating annual leave. According to Sec. 3 (1) German Federal Vacation Act (Bundesurlaubsgesetz – BUrlG), an employee is entitled to 24 working days paid annual leave if the work is distributed evenly over six days per week. If, according to the employment contract, an employee’s working time is less than six working days in a calendar week, the number of days holiday is calculated by taking into account the working time over the holiday year to ensure an equivalent holiday entitlement for all employees This is calculated as 24 working days multiplied by the number of days the worker is obliged to work divided by 312 working days. This will also apply to additional contractual leave, unless the parties to the employment contract have agreed otherwise. In this case, a recalculation of the holiday entitlement during the year is justified because whole working days were lost due to short-time working. As a result, the plaintiff was not entitled to any further holiday entitlement because the actual holiday taken by the employee did not exceed the holiday entitlement calculated and granted by the defendant.
This decision on short-time work is in line with earlier decisions of the Federal Labour Court on similar facts e.g. sabbaticals (BAG, 19.03.2019 – 9 AZR 406/17) and employees who take advantage of partial retirement (BAG, 24.09.2019 – 9 AZR 481/18), closes a loophole with regard to the German Federal Vacation Act in relation to a highly controversial issue. The decision is currently of relevance in Germany, as the Federal Ministry of Labor, in view of the pandemic, has extended easier access to short-time work until March 31, 2022.