krfacts November Edition 2021 Leave of absence in Labour Law

Changes in personnel occur in different ways (fn. 1), but are generally aimed at terminating the employment relationship.

The release of the employee is particularly important in the case of termination of the contract by mutual agreement. In the case of dismissals, it is often the case that the employee does not wish to remain in the company.

In the case of a contractual release, the parties are freer to shape the effects of the release. However, the framework conditions for (fn. 2) a valid termination agreement must be observed. In addition, a final disentanglement of the parties with a valid waiver can be effected by a clever execution of the contract. Since there is not always willingness to enter into a comprehensive severance agreement, certain points need to be taken into account in the case of a release after termination. The most important points are highlighted below.

What is an exemption?

In the case of an exemption in employment law, the employer unilaterally instructs the employee that he no longer has to perform his work (so-called declaration of exemption). With the declaration of release, the employer makes it clear that he no longer wishes to accept the employee's work. Although this is verbally possible, a written, correctly drafted notice is preferable.

The salary continues to be owed and the employee's compliance with the obligations under the employment contract continues in principle. Of particular importance here is the duty of loyalty, which prohibits direct competition with the previous employer during the leave of absence, and the duty of confidentiality flowing from the duty of loyalty.

Is an exemption always absolute?

In the case of time off, a distinction is made as to whether the employer no longer wishes to accept any work (so-called absolute time off) or whether, despite time off, a certain amount of work is still expected and demanded of the employee (so-called relative time off).

These include handover work to the successor, keeping the employee available for queries from the employer (fn. 3) during the leave of absence or important appointments or assignments where the employee's commitment is indispensable. In addition, a temporary leave of absence following a termination can also give the parties pause to consider whether to enter into a proposed severance agreement, if any, and mutually agree to terminate the contract. Things get tricky if this leave of absence is misused to put pressure on the employee. In such a case, the release is inadmissible.

The following comments refer only to unilaterally ordered time off by the employer and not to contractually agreed time off.

Which points should a declaration of exemption contain?

Nature of the exemption

The statement must make it clear whether an absolute or relative exemption has been granted. In the case of a relative exemption, the circumstances and conditions for a work assignment must be described as precisely as possible. In the case of dates that are not already fixed, a time buffer must also be provided between the request to work and the actual work assignment.

Salary and variable remuneration (or salary components)

Wages and also variable remuneration are due during the leave of absence on the usual due dates. Variable salary components usually have conflict potential, regardless of whether a leave of absence has been declared or not. In the declaration of release, it is therefore sufficient to simply state that the "usual salary" will be paid.

In order to assess whether, and if so to what extent, the leave of absence has an influence on the variable remuneration, the qualification of the remuneration (fn. 4) in question must first be carried out. Only if it concerns an owed wage claim, the question arises whether the release has an influence on it. Where objective assessment criteria (EBITDA, profit, etc.) determine the amount of the variable salary component, the exemption has no influence. In the case of non-objective assessment criteria (fn. 5) depending on the initial situation, in principle the average salary from the past can be used for the exemption period with the so-called reference period (fn. 6). A complete elimination of the variable remuneration is critical. Such a discontinuation can only be achieved within the framework of the termination agreement (cf. footnote 2).

Expenses that are directly related to the work and are no longer actually incurred no longer have to be paid. A differentiation must be made between flatrate expenses and expenses that cannot be suspended immediately (fn. 7).

Withdrawal of credit from holidays, overtime and overtime credits

Although it is not necessary to explicitly stipulate that vacation must be taken, it is advisable to do so. The same applies to the compensation of overtime and overtime credits. If the flexitime balance is positive (fn. 8) possible almost without restriction.

Whether such a reduction is permissible, and if so to what extent, must be examined in each individual case. As a rule of thumb, which can be waived in individual cases, approximately one third of the days of leave are available for a reduction of these credits. The entitlement to vacation accrues normally during the leave of absence, i.e. as if the employee had worked. Whether excess vacation days taken can be offset against salary entitlements must be examined on a case-by-case basis.

We will be happy to provide further information on the impact of (third-party) income, reporting obligations in the event of illness or accident, or the associated waiting periods.