Forfeiture of leave entitlements in the case of employees on long–term sick leave (Federal Labour Court, decision dated 07.08.2012 – 9 AZR 353/10)
In its recent ruling, the Federal Labour Court established how long employees on long-term sick leave may accumulate paid leave. According to the ruling, leave entitlements, which in the case of long-term sickness expire 15 months after the end of the year in which the leave was due, also accrue in an inactive employment relationship.
The plaintiff, who was acknowledged to be severely disabled, fell ill at the beginning of 2004 and from 20 December 2004 received a limited pension owing to reduced working capacity. She did not resume work for her employer until the termination of her employment on 31 March 2009. The plaintiff claimed compensation for 149 days leave for the years 2005 to 2009 amounting to EUR 18,841.05 (gross). The court of appeal found for the plaintiff in the action with regard to the compensation of the statutory leave and extra leave for severely disabled people and ordered the employer to pay EUR 13,403.70 (gross); the claim for compensation of the extra leave according to the applicable collective bargaining agreement was dismissed.
However, the Federal Labour Court ruled that pursuant to §7 (4) German Federal Holiday Act (BurlG) the plaintiff was only entitled to compensation of the statutory leave and extra leave for the years 2008 and 2009 amounting to EUR 3,919.95 (gross). However, according to the ruling, compensation of the mandatory holiday entitlements accrued by the plaintiff for the years 2005 to 2007 is precluded owing to the fact that pursuant to §7 (3) clause 3 German Federal Holiday Act (BurlG), the entitlements expired prior to the termination of employment after 31 March of the second year following the particular year in which the leave was due (i.e. for 2005 on 31.03.2007, for 2006 on 31.03.2008 and for 2007 on 31.03.2009).
According to this ruling, holiday entitlements are also accrued in an employment relationship that is temporarily inactive owing to a reduction in earning capacity. In the case of employees on long-term sick leave, the provisions of §7 (3) clause 1 German Federal Holiday Act (BurlG), according to which leave carried over must be taken within the first three months of the following calendar year, must be construed in compliance EU/European law in such a way that the leave accrued by the employee on long-term sick leave will expire 15 months after expiry of the second year following the particular year in which the leave was due.
Practical recommendationsIf more annual leave than the statutory minimum is granted to employees pursuant to their contract of employment, provisions therein pursuant to which additional days of leave beyond the statutory minimum expire after 31 March of the year following in which the leave was due are permissible in the case of employees on long-term sick leave. Such forfeiture clauses in the contract of employment may not, however, apply to the statutory minimum holiday entitlement.