Bad news for short-time workers who have not worked for weeks or months during the coronavirus crisis: Their vacation entitlement can be reduced proportionately in the case of so-called short-time work. This was decided by the Federal Labor Court on Tuesday in Erfurt (9 AZR 225/11) in the case of a saleswoman from North Rhine-Westphalia. The Federal Labor Court thus made a landmark ruling on a "highly controversial issue", as the presiding judge Heinrich Kiel said.

Board member Anja Piel from the German Trade Union Confederation (DGB) spoke after the ruling of a "bitter day for many employees". The decision shifts the burden of the pandemic onto employees. Many short-time workers had already suffered wage losses and some would now lose some of their vacation, explained Piel.

Some employment law experts, for example from the international commercial law firm CMS (Berlin), described the decision as consistent, also in the context of decisions by the European Court of Justice. It is of considerable practical importance in view of the tens of thousands of short-time workers. Legal experts such as Bonn-based labor lawyer Gregor Thüsing see a legal loophole that has now been closed. Presiding Judge Kiel said at the hearing that "our problem is not explicitly regulated in the Federal Leave Act".

With the ruling, the Federal Labor Court followed its line since 2019, according to which the amount of leave should be based on the number of agreed days with an obligation to work. "If individual working days are completely lost due to short-time work, this must be taken into account when calculating annual leave," states the decision of the 9th Senate, which is headed by Kiel. And: "The loss of entire working days due to short-time working justifies a recalculation of the vacation entitlement during the year."

The federal labor judges thus confirmed a ruling by the Düsseldorf Regional Labor Court, which had dismissed the claim of the 49-year-old saleswoman from Essen, as had the competent labor court. The lawsuit brought by the woman, who received 11.5 days of vacation instead of 14 days due to months of short-time working, was supported by DGB-Rechtsschutz through the instances.

Judge Kiel emphasized after the decision that it was not the case, as the DGB argued, that short-time work only serves employers in securing skilled workers. "It also helps employees to keep their jobs."

Experts assume that the ruling could have an impact on tens of thousands of employees in Germany in the coming months given the force of the fourth coronavirus wave. A few days ago, the Federal Ministry of Labor extended the easier access to short-time work until March 31, 2022.

The most important questions summarized

The saleswoman from Essen wanted 2.5 more vacation days. A seemingly minor labor court case concerning the reduction of vacation days for short-time work during the coronavirus crisis. But it made it to the highest instance - with enormous consequences.

The precedent was set by a saleswoman from North Rhine-Westphalia, and the decision may influence the vacation planning of tens of thousands of short-time workers during the coronavirus crisis in the coming year: On Tuesday, the Federal Labor Court (BAG) in Erfurt answered the controversial question of whether employees' vacation entitlement can be reduced proportionately in the case of so-called short-time work zero with days or weeks without work obligation. A landmark ruling was handed down.

What did the Federal Labor Court decide?

The highest German labor court judges have answered the question of whether employers are allowed to reduce their employees' vacation entitlement on a pro rata basis in the case of agreed zero short-time work and thus often long phases without compulsory work with yes. Reductions in leave in the case of zero short-time working are therefore now legal. The German Trade Union Confederation (DGB) had argued that short-time work would "not give employees any predictable time off". Following the ruling, DGB board member Anja Piel spoke of a "bitter day for many employees". The decision shifts the burden of the pandemic onto employees.

Why is this a landmark ruling?

"The Federal Labor Court can close a legal loophole," said Bonn-based labor law expert Gregor Thüsing. The presiding judge, Heinrich Kiel, said at the hearing that "our problem is not explicitly regulated in the Federal Leave Act". Accordingly, different procedures were followed in industry, trade, the hospitality sector and the skilled trades during the lockdown phases. The judge's ruling could now affect the vacation planning of tens of thousands of short-time workers. "The practical implications are enormous given the high number of short-time workers during the coronavirus crisis," says Thüsing.

Who brought the case before the Federal Labor Court?

A 49-year-old sales assistant from Essen set the precedent. She was asking for 2.5 more days of vacation. Instead of the 14 days she was entitled to as a sales assistant with three working days a week, she had only received 11.5 days last year due to months of short-time working. Her lawsuit was supported by the DGB legal protection organization.

What is the current case law on vacation cuts?

The lower courts in Essen and Düsseldorf dismissed the saleswoman's claim, but allowed an appeal to the Federal Labor Court due to its importance. "For periods in which employees are not required to work due to zero short-time work, the annual leave entitlement must be reduced proportionately," ruled the Düsseldorf Regional Labor Court - and has now been confirmed by the Federal Labor Court.

The courts considered themselves to be in line with the case law of the European Court of Justice (ECJ). Since 2019, the Federal Labor Court had affirmed a reduced leave entitlement in other matters - in the case of unpaid special leave or partial retirement models. In the case of short-time work, it has now continued its line that vacation entitlement should be based on the actual number of days worked.

Is there still a lot of short-time work at the moment?

Yes, according to figures from the Federal Employment Agency, registrations for short-time work are rising steadily. Between November 1 and 24 alone, there were 104,000 applications for short-time work nationwide - around 10,000 more than in October. In view of the impact of the fourth coronavirus wave, the Federal Ministry of Labor has just extended easier access to short-time work until March 31, 2022.

What is the practice in Germany? Do companies give their employees zero vacation during short-time work?

Rarely - at least according to a study by the Institute for Employment Research (IAB) in Nuremberg. In its study published in the fall, the institute found that, on average, only one in nine companies in a random sample this year canceled vacation days for their employees on short-time work. This was particularly true for larger companies with a high workload. "These are the companies that have the most routine with short-time work," said study author Enzo Weber. According to employment law expert Thüsing, the BAG ruling has no impact on leave that has already been taken. According to the court, companies can, but do not have to, recalculate and reduce zero vacation during short-time work.