In a recent ruling, the Federal Labour Court had to decide on the entitlement to holiday pay. The legal action was brought by a newspaper deliveryman whose employment contract contained provisions intended to circumvent remuneration on public holidays. The Federal Labour Court ruled that this violated the principle of mandatory statutory entitlement to payment on public holidays and that the employer must pay wages despite the contractual provisions. We have analysed the decision and summarised the most important information on the subject of holiday pay, just in time for Christmas.
In principle, an employment ban applies for employees on public holidays (s9, paragraph 1 of the Working Time Act). If no work is done on a public holiday, the labour law principle of ‘no wages without work’ actually applies. The legislator has therefore determined in s2 paragraph 1 of the Continued Remuneration Act:
‘For working time which is lost as a result of a public holiday, the employer must pay the employee the wages which he would have received without the loss of working hours.’
In Germany, the states determine which days are public holidays. Only German unification day on 3 October is standardised at federal level. However, state regulations generally provide for nine uniform holidays, such as the first and second Christmas holidays. However, Epiphany, Corpus Christi, Assumption Day, Reformation Day, All Saints’ Day and the Day of Repentance and Prayer are handled differently.
As far as holidays are not expressly recognised as legal holidays, the obligation to pay wages in s2 paragraph 1 of the Continued Remuneration Act does not apply. Christmas Eve and New Year’s Eve are therefore not public holidays within the meaning of the law. In collective agreements, works agreements or employment agreements, this can be altered in favour of the employees and an additional (paid) holiday day granted on these days. In addition, the majority of the state public holiday laws provide, at least for certain church holidays, that unpaid leave or vacation is to be granted to employees belonging to the relevant faith.
The Federal Labour Court judges on holiday remuneration
In a recent ruling, the Federal Labour Court had to decide on a contractual provision which de facto excluded a claim to holiday pay (ruling of 16 October 2019 – 5 AZR 352/18, currently only available as a press release).
The complaint was filed by a newspaper deliveryman from Saxony who demanded holiday pay for five holidays in 2015 from his employer. According to his employment contract, he was obliged to supply newspaper subscribers from Monday to Saturday inclusive. In addition, it was contractually agreed that working days meant all days on which newspapers were published in the delivery area. If a public holiday fell on a working day on which no newspapers appeared in the delivery area, the plaintiff would not be paid. The plaintiff therefore claimed his wage of EUR 241.14 for five public holidays (Good Friday, Easter Monday, Labour Day, Ascension Day and Whit Monday) on which he was not employed by his employer. In his view, the work had only been interrupted because of the public holidays, which is why he had a claim to remuneration under the Continued Remuneration Act. The Dresden Labour Court and the Saxony Regional Labour Court upheld the action.
The Federal Labour Court’s decision
Although the Federal Labour Court referred the matter back to the Saxon State Labour Court, it upheld the plaintiff’s case and granted him a claim to the holiday pay on the merits. Under s2 paragraph 1 of the Continued Remuneration Act, an employer must pay the wages the employee would have received if he or she had worked, for any working time that is lost as a result of a public holiday.
The Federal Labour Court found that the plaintiff was not employed on the holidays solely because the newspapers he usually delivers did not appear in his area of work. The provisions in the employment contract for determining working days to be paid were invalid to the extent they aimed to exclude public holidays from the obligation to pay wages.
According to the Federal Labour Court, this contravenes the statutory right to continued payment of wages, which the parties to the employment contract cannot waive. The Saxon Higher Labour Court had also assessed the provision to be invalid (judgement of 21 February 2018 – 5 Sa 269/17). However, the finding was based on inappropriate discrimination against the plaintiff within the meaning of s307 paragraph 1 of the Civil Code, since the employer had inadmissibly transferred its economic risk of loss of working hours to the employee. It had obviously overlooked the legally mandatory nature of entitlement to remuneration on public holidays under s12 of the Continued Remuneration Act.
However, the Federal Labour Court overlooked this (at least in its press release) and overturned the ruling based on incorrect calculation of the wage entitlement. For the more exact reasoning, we will have to wait for the judgement, with reasoning, to be made public. What is clear, however, is that employment contract provisions that circumvent the statutory holiday remuneration claim will generally be ineffective. This should already be taken into consideration in drafting employment contracts, in order to prevent disputes.