Effects on holiday entitlement

In the case of short-time work zero, the employee's duty to fulfil his or her employment contract obligation ceases completely and work time is temporarily reduced to zero. It remains to be seen whether this also leads to a corresponding reduction in holiday entitlements, as it must be ensured that the purpose of the statutory recreational leave is fulfilled – namely, ensuring that employees receive the rest and recreation they need to safeguard their health.

The question of whether holiday entitlements can be reduced in the case of short-time work has not (yet) been decided by the highest courts. However, two decisions issued earlier this year give a slight indication of the types of cases in which a reduction in these entitlements might be permissible. The Düsseldorf Regional Labour Court (LAG Düsseldorf, judgement of March 12, 2021, ref: 6 Sa 824/20) affirmed a reduction in the case of short-time work zero. It is assumed that the opinion issued by the Düsseldorf Regional Labour Court assuming a pro-rata reduction of the holiday entitlement for the periods of short-time work zero may set a precedent. In principle, the vacation entitlement only exists for the periods in which the employee was contractually obliged to work. Because the employee's contractual duty to work is completely suspended during the period of zero work hours, the entitlement to annual leave cannot arise during this period. Furthermore, the contracting parties can agree that the termination or reduction of short-time work can only occur if the employer provides notice within a reasonable period. In this case, the employee is not faced with the expectation that they will be required to return to work immediately, thus giving the employee time to prepare for it and take their holiday leave before returning to work.

The decision is not yet final and can still be appealed. 

The Osnabrück Labour Court (judgement of June 8, 2021 - 3 Ca 108/21) also had to rule on a reduced vacation entitlement, although here the facts were different. In this case, the work time had not been reduced to zero (no short-time work zero) and the employer had been given the possibility to reduce or terminate short-time work with a notice period of (only) two workdays. In this case, the Labour Court did not consider the reduction of the holiday entitlement to be justified. Also in this decision, an appeal was allowed by the Labour Court.

Calculation of the shortened holiday entitlement

The Düsseldorf Regional Labour Court (LAG Düsseldorf) assumes that the holiday entitlement can be reduced by 1/12 for each full month of short-time work and uses the following formula as a basis for the calculations:

Effect of short-time work on the assessment of holiday pay

Short-time work does not affect the assessment of holiday pay. Employees are entitled to the remuneration owed for the duration of the leave. Pursuant to § 11 BUrlG (German Federal Leave Act), holiday pay is calculated based on the average pay received by the employee in the last 13 weeks before the start of the holiday, whereby additional remuneration paid for overtime is not taken into account.

Section 11(1) Sentence 3 of the BurlG states that reductions in earnings as a result of short-time work are not considered when calculating the holiday pay, so that the holiday pay is calculated based on the contractually owed pay. The European Court of Justice ruled in 2018 (ECJ, judgement of December 13, 2018 - C 385/17) that the employer may not reduce the holiday pay as a result of short-time work even on the basis of a corresponding collective agreement provision.

Quarantine - counts towards holiday entitlement

If an employee must be quarantined during their leave, it must be determined whether or not he or she is unfit for work. A distinction must be made between a quarantine ordered by the authorities due to infection or for other reasons (e.g., because the employee has been in contact with someone who might be infected).

• If the quarantine is mandated due to (one's own) infection, this is not counted as leave. The period of quarantine is viewed as an incapacity to work due to illness, § 9 BUrlG. (Cases in which there is no incapacity for work despite a confirmed infection are probably only theoretical.)
• If the quarantine is mandated due to contact with another person who may or may not be infected, the duty to perform work remains, so a differentiation must be made based on the ability to perform the work from home.
  • If the nature of the job allows the employee to work from home during the quarantine period and the necessary equipment is available, the quarantine period is treated as leave.
  • If this option doesn’t exist for the employee, the employee is entitled to compensation for the (possible lost earnings) during the quarantine period in accordance with Section 56 Subsection 1 of the Protection against Infection Act (InfSG). The compensation is initially paid by the employer, who can then claim reimbursement (§ 56 para. 5 IfSG).

If the employee voluntarily goes into quarantine, the period of quarantine is counted towards the leave entitlement.

Withdrawal of vacation requests

A distinction must be made here between a vacation request that has already been submitted and approved, and one that has not yet been approved.

• If the leave application has been submitted but not yet approved, the employee can withdraw the request for leave.
• If the leave request has been submitted and approved, the employee is not entitled to withdraw the leave request. The fact that the planned trip cannot take place due to the COVID 19 pandemic is not a valid argument. The recreational purpose of the leave can also be fulfilled without the planned trip.

Entitlement to information on leave destinations

In principle, an employer has no right to obtain information from an employee regarding their personal travel destinations or contacts. However, a (limited) right to information exists in exceptional cases where the employer must fulfil its duty to protect other employees. In the current pandemic, this concerns the information provided by employees as to whether they are travelling to – or have travelled to – a country for which the Foreign Office has issued an official travel warning due to the risk of infection.

The employer cannot prohibit employees from visiting certain areas. However, it should be noted that if an employee has travelled to an area for which an official travel warning has been issued by Germany’s Foreign Office and thereby becomes infected with COVID-19, making them incapacitated for work or requiring them to quarantine, the employee is not entitled to continued payment of remuneration as it must be assumed that the illness was due to their own actions. See Section 3, Paragraph 2 of the Continued Remuneration Law (EFZG).

Practical tip

It can be assumed that partial short-time work ordered by the employer (not 0% short-time work) is not a plannable release from work for the employee. This is also likely to be the case if the agreement specifies an unreasonably short period for ending or reducing the short-time work. In both of these situations, the current interpretation of the law does not view a reduction in the vacation entitlement as justifiable.

Until the legal issues involving short-time work and the granting of vacation have been clarified, we recommend closely examining the works agreements and individual employee agreement for their legality and feasibility when reducing leave entitlements on a pro rata basis. When assessing the risk of reduced holiday entitlements, the details of any relevant court decisions (short-time work zero and reasonable notice periods) should be taken into account before taking any action.

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This is a post from our newsletter "People in Business" 1-2021. The entire newsletter can be found here. You can also subscribe to this newsletter and receive the current issue directly on the release date.