No granting of holiday in cases of termination without notice, alternatively ordinary termination

BAG, judgment dated 20.2.2015 - 9 AZR 455/13

The BAG has decided that an employer only effectively grants his employee holiday through a declaration of release from duties in a letter of termination if he pays the employee the holiday remuneration before the holiday is taken, or at least gives an unreserved assurance of payment of the holiday remuneration. No such granting is given if the employer terminates the employee extraordinarily, alternatively ordinarily, and declares release from duties in the event of effectiveness of the ordinary termination.

The Federal Labour Court (BAG) was required to decide on the claim of an employee against his former employer concerning remuneration of 15.5 days holiday.

In its letter dated 19 May 2011, the defendant had terminated the claimant’s employment extraordinarily with immediate effect, and alternatively with the required period of notice to 31 December 2011. The letter of termination stated the following: “Should the alternative termination with the required notice period be effective, you will be released irrevocably from performance of your work duties with immediate effect, subject to crediting of all claims to holiday and overtime.” In the ensuing legal dispute, the parties reached a settlement agreement at the conciliation hearing on 17 June 2011 which conclusively regulated the reciprocal claims. Under this settlement agreement, the employment relationship ended on 30 June 2011. The claimant was released from performance of his work duties up until this date, subject to continued payment of remuneration. The parties also agreed on a general release of claims. The claimant subsequently continued to demand remuneration for his residual holiday entitlement.

The claimant would have been entitled to the claim to compensation for holiday under Section 7 Subsection 4 BUrlG (Federal Holiday Act) if he had not been granted the holiday and the parties had likewise not made any other agreement on this.

No granting of holiday through the declaration of release in the letter of termination

Of material importance for the decision was therefore above all the question of whether the defendant was able to grant the claimant the holiday through the irrevocable release declared in the letter of termination dated 19 May 2011. The BAG now rejected this in agreement with the previous instance (see LAG Hamm dated 14.3.2013 - 16 Sa 763/12).

Effective granting of holiday presupposes not only release from work duties but also payment of the holiday remuneration – or at least an unreserved assurance of such. If, however, an employer terminates extraordinarily and ordinarily only as an alternative, he is making primarily clear that he does not wish to pay further remuneration – and thus not even holiday remuneration. Unpaid release does not satisfy the employee’s statutory claim to holiday. The previous instance refers in particular to European law as regards the reasons. Under European law, the claim to holiday and the claim to holiday remuneration are only two aspects of a single claim (LAG Hamm dated 14.3.2013 - 16 Sa 763/12 with reference to ECJ dated 16.3.2006, Robinson-Steel - C 131/04).

Failure of the legal action based on the preceding settlement agreement

In the specific case, the BAG nevertheless dismissed the claimant’s action, as the parties had regulated their reciprocal claims conclusively in the legal dispute concerning dismissal.

Summary

In future, employers must continue to exercise care when formulating extraordinary, alternatively ordinary termination. If it is not clear that the employer is willing to pay the holiday remuneration, he bears a double risk. If the extraordinary termination is ineffective, he must also pay the holiday entitlement in addition to the normal remuneration (as wages owed through default) despite any extended period of release.