international employment law firm alliance L&E Global

Germany: Reduction of Leave Entitlement if Working Days are Cancelled Due to Short-time Work

Short-time work continues to prevail during the COVID-19 pandemic. During the “fourth wave” and with local lockdowns, short-time work is gaining importance again. In this once again very difficult time, it is pleasing that the Federal Labour Court (30 November 2021, 9 AZR 225/21) – as expected – confirmed an earlier decision of the regional labour court on the reduction of leave entitlement for periods of short-time work. However, the landmark ruling probably even goes beyond the decision of the regional labour court of Düsseldorf.

The employee in question was employed as a part-time salesperson with a total of 14 days of annual leave. Due to the pandemic, the employee was on short-time work “zero” (= not working at all) in June, July and October 2020. In November and December 2020, the employee was on partial short-time work with only working five days in two months. The employee was granted 11.5 days of vacation in August and September 2020 before the employer recalculated the leave entitlement taking into account the period of short-time work. This showed that the employee was entitled to less days of vacation than she had already been granted.

The employee challenged the recalculation of her leave entitlement and claimed that she was still entitled to 14 days of leave despite the short-time work period. She was of the opinion that the days not worked due to short-time work should nonetheless be treated as working days under vacation law. However, the labour courts agreed with the employer, who assumed that a leave entitlement during short-time work only arises for days on which work is actually done. The regional labour court of Düsseldorf only referred to the months of short-time work “zero” and ruled that no leave entitlement arises for months of short-time work “zero”. Thereafter, the leave entitlement was to be reduced by 1/12 for each full month of short-time work “zero”.

The Federal Labour Court confirmed this. Working days cancelled due to short-time work are not to be taken into account for calculating the annual leave entitlement. This applies to both the statutory minimum leave and additional contractual leave, if not agreed otherwise. The press release indicates that the scope of the ruling of the Federal Labour Court even goes beyond the ruling of the previous court instance. Thus, the leave entitlement might not only be reduced for full months without work (whole month of short-time work “zero”), but also for each single day of short-time work on a pro-rated basis. In the case at hand, the Federal Labour Court found that the employee was not entitled to any further leave (as the employee had already taken a considerable part of her full leave entitlement, this result was achieved even if the leave entitlement was only reduced for the full months of short-time work “zero”).

It remains to be seen whether the Federal Labour Court explains the exact scope of reduction of leave entitlements during short-time work in the not yet published full rationale of the verdict. So far, it is clear that the employee’s leave entitlement may be reduced by 1/12 for each full month of short-time work “zero”. However, it remains to be seen whether the leave entitlement may also be reduced on a pro-rated basis for months with only partial short-time work.

Key Action Points for Human Resources and In-house Counsel 

  • Employers who are and have been affected by short-time work, should check to what extent this new ruling affects their employees’ leave entitlements, as the days of annual leave might be subject to significant reductions.
  • Leave entitlements should be recalculated in due course, as additional days of leave that have already been granted cannot be reclaimed and usually cannot be deducted from salary.