Dormant employment relationships

A dormant employment relationship refers to a situation when the main mutual obligations (work and payment) are suspended. This can occur by force of law (e.g. parental leave) or by agreement (e.g. special leave).

In the past, the Federal Labor Court (BAG) has always taken the position regarding dormancy agreements – e.g. on the occasion of »sabbaticals« – that a claim to vacation arises even without the obligation to perform any work.

The BAG has now dropped this opinion, which, among other things, led to the illogical result that an employee who had taken special leave for several months could claim their entire annual vacation upon their return. Following a new, fundamentally altered court ruling, the specific scope of the annual vacation is now to be calculated in proportion to the number of days on which the employee had to perform their work in the vacation year. Hence, their claim has been reduced (verdict of the Federal Labor Court of March 19, 2019 – 9 AZR 315/17).

However, in its decision, the BAG pointed out explicitly that these principles for calculating the vacation claim in the event of a dormant obligation to work do not apply at all times and without restrictions. Another mode of calculation may be required as a result of contradictory legal provisions, EU law requirements and permissible contractual arrangements. Cases in which no reduction may occur include dormant positions on account of long-term illness and maternity leave. In addition, special regulations apply to vacation claims covered by statutory reduction provisions (e.g. parental leave, care periods and military service).

Practical tip: It must be borne in mind with regard to parental leave that a reduction in the vacation claim pursuant to Section 17 (1) sentence 1 of the Federal Parental Allowance and Parental Leave Act (BEEG) requires an express declaration by the employer. The employer can reduce the vacation before, during and also after the end of the parental leave, but not before the parental leave request by the employee and also not after termination of the employment relationship.

Short-time work

Just a few months ago, short-time work probably would not have managed to find a place in this presentation of practically relevant special configurations for vacation calculation. However, as a result of the coronavirus pandemic, short-time work is currently one of the most asked-about employment law questions. Alongside numerous other questions associated with the introduction of short-time work, not the least important one is what consequences short-time work has on vacation calculations.

The question of whether »zero-hour short-time work« reduces the claim to vacation is especially relevant. The ECJ assumes the position that a claim to vacation in general depends on whether an employment relationship exists and the employee has actually performed work. From this it concludes that no claim to vacation arises for short-time periods when the employee was not working at all (verdict of November 8, 2012 – C-229/11). The BAG has not yet adopted a position on this constellation, and the ECJ left a backdoor open for a divergent judgment insofar as it remarked that its rulings should not affect national regulations more favorable to employees. The BAG will probably soon have an opportunity to decide this question.

Should weekly working hours be reduced as part of the introduction of short-time work but the number of weekly working days remain the same, no special features arise with regard to vacation calculation.

If the weekly working days also decrease during the short-time period, the principles presented in the first part of this article regarding the change from full-time to part-time working and vice versa apply.

Practical tip: With regard to vacation payment, it should be noted that in general short-time work may not negatively affect this. Vacation payment is in general calculated according to the average employment earnings of the last 13 weeks before the vacation begins. However, a reduction in payment on account of short-time work has to be disregarded.

Long-term illness

Vacation claims also arise during the inability to work due to illness. However, the question arises as to how long an employee can accumulate these claims, i.e. when they lapse at the latest.

At first glance, Section 7 (3) of the Federal Vacation Act appears to provide a clear ruling in this regard. In general, vacation must be taken in the particular calendar year. Exceptionally, it can be transferred to the following year but must then be granted and taken by March 31 at the latest. However, in 2009 the ECJ decided in a groundbreaking verdict that Section 7 (3) of the Federal Vacation Act must be interpreted in compliance with EU law. As a result, the statutory minimum leave for the long-term sick may not lapse only three months after the end of the particular vacation year (verdict of January 20, 2009 – C-350/06). The BAG then clarified this finding to the effect that the statutory vacation claim lapses at the latest after the expiry of a transfer period of 15 months after the end of the vacation year, even if the employee's incapacity for work continues unabated beyond this period (verdict of September 18, 2012 – 9 AZR 623/10).

Practical tip: The extension of the transfer period in the case of long-term illnesses in general only applies to the statutory minimum vacation. Contractual arrangements can be made that additional vacation claims lapse earlier.

Part-time retirement in block models

The part-time employment relationship is divided temporally into two blocks in the so-called block model. The first half of the part-time retirement is referred to as the work period. The employee continues to work at a rate of 100% but receives payment reduced by half. In the second half of the part-time retirement, the leave of absence phase, the employee is given leave of absence from work but continues to receive 50% of their original remuneration.

It was unclear for a long time whether an employee acquires a claim to vacation during the leave of absence phase. However, in December 2019, the BAG at last took a stand on this and answered this question with »no« (verdict of December 3, 2019 – 9 AZR 33/19). An employee in the leave of absence phase of part-time retirement is not entitled to any statutory claim to recreational vacation in the absence of any work obligation. If the change from work to the leave of absence phase occurs in the course of a calendar year, the statutory vacation claim is to be calculated according to time periods corresponding to the contractually planned number of days with a work obligation.

Practical tip: Employers are advised to ensure that employees take their remaining vacation before entering the leave of absence phase, because otherwise granting vacation in natura is impossible and payment must be made in lieu of the remaining vacation.

Footnote: Other practically relevant configurations are dealt with in the first part of this article (among others, vacation calculation when switching between full-time and part-time work and in the event of an irregular number of weekly working days).

*The article was written by Nicole Witt in collaboration with our research assistant Laura Anna Hagen.

Expect only the best from us.

We periodically provide you with news regarding important topics from the world of employment law and keep you posted about vangard. Sign up for our newsletter now!

Get our newsletter