During the Covid crisis, millions of employees are affected by short-time work. When it comes to vacation entitlement under short-time work, there is a lot to keep in mind.

Leftover vacation from the previous year

Before receiving the short-time work allowance, employees must first use up their leftover vacation from the previous year. With vacation entitlement under short-time work, something different applies only if the employee's vacation wishes conflict with using the remaining vacation in that way. The vacation wishes the employee expresses always come first.

What does vacation entitlement under short-time work mean for the current year in which the short-time work occurs?

Short-time work vacation entitlement

In principle, an employee's annual vacation entitlement arises under the employment contract or collective agreement. Short-time work, however, is a special case.

Short-time work, vacation entitlement and the legal rules

Until December 31, 2020, the Federal Employment Agency did not require employees on short-time work to use their vacation entitlement from the current year in order to avoid or reduce short-time work. The reason given was that employees had been taken by surprise by "Covid" in 2020. Parents were also meant to use such vacation days to provide child care during school and daycare closures. As a result, there was a lenient rule on vacation entitlement under short-time work for 2020.

In 2021 the employment agency takes a different approach. Since January 1, 2021, employees must again use their entitlement to avoid short-time work. The condition is, however, that the employees' vacation wishes do not stand in the way.

If a company's vacation planning for 2021 is based on

-a vacation schedule;

-a vacation list;

-company-wide closures (see also § 87 I No. 5 BetrVG, the German Works Constitution Act)

Short-time work vacation entitlement

then the vacation entitlement does not have to be used beforehand to avoid short-time work. In that case, vacation is taken at the times planned within the company.

Short-time work, vacation entitlement and pay

If, on the other hand, a company that has registered short-time work for 2021 has no vacation planning, it is required there to schedule the start of vacation entitlements toward the end of the 2021 vacation year in order to avoid short-time work. This rule only applies if the vacation entitlement under short-time work cannot be carried over into the 2022 vacation year. If this vacation is not taken, there is no unavoidable loss of work.

Short-time work must not have a negative effect on the calculation of an employee's vacation pay. Vacation pay is calculated on the basis of average earnings over the last 13 weeks before the vacation begins. If the introduction of short-time work leads to a reduction in reference pay, those reductions are not taken into account in the calculation.