If an employee takes up other employment following an unlawful dismissal, holiday entitlements arise for the period of overlap of both employment relationships if the dismissal proves to be invalid in the unfair dismissal proceedings.  This also applies if the employee would not have been able to fulfil the obligations from both employment relationships cumulatively. In order to avoid the duplication of holiday entitlements, the holiday granted by the new employer is offset against the holiday entitlements against the original employer on a calendar year basis.

Facts of the case

The plaintiff had been employed by the defendant as a salesperson from 1 December 2014, with a five-day week and a holiday entitlement of 30 working days. The defendant terminated the employment relationship on 23 December 2019 without notice. The Labour Court upheld the action for protection against dismissal in a judgement dated 9 September 2020. However, the employment relationship ended before the end of May 2021 due to an extraordinary termination by the defendant on 7 May 2021. During the dismissal dispute, the plaintiff entered into another employment relationship on 1 February 2020. In this employment relationship, she received 25 working days of leave in 2020 and ten working days of leave from January to May 2021. In her lawsuit against the old employer, the plaintiff sought compensation for a total of seven days of additional contractual leave (five days for 2020 and two days for 2021). The Labour Court dismissed the claim. The plaintiff’s appeal was unsuccessful.

Decision

The plaintiff’s appeal was partially successful. In the opinion of the Federal Labour Court, there was no entitlement to compensation for 2020. The plaintiff had, in principle, acquired a holiday entitlement of 25 working days with the defendant for 2020. This was despite the fact that she no longer performed any work for the defendant after the (invalid) notice of termination was given or that there was a double employment relationship. Nevertheless, the plaintiff must allow the holiday granted to her by the new employer to be offset against her holiday entitlements against the defendant. This follows from the legal concept of Section 11 No. 1 German Dismissal Protection Act and Section 615 sentence 2 German Cicil Code. However, the offsetting must be based on the calendar year and not across calendar years. Only in this way can the regulatory system of the Federal Leave Act be taken into account and it can be ensured that the right to statutory minimum leave remains protected. In the absence of any contractual provisions in the employment contract to the contrary, the calendar year-related offsetting also applies to any additional the contractual leave. As a result this led to the loss of all of the plaintiff’s leave entitlements from 2020. It was not possible to make a determination regarding the leave days from 2021, as the Court of Appeal assumed a cross-calendar year approach and did not clarify whether leave entitlements from 2021 or residual leave entitlements had been fulfilled.

(BAG, 05.12.2023 – 9 AZR 230/22)

Practical tips for employers

The calendar year is to be used as the basis for offsetting holiday entitlements in the case of dual employment relationships (annualisation of holiday) and not the period in which the dual employment relationship exists.