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Change in precedent: No reduction in holiday leave due to parental leave anymore after termination of employment

(Federal Labor Court, decision dated May 19, 2015 9 AZR 725/13)

The plaintiff has worked as an occupational therapist in the nursing home of the defendant since April 1, 2007. The plaintiff was entitled to 36 vacations days per calendar year based on a five-day work week. After the birth of the plaintiff's son, the plaintiff took parental leave from the middle of February 2011 until the termination of employment on May 15, 2012. A few days later, the plaintiff demanded, without success, the settlement of her vacation entitlement from the years 2010 through 2012. It was only in September 2012 that the defendant initiated a reduction in holiday leave, due to parental leave, by one twelfth for each full calendar month of parental leave.

The appeal of the defendant against the decision of the Higher Labor Court Hamm (decision dated June 27, 2013 - 13 Sa 51/13) had no success before the Ninth Senate of the Federal Labor Court. The Federal Labor Court held that the reduction in holiday leave due to parental leave after the end of the employment relationship to be ineffective.

The provision in  17 para. 1 sent. 1 of the Law on Parental Allowance and Parental Leave (BEEG) requires that the claim for holiday leave still exists. It is lacking if the employment relationship is terminated and the employee is entitled to annual leave. The previous case law concerning the entitlement of the employer to reduce such leave, even after termination of employment, rests on the Theory of Surrogate, which has now be completely abandoned by the Senate. According to the recent decision of the Senate, the claim to annual leave compensation is no longer a surrogate for annual leave, but a mere claim to money. This owes its emergence to legislation concerning vacation entitlements. If the claim to compensation arose, it forms part of the assets of the employee and, from a legal point of view, does not differentiate itself from other claims to financial compensation that the employee might have against the employer.

It no longer depended on the question that was answered by the Higher Labor Court in the affirmative, which was whether or not the entitlement to reduce leave as regulated by  17 para. 1 sent. 1 of the Law on Parental Allowance and Parental Leave agrees with European Union law.

Practical Recommendations:
The Ninth Senate of the Federal Labor Court abandoned its previous case law of a temporally unlimited possibility to reduce leave with the decision of the Federal Labor Court, which has only been available in press releases (see still Federal Labor Court, decision dated April 23, 1996 9 AZR 165/195; Higher Labor Court Lower Saxony, decision dated September 16, 2014 15 Sa 533/14). This is in direct connection with the case law of the Federal Labor Court referring to the Schulze-Hoff Decision of the ECJ (decision dated January 20, 2009 C-350/06 und C-520/06) according to which the Theory of Surrogate was abandoned. The claim to holiday leave compensation is now considered a claim to financial compensation separate from vacation entitlement. This arises with the termination of the employment relationship and is immediately due pursuant to  271 of the German Civil Code (BGB), which precludes a subsequent reduction.

Overall, the result of the decision means legal clarity for the question of the timing of the reduction, which is not clearly stated in  17 of the Law on Parental Allowance and Parental Leave. Furthermore, employers would be well-advised to timely declare the reduction of the annual leave before terminating the employment relationship in accordance with the Law on Parental Allowance and Parental Leave.

Dr Katrin Hasler-Hagedorn
Author:
Attorney
Dr Katrin Hasler-Hagedorn
hasler-hagedorn@buse.de

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