Federal Labor Court, decision dated February 10, 2015 – 9 AZR 455/13
Facts of the case
The employee was employed since more than 20 years. The employer terminated the employment with immediate effect and additionally gave statutory notice of termination under due respect of the applicable notice period in case the dismissal with immediate effect may be invalid. Furthermore the letter of termination said: “In case that only the statutory notice of termination is effective, you are released from your duty to work with immediate effect, taking into account all leave and overtime claims.” The parties reached a settlement ending the employment 5 weeks after notice was given. Although this period would have sufficed to grant the entire leave, the employee claimed compensation for the leave. The Federal Labor Court sided with the plaintiff.
The decision
According to precedents set by the Federal Labor Court, it was possible so far to grant any remaining days of leave by releasing the employee from his duty to work during the notice period of an additional statutory notice of termination as a precautionary measure in the event that the immediate termination of the employee may be found to be invalid. The Federal Labor Court has now renounced this jurisdiction. In such cases leave can no longer be granted solely by an irrevocable release.
In order to satisfy claims for paid leave, it is now necessary that the employee is not only released from the obligation to work, but also receives the salary for the period or a clear statement that payment will be made in any case. The entitlement to leave aims to enable the employee to recuperate. This purpose can only be achieved, according to the Federal Labor Court, if the employee also has financial security by receiving an income during that period. The employee must therefore be sure to receive remuneration during the leave. Therefore he must receive the payment at the time of the dismissal or that payment must at least be confirmed without any reservation.
Practical tip
The decision applies to all employers. Previously used templates for extraordinary notices of termination must be adapted. If, the employer does not want to risk paying leave compensation on top of the salary for the contractual or statutory notice period despite release from work, after a labour court found the dismissal with immediate effect invalid, the employer has to state in the letter of termination that the employee will receive leave compensation without any reservation for at least the days of leave already incurred, otherwise there can be no fulfillment. The corresponding formulation could be: “In the unlikely event of the ineffectiveness of the immediate termination, we hereby irrevocably release you from the obligation of performing work for the period of the termination notice expressed in the alternative period of termination with immediate effect, taking into account all incurred vacation entitlements up to the point of submission of the termination as well as any other claims to compensatory leave. Your remuneration for the outstanding leave will be paid with the next salary.” If the immediate dismissal is overturned by the Labor Court, the leave compensation can be offset against the remuneration arrears.
Facts of the case
The employee was employed since more than 20 years. The employer terminated the employment with immediate effect and additionally gave statutory notice of termination under due respect of the applicable notice period in case the dismissal with immediate effect may be invalid. Furthermore the letter of termination said: “In case that only the statutory notice of termination is effective, you are released from your duty to work with immediate effect, taking into account all leave and overtime claims.” The parties reached a settlement ending the employment 5 weeks after notice was given. Although this period would have sufficed to grant the entire leave, the employee claimed compensation for the leave. The Federal Labor Court sided with the plaintiff.
The decision
According to precedents set by the Federal Labor Court, it was possible so far to grant any remaining days of leave by releasing the employee from his duty to work during the notice period of an additional statutory notice of termination as a precautionary measure in the event that the immediate termination of the employee may be found to be invalid. The Federal Labor Court has now renounced this jurisdiction. In such cases leave can no longer be granted solely by an irrevocable release.
In order to satisfy claims for paid leave, it is now necessary that the employee is not only released from the obligation to work, but also receives the salary for the period or a clear statement that payment will be made in any case. The entitlement to leave aims to enable the employee to recuperate. This purpose can only be achieved, according to the Federal Labor Court, if the employee also has financial security by receiving an income during that period. The employee must therefore be sure to receive remuneration during the leave. Therefore he must receive the payment at the time of the dismissal or that payment must at least be confirmed without any reservation.
Practical tip
The decision applies to all employers. Previously used templates for extraordinary notices of termination must be adapted. If, the employer does not want to risk paying leave compensation on top of the salary for the contractual or statutory notice period despite release from work, after a labour court found the dismissal with immediate effect invalid, the employer has to state in the letter of termination that the employee will receive leave compensation without any reservation for at least the days of leave already incurred, otherwise there can be no fulfillment. The corresponding formulation could be: “In the unlikely event of the ineffectiveness of the immediate termination, we hereby irrevocably release you from the obligation of performing work for the period of the termination notice expressed in the alternative period of termination with immediate effect, taking into account all incurred vacation entitlements up to the point of submission of the termination as well as any other claims to compensatory leave. Your remuneration for the outstanding leave will be paid with the next salary.” If the immediate dismissal is overturned by the Labor Court, the leave compensation can be offset against the remuneration arrears.
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