Unpaid Leave Sabbatical Triggers Days of Paid Vacation in Germany

3 minute read | September.17.2014

Like in other countries, the parties to an employment agreement in Germany are free to agree on a sabbatical – a defined period during which the employment relationship is suspended. The employee is released from his active duties, and the employer is not obliged to pay remuneration and benefits throughout the agreed sabbatical.

The details of the sabbatical are either stipulated in a works agreement with the works council (a representative elected body of employees representing the workforce), or provided for in a contract directly agreed between employer and employer. Common clauses in such agreements are the length of the sabbaticals’ term, the suspension of employment during the term, the right of the employee to return on his/her workplace on expiration of the agreed term – and a provision that the employer is not obliged to pay remuneration and benefits during the sabbatical.

At many companies offering sabbaticals, it is practice that the employee will not acquire days of vacation during the term of the sabbatical. If, for example, the annual vacation entitlement of an employee is 30 days per year, 2.5 vacation days will be deducted for each month of the sabbatical.

The German Federal Labor Court – the highest employment court in Germany – has now found a judgment that this practice – no accrual of vacation days during the sabbatical -is in conflict with the German Federal Vacation Act and therefore unlawful (judgment dated May 6, 2014 / 9 AZR 678/12):

In the case decided by the court, employer and employer agreed on a sabbatical for the period between January 1, 2011 and September 20, 2011. Further, it was agreed that, during the sabbatical, no days of vacation will accrue. During the sabbatical, the employee gave notice of termination to the employment relationship effective September 30, 2011, and asked the employer to compensate her for her days of vacation accrued in 2011 during the agreed sabbatical. The Federal Labor Court ordered the employer to pay out the requested compensation. The court argued that the German Federal Vacation Act gives an employee the annual entitlement to paid leave, and that the only relevant prerequisite for this benefit is an employment relationship – irrespective whether it is active or dormant during the year. According to the court, the Act does not allow an employer to grant days of vacation only prorated in a calendar year during which employment fully or partly suspended. Finally, the judges stressed that the German Federal Vacation Act is mandatory, and that the parties to an employment relationship cannot agree otherwise.

In light of this recent judgment of the Federal Labor Court, employers are well advised to check their existing policies for sabbaticals. Following the judgment, provisions reducing the employee’s days of vacation in line with the length of a sabbatical cannot be validly agreed on in the future, and cannot prevent the employee from requesting days of paid leave accrued during the sabbatical.