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03 April 2020

Vacation pay and overtime compensation despite reduced working hours (RWH)

Many employees have planned vacation over Easter. But now that the corona virus has put a spoke in the wheel for all employees who enjoy travelling, employers are receiving more and more enquiries as to whether the vacation can be taken at a later date. With other employers, the workload in the company has shifted considerably, so that for certain departments, a vacation block has been implemented, while RWH have been introduced in other departments.

Here you will find the most important answers regarding vacation and overtime compensation during RWH.

1. May vacation be taken despite RWH?

Yes. RWH do not prevent the employee from taking vacation. The usual conditions apply.

2. What is the vacation pay during RWH?

This question has not yet been finally clarified. There are good arguments for a reduction of vacation pay. During vacation, the employer must pay the employee the usual wage. As the wage is reduced during RWH, a reduction of the vacation pay is in our view justified.

There is no entitlement to RWH benefits during the vacation. Therefore, vacation pay is to be fully borne by the employer.

3. Is the vacation entitlement reduced during RWH?

No. A reduction of the vacation entitlement is not permissible. The introduction of RWH has no effect on the employee's vacation entitlement; the contractually agreed vacation days apply without any change. Decisive is the vacation entitlement as contractually agreed. This also means that for one week of vacation, the employee must take five days' vacation, even if he or she temporarily only works four days a week as a result of RWH.

4. May the employer insist that approved vacation have to be taken?

Yes. Despite the pandemic, the recreational purpose of the vacation is deemed as given. Cancellation or postponement of already approved vacation requires the employer's consent. Therefore, the employer can insist that pre-approved vacation is actually taken. This corresponds to a practical need. If all employees would postpone their vacation to the second half of the year, this may lead to staff shortages.

5. May the employer impose a vacation block?

Yes. Despite RWH, it can be useful to impose a vacation block for individual functions or departments. Since the time of vacation can be determined unilaterally by the employer, taking into account the employee's wishes and observing a notification period of three months, the employer is entitled to impose such a vacation block. In the event of unforeseen and urgent operational needs, the employer can even refuse that pre-approved vacation are taken. However, in that case, the employer must reimburse the employee for any costs arising from the cancellation of the vacation.

6. Do overtime and flexitime credits have to be balanced before RWH is introduced?

No. Employees no longer have to balance their overtime and flexitime credits in advance in order to benefit from RWH benefits.

7. Within which period of time may the compensation of overtime be ordered?

If the contract provides for overtime compensation by time off in lieu, overtime compensation can be ordered at relatively short notice in the current situation. The same applies to the compensation of flexitime credits. A notification period of a few days is deemed sufficient. It is questionable, however, whether overtime compensation can be settled via RWH.

8. Compulsory company holidays instead of RWH?

The employer has the right to determine the time of the vacation. In doing so, he has to take into account the interests of the employee to the extent possible. Therefore, the employer is entitled to order compulsory company holidays. The advance notification period of three months, which normally applies, no longer needs to be observed due to the current situation. An advance notice of a few weeks is deemed sufficient. If compulsory company holidays are ordered instead of the introduction of RWH, the employee is entitled to 100% pay during the compulsory company holidays.

The VISCHER employment team is happy to assist you with any questions you may have.

Authors: Marc Ph. Prinz, Sara Ianni

Topics: Employment LawEmployerPandemicCoronavirusVacation

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