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Conflict issue annual leave: "Short-time work with zero hours" reduces holiday entitlements

Submitted by Firm:

Judgment of the District Labour Court of Dusseldorf of 12 March 2021 in Case 6 Sa 824/20

In line with the judgment of the European Court of Justice (ECJ) of 8 November 2012 (Case C-229/11), the District Labour Court (Landesarbeitsgericht, LAG) of Dusseldorf held that annual leave can be reduced proportionately for each full month in which no hours were worked due to short-time work.

Facts of the case

The claimant has worked part-time (three days per week) for the defendant as a sales assistant with baking duties since 1 March 2011. Under their agreement, she was entitled to 14 days of holiday per year.

Since 1 April 2020, the Claimant has repeatedly worked short-time work with zero hours as a result of the corona pandemic i.e. her working time has been reduced to zero percent. This was the case for June, July and October 2020. In August and September 2020, the Defendant granted the Claimant a total of 11.5 days holiday and was of the view that her leave entitlement for 2020 was thus used in full. The Defendant had thus reduced the number of leave days for the Claimant by 2.5 days for 2020.

The Claimant fought against this decision and claimed the leave days that had not been granted. The Claimant argued that the short-time work due to economic conditions had not been requested by the employee but was in the interests of the employer and short-time work was not leisure time due to the obligation to report regularly and be available to work at short notice.

The judgment

Like the lower Court (the Labour Court in Essen), the District Court in Dusseldorf rejected the claim. There was no right to the 2.5 days of (remaining) leave. Since the Claimant was on short-time work with zero hours for June, July and October 2020, she had not acquired any leave entitlements pursuant to § 3 of the Federal Leave Act (Bundesurlaubsgesetz) for these months. She was therefore only entitled to a proportionately reduced amount of annual leave for 2020. For each full month of short-time work with zero hours, the number of leave days would be reduced by one-twelfth, which would have actually resulted in a reduction in the number of leave days by 3.5 days.

This judgment must be viewed in light of the purpose of leave, which requires an obligation to perform an activity. As the performance obligations on both sides are suspended in the case of short-time work with zero hours, the employees are temporarily treated like part-time workers. The leave is also reduced proportionately.

The District Court refers to the case law of the ECJ, which also held that entitlements to the European minimum paid leave pursuant to Article 7 (1) of Directive 2003/88/EC will not arise while short-time work with zero working hours applies. German law does not contain any more favourable arrangement. There are no special rules in this respect for short-time work, nor do the provisions of the Federal Leave Act provide any such special rules. In particular, short-time work with zero hours should not be compared to an incapacity to work.

Consequences for practice

The judgment provides legal certainty and makes it clear that the corona pandemic does not change anything in relation to the applicable (leave) principles. The reduction in the number of annual leave days can also be a way for companies, which are slowly short on funds after a year of the corona crisis, to reduce certain financial liabilities and thus their financial burden.

The Federal Labour Court (Bundesarbeitsgericht) has agreed to hear the appeal. In light of the case law of the ECJ, as outlined above, and the previous case law of the Federal Labour Court (Judgment of 19 March 2019 in Case 9 AZR 406/17), the decision is ultimately likely to remain unchanged.

Our tip

The judgment is interesting for employers, even where there was no agreement on the pro rata reduction of the number of annual leave days when introducing short-time work – as would normally be agreed for parenting leave. This gives employers a way to explain the reduction to employees. This should be done in manner that allows the information (and the sharing of that information) to be later verified.

Author: Dr Dominik Sorber