Parental leave: No reduction in vacation following ending of the employment relationship

BAG, judgment dated 19.5.2015 – 9 AZR 725/13

Under Section 17 Subsection 1 Sentence 1 BEEG (Parental Allowance and Parental Leave Act), the employer can reduce the recuperation vacation, to which the employee is entitled for the vacation year, by one twelfth for each full calendar month of parental leave. A precondition is that the entitlement to recuperation vacation still exists. This is not the case if the employment relationship has ended and the employee is entitled to payment in lieu of vacation.

An employee also acquires his/her annual vacation entitlement if he/she has not actually worked during the vacation year. The entitlement to vacation is dependent solely on the existence of the employment relationship. As the employment relationship is suspended during parental leave in terms of the principal duties but otherwise continues to exist, the respective employee also acquires vacation entitlement during parental leave.

Facts

In view of the suspension of the principal duties under the employment relationship during parental leave, there is justification for the employer being able to reduce the employee’s annual vacation entitlement on a pro-rata basis for the duration of parental leave in accordance with Section 17 Subsection 1 Sentence 1 BEEG. Under this ruling, the employer can reduce the recuperation vacation, to which the employee is entitled for the vacation year, by one twelfth for each full calendar month of parental leave.

In the case to be decided by the BAG (Federal Labor Court), the plaintiff was on parental leave as from mid-February 2011 up until the ending of the employment relationship on May 15, 2012. On May 24, 2012, the plaintiff unsuccessfully requested the defendant employer to make payment in lieu of her vacation entitlements from 2010 to 2012. Following legal action by the plaintiff to assert her claim to payment in lieu of vacation, the defendant declared in September 2012 that it was reducing the recuperation vacation as a result of parental leave (Section 17 Subsection 1 BEEG).

The BAG affirmed the decision of the previous instance that had ordered the employer to also make payment in lieu of vacation for the period of parental leave. The BAG initially makes it clear that the employer can reduce the vacation, but is not obliged to do so. If it wishes to exercise its right, it must issue a binding declaration of legal significance in order to reduce the vacation entitlement. This statement must be received by the employee.

Reduction in vacation during parental leave presupposes a declaration by the employer

The previous case law of the BAG regarded the claim to payment in lieu of vacation as being equivalent to the recuperation vacation. Accordingly, the claim to payment in lieu of vacation shared the legal fate of the vacation entitlement (so-called surrogate theory). The result was that the power to reduce under Section 17 BEEG could still be exercised even after ending of the employment relationship. Following the abandonment of the surrogate theory by the BAG, the claim to payment in lieu of vacation constitutes a purely monetary claim – fundamentally divorced from the vacation entitlement. In the case at hand, the BAG logically assumes that the declaration on reduction of vacation during parental leave presupposes the existence of an outstanding vacation entitlement for the employee. However, no such entitlement exists if the employment relationship has ended. Upon ending of the employment relationship, a claim to payment in lieu of vacation is created in favor of the employee. However, Section 17 BEEG does not provide for a reduction in the claim to payment in lieu.

Change in the case law of the BAG: Reduction in vacation during parental leave only possible if a vacation entitlement still exists

In the case to be decided by the BAG, the employer could therefore no longer successfully declare a reduction in the vacation during parental leave in accordance with Section 17 Subsection 1 Sentence 1 BEEG. The plaintiff’s employment relationship ended on May 15, 2012. On this date, a claim to payment in lieu was created in her favor. The reduction, declared in September 2012 and thus just under four months after ending of the employment relationship, was made too late.

Summary

Employers should not forget to make use of their right to reduce vacation during parental leave. This requires a contractual declaration to the respective employee. Proof of receipt of the (preferably written) declaration should be ensured. Employers learn the possible scope of reduction on the basis of the written request for parental leave by the employees (see Section 16 Subsection 1 BEEG). In the event of retrospective extension of parental leave – a frequent occurrence in practice – it is important to declare renewed reduction of the recuperation vacation in accordance with the extended parental leave. If the employment relationship is not continued following parental leave, employers can make use of their right of reduction during the notice periods to be observed (see  Section 19 BEEG) or prior to conclusion of a termination agreement.