Cologne Regional Labor Court on leave compensation in the current employment relationship

It happens time and again that employees are unable or unwilling to take the vacation to which they are contractually entitled in the current vacation year or by the end of the carry-over period. These cases regularly raise the question as to whether the employer can pay out leave in the current employment relationship. With regard to the statutory minimum leave entitlement, the German Federal Leave Act (“BUrlG”) clearly stipulates that only leave that can no longer be taken due to termination of the employment relationship may be paid out. Compensation for the statutory minimum leave is therefore not permitted in the current employment relationship. With regard to contractually agreed additional leave exceeding the statutory minimum leave, the parties to the employment contract can also agree on compensation during the current employment relationship.

In the case now decided by the Cologne Regional Labor Court (decision of April 11, 2024, case no. 7 Sa 516/23), the employer and employee had concluded a termination settlement in court proceedings pending while the employment relationship was still in existence, which included a clause stating that the plaintiff’s leave entitlements had been granted in kind. In fact, however, the plaintiff had been continuously incapacitated for work from the beginning of the vacation year until the termination of the employment relationship and had therefore not been able to take any leave in the year in question. After the employment relationship ended, he therefore sued for compensation for the proportionate statutory minimum leave. The defendant countered the plaintiff had waived his statutory and contractually agreed leave (compensation) entitlements.

The Cologne Regional Labor Court found that the leave entitlement had not ceased to exist either by fulfillment or by waiver. The agreement reached in the termination settlement did not constitute an admissible factual comparison with regard to the leave, as there was no dispute about the number of vacation days still outstanding. The leave entitlement pursuant to Art. 1, Art. 3 BUrlG is indispensable pursuant to Art. 13 (1) sentence 3 BUrlG. Legal agreements during the employment relationship that exclude or limit the leave entitlement are contrary to the law’s protective purpose. The BUrlG serves to protect health. A corresponding agreement is not permitted even if the imminent end of the employment relationship is already binding when the restrictive agreement is concluded.

An appeal against the decision has been lodged with the Federal Labor Court. However, it can be assumed that the Federal Labor Court will confirm the decision of the Cologne Regional Labor Court.

Practical advice

Even if an employee approaches the employer and requests payment of leave days in the current employment relationship, this request should only be granted with regard to any contractually agreed additional leave. The statutory minimum leave of 20 days as part of a 5-day week is inviolable. If the employer agrees to the employee’s request to pay out additional vacation days, the employer bears the risk of ultimately having to pay these leave days twice.