Company holidays: What employers and employees need to know

SaaS.de provides information on the key requirements
When the entire business closes its doors for a specific period, this is referred to as a company holiday or company break. From an employment law perspective, this constitutes a collective holiday directive. However, the employer must not impose the holiday arbitrarily.

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The legal basis and the landmark ruling


The Federal Annual Leave Act (Section 7(1) BUrlG) stipulates that an employee’s preferences must be taken into account when planning annual leave.
An exception applies only if there are ‘urgent operational requirements’ that conflict with this.

The landmark ruling by the Federal Labour Court (BAG, Case No. 1 ABR 79/79) draws a clear line in this regard:

A maximum of 3/5 (approx. 60 per cent) of the statutory annual leave may be allocated to company-organised holidays.
At least 2/5 of the holiday entitlement must remain at the employee’s free and individual disposal.

An overview of the key requirements

Urgent operational reasons: The employer must be able to demonstrate objective grounds.
These include, for example, the closure of a key supplier, the closure of a doctor’s surgery whilst the practice owner is on holiday, or a seasonal halt to orders (e.g. in the construction industry during winter).

Co-determination by the works council:
If the company has a works council, the employer cannot impose company holidays unilaterally. Under Section 87(1)(5) of the Works Constitution Act (BetrVG), the works council has a mandatory right of co-determination.
Timely notice: To give employees certainty when planning their schedules, company holidays must be announced with reasonable notice – in practice, usually 6 to 12 months in advance.

What happens if you have negative hours or are off sick?


What happens if an employee has no holiday left in the summer because they have already taken it in the spring?
In such cases, the employer bears the financial risk.
They may not send the employee home without pay or deduct hours from their balance, provided they had already approved the previous holiday.
However, according to a ruling by the Federal Labour Court (BAG) from 1981, employees are entitled to determine approximately two-fifths of their holiday entitlement themselves (1 ABR 79/92).

What happens if an employee falls ill during the company holiday?

If employees can prove they have fallen ill during the company holiday, they are protected by Section 9 of the Federal Leave Act (BUrlG):
Upon presentation of a medical certificate of incapacity for work, the days of illness are not counted towards their annual leave and are credited to their entitlement.

You can find further information on the topic of falling ill whilst on holiday in our blog post ‘Falling ill whilst on holiday’

Sources:
Section 87(1)(5) of the Works Constitution Act (BetrVG)
Section 7(1) of the BurlG
Section 9 of the BurlG
Federal Labour Court (BAG), Ref. 1 ABR 79/79
BAG 1 ABR 79/9 Contents

Created by Leto Gebele yesterday at 16:15 o'clock