The instrument of short-time working has proved its worth during the coronavirus pandemic. Companies have been able to respond flexibly to the reduced need for labour, thus preserving jobs. Due to the ongoing pandemic, many employees are still on short hours, and it is hard to predict when the current situation will ease. The issue of short-time working continues to raise numerous questions on the part of employers, for example, with regard to the affected employees’ holiday entitlement. One such question is whether periods of short-time working where employees work only a reduced number of hours or even zero hours give rise to a (reduced) holiday entitlement. There are no statutory rules in Germany relating to this and the Federal Labour Court has not yet ruled on this question of law. The following post outlines the legal problem and provides a brief overview of the legal situation in Europe.
Employees who work a 6-day week are legally entitled to 24 working days’ holiday per calendar year (Sections 1, 4(1) German Federal Holiday Act). As a result of this holiday entitlement, employers are obliged to release their employees temporarily from their work duties while continuing to pay their remuneration (Federal Labour Court, Judgment of 20 June 2000 – 9 AZR 405/99). Up to now, the Federal Labour Court assumed that the existence of an employment relationship was the only condition for a holiday entitlement to exist. This meant that a holiday entitlement could also arise while the employment relationship was suspended. Whether the employee carried out any work during the holiday year was irrelevant, according to the Federal Labour Court (Federal Labour Court, Judgments of 6 May 2014 – 9 AZR 678/12; 7 August 2012 – 9 AZR 353/10).
The European Court of Justice (ECJ), however, has clarified that the existence of a holiday entitlement does not only depend on the existence of an employment relationship but also on the amount of work actually performed by the employee. Accordingly, periods during which the employment relationship is suspended do not normally have to be taken into account when determining the holiday entitlement (ECJ, Judgment of 4 October 2018 – C-12/17). According to the European Court of Justice, the same applies to periods of short-time working. In another ruling, when determining the number of holiday days, the European Court of Justice initially pointed out the purpose of the minimum leave to which each employee is entitled pursuant to Article 7 of Directive 2003/88, stating that such purpose was to enable the worker both to rest from carrying out the work he/she is required to do and to enjoy a period of relaxation and leisure (ECJ, Judgment of 13 December 2018 – C-385/17). According to the European Court of Justice, this purpose is, however, conditional upon the employee actually performing any work during the reference period, which means that a holiday entitlement does not exist for periods of short-time working where the employee has not performed any work.
There has since been a change in the Federal Labour Court’s rulings, which are now approximating the principles defined by the European Court of Justice. In 2019, for instance, the Federal Labour Court held that periods of unpaid special leave are not to be taken into account in determining the statutory minimum leave. The reason given for this was that as the employee is not obliged to work, he/she is also not entitled to a holiday (Federal Labour Court, Judgment of 19 March 2019 – 9 AZR 315/17). In another judgment, the Federal Labour Court held that if special leave is taken only during part of the year, the holiday entitlement must be reduced by 1/12 for each full month of special leave (Federal Labour Court, Judgment of 21 May 2019 – 9 AZR 259/18). It remains to be seen whether the Federal Labour Court will apply its rulings regarding the determination of the number of holiday days also to cases of short-time working. It would appear that the Federal Labour Court’s arguments for reducing the holiday entitlement for periods of unpaid special leave can also be applied to periods of short-time working where no work at all has been performed by the employee. However, it remains to be seen what position the Federal Labour Court will take on this legal issue.