Commented decision: Leave entitlements can be reduced for periods of parental leave

Decision of the Federal Labor Court from March 19, 2019 (9 AZR 362/18)

A female employee requested paid leave from her employer for the period during which she was on parental leave. She was of the opinion that the claim to statutory leave pursuant to secs. 1, 3 (1) of the German Federal Leave Act also arises during parental leave. After the employer did not grant her any paid leave for this period, she took the case to court. The action was dismissed by the Federal Labor Court as well as all the lower courts.

In its decision, the Federal Labor Court ruled that an employee’s paid leave entitlement can be reduced by one twelfth for each full calendar month of parental leave. This is apparent from sec. 17 para. 1 sent. 1 of the German Parental Leave and Parental Allowance Act. However, the court also made clear, that employers must make a legal declaration to be received by the employee, which informs them about the reduction of the leave entitlement. The Federal Labor Court judges referred, inter alia, to the ruling of the European Court of Justice of October 2018 (EuGH of October 4, 2018, Az. C-12/17), according to which it is permissible treating paid leave entitlements acquired during parental leave different from those acquired during illness or maternity leave. The reduction of the statutory paid leave by employers for periods of parental leave does insofar not violate EU law.

 

Ogletree Deakin’s practical tip:

The Federal Labor Court has ruled that leave may be reduced for the duration of parental leave pursuant to sec. 17 para.1 sent. 1 of the German Parental Leave and Parental Allowance Act, but contrary to widespread assumptions, such a reduction is not automatic. Rather, the employer must declare such a reduction vis-a-vis the employee.

It should be noted that the law does not stipulate any particular form for the employer’s declaration. The employer may express the reduction in paid leave not only in writing or by e-mail, but also orally. It must, however, be ensured that the declaration reaches the employee and that he/she has to opportunity to take note of it. In order to prove the receipt later on, the declaration should be made in writing or in text form (e.g. by e-mail).

It is particularly advisable to include a corresponding declaration of reduction in the customary confirmation of parental leave, which the employer submits to the employee. If the reduction is declared orally, we recommend that you do this with witnesses present and subsequently document the declaration in writing, for example by making a note in the employee’s personnel file.

In our opinion, it would also be conceivable to include a corresponding clause on paid leave reduction in the case of parental leave in the employment contract. It is also important that the declaration of reduction is made before the end of the employment relationship. Otherwise, the full leave entitlement converts into a compensation entitlement, which can no longer be reduced.