Germany: Employees in old age part-time in the so-called block model do not acquire vacation claims for the duration of their release phase

The German Federal Labour Court recently ruled on the question of whether vacation claims are also accrued when the employee is in an employment relationship, but not actually working due to an agreement on old age part-time.

In the case before the court, the plaintiff initially worked full-time for the defendant. The parties then agreed to continue the employment relationship as old age part-time from December 2014 onwards. Old age part-time is a special working time model for employees who are close to retirement. In the case at hand, the parties chose the so-called “block model” for the old age part-time, which splits the period of the old age part-time into a working phase and a release phase. Accordingly, the plaintiff was obliged to continue working full-time between 1 December 2014 and 31 March 2016 and was then released from work until 31 July 2017. During both phases of the old age part-time, the employee continuously received a monthly salary in the amount of half of his full-time salary, plus agreed top-up amounts, from his employer.

According to his employment contract, the employee was entitled to 30 working days of vacation for each calendar year. The employer granted him 8 days of vacation in 2016. After the expiry of the old age part-time, the employee claimed financial compensation for 52 untaken vacation days. He argued that he accrued vacation for the entire period of the old age part-time, i.e. also during the period he was released from work.

The plaintiff was not successful in front of the Federal Labour Court. The court ruled that employees in old age part-time due not accrue claims for vacation during the release phase of their old age part time. An employee who is released from work for an entire calendar year due to old age part-time is not entitled to vacation for this year, because he did not actually perform any work and is not comparable to employees who did. If the employee switches from the working phase to the release phase of the old age part-time within a calendar year, his vacation entitlement must be calculated pro rata in relation to the number of days he actually worked. These principles apply not only to the statutory minimum vacation entitlement, but also to any further contractual vacation claims, unless the parties to the employment contract have agreed otherwise with regard to the latter.

The ruling of the Federal Labour Court provides legal certainty to employers regarding vacation entitlements of old age part-time employees, and safeguards employers from unexpected payment obligations for vacation days for the period of the release phase. Furthermore, the ruling is in line with another decision by the Federal Labour Court from March 2019, where the court ruled that no vacation entitlements are acquired for times during which the employee is on a contractually agreed sabbatical and, therefore, not performing any work.