Statutory annual leave entitlement for times of unpaid special leave

The German Federal Labor Court (BAG), moving away from its hitherto case law, decided on March 19, 2019 (9 AZR 315/17) that periods of unpaid special leave are not taken into account for the calculation of the statutory minimum leave.

The case: The plaintiff has been employed by the defendant, her employer, since June 1, 1991. As requested, the defendant granted her unpaid special leave from September 1, 2013 to August 31, 2014, which was extended by mutual agreement until August 31, 2015. After the end of the special leave, the plaintiff demanded that the defendant grant her the statutory minimum leave of 20 working days for 2014.

The Labor Court dismissed the action. In response to the plaintiff's appeal, the Regional Labor Court amended the judgment of the Labor Court and ordered the defendant to grant 20 working days leave.

The defendant's appeal was successful before the German Federal Labor Court (BAG). The plaintiff was not entitled to paid annual leave for 2014.

The BAG first determined that, according to Section 3 para. 1 BUrlG (Federal Leave Act), the entitlement to paid annual leave amounts to 24 working days if the working time is evenly distributed over six days a week; this corresponds to a statutory annual leave entitlement of 20 days for a five-day week. If an employee's working time in any year is spread over fewer or more than six working days in the calendar week, the number of days of leave must be calculated taking into account the rhythm of work relevant to the respective year in order to ensure an equivalent length of leave for all employees.

In its hitherto case law, the BAG had not applied such calculation method in cases of special leave. With its decision of March 19, 2019  the BAG has expressly moved away from this case law. If an employee is on unpaid special leave in whole or in part during a year, the fact that the parties to the employment contract have temporarily suspended their main obligations by agreeing on special leave must be taken into account when calculating the annual leave entitlement. This means that no entitlement to paid leave accrues for any calendar year in which the employee is continuously on unpaid special leave.

Practical advice

The BAG's decision is welcome to employers, especially since the repealed older case law led to results that were difficult to understand. With regard to the mandatory statutory minimum leave, an effective deviation from the strict requirements of the BAG was not possible, neither by individual agreement between the parties nor through a provision in a collective labor agreement.

The decision has so far only been available in the form of a press release and concerns the annual leave entitlement for an entire year in which the plaintiff was on unpaid special leave. It might also apply, however, if an employee, for example, only wants to go on special leave for 6 months and the employer agrees. It will probably not even be necessary to conclude an agreement on this. In this respect, however, it remains to be seen what the BAG will say in the reasons for the judgment. For the transitional period until the reasons for the judgement will be available, an employer is recommended to stipulate, e.g. in the arrangement on special leave, that the annual paid leave entitlement accrues only pro rata temporis.

This decision is unlikely to change the case law of the BAG on the fact that an illness of an employee has no effect on the accrual of the statutory minimum leave entitlement.