The Federal Labor Court ruled that the statutory entitlement to vacation under the Federal Leave Act also exists for the period of parental leave, but may be reduced by the employer in accordance with Section 17(1) sentence 1 Federal Parental Benefits and Parental Leave Act. According to the Federal Labor Court, Section 17(1) sentence 1 Federal Parental Benefits and Parental Leave Act is also consistent with Union law.
The parties dispute the payment of vacation pay and vacation compensation against the backdrop of the permissibility of reducing vacation entitlements during parental leave. The plaintiff, born in 1978, married and with two children, had been employed by the defendant as an assistant to management since June 01, 2001. Her annual vacation entitlement was 30 working days. The plaintiff’s first child was born on April 16, 2010. The plaintiff was on parental leave from April 16, 2010 to November 14, 2011. The maternity protection period for the second child extended from November 15, 2011 to February 21, 2012. The plaintiff took parental leave for the second child from December 16, 2011 to December 15, 2013. Another parental leave for the first child was taken from December 16, 2013 to December 15, 2014, parental leave for the second child was claimed again from December 16, 2014 to December 15, 2015. Effective December 16, 2015, the plaintiff applied for part-time employment. The defendant did not comply with the request, which was accepted by the plaintiff. From December 16, 2015 up to and including January 26, 2016, the plaintiff was incapacitated for work and fell ill. From January 27, 2016 to February 15, 2016, the plaintiff was granted leave by the defendant. Due to surgery, the plaintiff was again incapacitated for work from February 16, 2016 to March 28, 2016. By notice dated March 23, 2016, the plaintiff terminated the employment effective June 30, 2016 with the request to take remaining vacation time during that period. The notice of termination was accepted by the defendant by letter dated April 04, 2016. The defendant also granted the plaintiff leave from April 04, 2016 to May 02, 2016, but refused to grant vacation time from the parental leave. In her lawsuit, the plaintiff had most recently still claimed compensation for 89.5 working days of leave from the period of her parental leave. The lower courts had dismissed the complaint. The plaintiff’s appeal before the Federal Labor Court did not succeed.
The plaintiff’s complaint had been dismissed in the two lower instances. Both courts held that the German vacation reduction provision was compatible with Union law, since European law, as a result of a balancing decision, also allowed for a reduction in leave in periods during which no actual work was performed. In addition, the Working Time Directive would explicitly allow Member States to determine the status of the employment relationship during parental leave.
This has now also been confirmed by the judges in Erfurt. According to the Federal Labor Court, the statutory vacation entitlement would also arise for the period of parental leave, but the employer is permitted to reduce it by one twelfth for each full calendar month of parental leave with reference to the provision of Section 17(1) sentence 1 Federal Parental Benefits and Parental Leave Act. This does not constitute a breach of Union law. Employers wishing to make use of the right under Section 17(1) sentence 1 Federal Parental Benefits and Parental Leave Act would need to make an appropriate legal declaration that becomes effective upon receipt. This declaration would not necessarily have to be given prior to the parental leave, however. Additionally, it could also be considered given by conclusive behavior. Contractual additional leave is also covered by the right to reduction, unless provisions derogating from Section 17(1) first sentence Federal Parental Benefits and Parental Leave Act are agreed in the employment contract. Employers are only entitled to the right of reduction for full calendar months, however. According to the case law of the Court of Justice of the European Union (CJEU), European law does not require employees who were not obligated to perform work because of parental leave during the reference period to be treated in the same way as employees who actually worked during that period.
Employees’ entitlement to four weeks of paid vacation in a calendar year does not arise exclusively from the Federal Leave Act, but also from provisions of Union law in the form of Article 7 European Working Time Directive 2003/88/EC. In various rulings, the CJEU has made it clear that vacation entitlement enjoys high priority and is an important principle of Union law. In the past, there has been controversy as to whether the possibility of a reduction under German law violates European statutory provisions, as the employment relationship continues to formally exist during parental leave.
The decision of the Federal Labor Court is no surprise, however, particularly as the Erfurt judges referred to a recent ruling issued in Luxemburg at the end of last year (CJEU, October 4, 2018, C-12/17) enabling to forgo a referral question to the CJEU. In recent case law, European judges have shown that vacation entitlements acquired during parental leave may be treated differently from those acquired as a result of sickness or maternity leave.