Leave can be cut while on short-time work

Judgment of the Federal Labour Court of 30 November 2021 in Case No. 9 AZR 225/21

The Federal Labour Court (BAG) recently decided that annual leave can be cut proportionately when whole workdays are not worked because of short-time work. This judgment is the second wide-reaching decision of the Court in connection with the Corona pandemic (after its judgment on the continued payment of wages where there are site closures during lockdown).

Facts of the case

The claimant works part-time as a sales assistant (3 days per week). She has an annual leave entitlement of 14 days (28 days in the case of a 6-day week). During the Corona pandemic, the defendant introduced short-time work. In June, July and October 2020, the employee had short-time work with zero hours work based on a short-time work agreement. In November and December, the employee worked for a total of five days. The company, therefore, recalculated the employee’s annual leave for 2020 at just 11.5 days. The employee claimed that she was due a further 2.5 days of annual leave. The Regional Labour Court of Dusseldorf (LAG Düsseldorf, judgment of 12 March 2021 in Case 6 Sa 824/20) held in favour of the employer. According to § 3 (1) of the Federal Leave Act (Bundesurlaubsgesetz, BurlG), no leave was acquired during the three months of short-time work with zero workdays. The annual leave was reduced proportionately.

The judgment

The BAG followed the view of the LAG Düsseldorf. According to the press release, the Court reasoned that the loss of whole workdays due to short-time work justified a recalculation (“reduction”) of the leave entitlements during the year. Under § 3 (1) of the BurlG, an employee is entitled to 24 workdays of paid leave where the working time is spread evenly over six days in the week. If the weekly working time is spread over fewer or more than six workdays under the employment agreement, the leave entitlement must be calculated in light of the work rhythm applicable for the leave year in according with the formula (24 workdays x number of days the employee has to work divided by 312 workdays). The loss of workdays due to short-time work justifies the recalculation of the leave entitlement. Based on the contractually agreed short-time work, lost workdays are not to be equated with periods that the employee has to work either under national or EU law. The employee’s leave entitlements for 2020, therefore, did not exceed the 11.5 workdays calculated by the company. Calculated on the basis of the three months in which the employee did not work at all, the employee has leave entitlements of only 10.5 workdays (28 workdays x 117 workdays with work obligations divided by 312 workdays).

Consequences for practice

The judgment of the BAG brings much needed legal certainty for many employers. If whole workdays are not worked due to short-time work, this will reduce the annual leave entitlement accordingly. Employers now have legal certainty of their right to reduce employee leave during the next short-time work period, where this is desired from a corporate policy perspective. The decision is not limited to longer periods of short-time work with no work (at least according to the press release). The BAG uses the general term “whole workdays not worked” as a result of short-time work, which necessitates a recalculation of the leave entitlements. However, there are often also “whole workdays not worked” for pro rata short-time work, too. The opinion of the Court should provide more clarity in this respect.

Practical tip

Annual leave can be reduced proportionately in the case of short-time work where whole workdays are not worked. The following formula should be used to calculate the reduced leave:

(Number of leave days x Number of individual days with work obligations) / 260 (for a 5-day working week) or 312 (for a 6-day working week)

The reduction should be undertaken as soon as possible when there is short-time work. Where the duration of the short-time work is unclear, the leave entitlements should be recalculated each month and communicated to the employee. In particular, any reduction should be entered into the relevant HR management system without delay. This will limit the number and scope of cases in which employees take leave that they are no longer entitled to after the recalculation.

Dr Anne Dziuba, Maximilian Nickel