Due to the coronavirus pandemic, many companies have given notice that staff will need to work shorter hours. What does this mean for holiday entitlement? Can this be shortened? What applies to working hours that have been temporarily reduced to zero?
The following article provides a brief overview of the employment law implications that apply to employees' holiday entitlement when shorter working hours are introduced.
As a general rule, holiday can be taken during a period where shorter working hours apply. On the other hand, where working hours have been temporarily reduced to zero, holiday cannot be granted, as the holiday entitlement releases an employee from his/her obligation to work and this is no longer possible during a period where shorter working hours (in the form of zero working hours) have been put into place. Accordingly, granting holiday becomes subsequently impossible; if necessary, substitute holiday must be granted at a later date.
If the holiday is nevertheless taken during the period of time where shorter working hours apply, it should be noted that no compensation for shorter working hours will be paid, as the non-performance of the work is not due to any unavoidable loss of work that is a prerequisite for shorter working hours. This applies regardless of whether the employer had initially granted the leave and subsequently then gave notice that shorter hours would be worked or vice versa. Employees will then receive the usual holiday pay that they would have received before the shorter working hours were implemented.
The European Court of Justice recently ruled that statutory minimum holiday entitlement can be reduced accordingly for the period where shorter hours are worked (ECJ, Ruling of 13 December 2018 C-385/17). The same also applies where working hours have been temporarily reduced to zero. Holiday entitlement can be completely cancelled during this period.
However, it still remains unclear, whether a reduction in holiday entitlement occurs automatically during periods where shorter hours are worked or whether it is necessary to include a clause to this effect in the employment contract or enter into a works agreement. This still needs to be clarified by the Federal Labour Court. In the meantime, employers are advised to conclude agreements on how to act taking into account the interests of all parties involved.