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No Deduction of Vacation Pay Entitlement in Case of Dismissal with Proper Notice - Employment-Law

Employers must not deduct any vacation pay entitlement when releasing employees from their obligation to work.


Cologne, NRW -- (SBWIRE) -- 10/09/2013 -- GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Bremen, Dusseldorf, Essen, Frankfurt, Hamburg, Hanover, Munich, Nuremberg, Stuttgart and London – conclude: The Superior Labour Court (LAG) of Hamm had to decide in a case (File number 16 Sa 763/12) where an employee was summarily dismissed and alternatively with proper notice, and the employer released him from his obligation to work should the summary dismissal turn out to be ineffective. The employer wanted to deduct the employee’s still existing entitlement to vacation pay and overtime pay. When the employer denied the employee’s request for vacation pay, based on the release from his obligation to work, the employee took the case to the Labour Court.

Initially, the Labour Court of Dortmund had dismissed the action. As a reason, the court stated that the plaintiff had been granted vacation when he was released from the obligation to work. Had the employment relationship been extended beyond the effective time of summary dismissal, precautionary vacation pay would have had to be granted. The employee filed an appeal against the decision with the LAG.

The judges in Hamm set the judgment aside and ruled for the plaintiff. They based their decision on a judgment by the Federal Labour Court (File number AZR 647/77). It ruled that an employer summarily dismissing an employee can deduct existing vacation pay entitlement only if the duration of the vacation is taken into consideration and is postponed accordingly. Furthermore it stated that the employee would have to pay the amount of wages as vacation pay. This had not happened in the case at hand. The formulation was also said to be unusual. The defendant had not granted vacation in case the summary dismissal would be ineffective, but referred to the effectiveness of dismissal with proper notice. The court left open whether this was compatible with the required clarity of explanations.

When employers and employees have question and problems with regard to an employment contract, cautioning or dismissal, they should consult a lawyer with experience in labour law. Since short deadlines are common in labour law, it is necessary to act promptly. In case of a dismissal, for example, a law suit for unfair dismissal must be filed within three weeks after receiving notice.

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GRP Rainer LLP, is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Essen, Frankfurt, Hamburg, Hannover, Munich, Stuttgart, Bremen, Nuremberg and London UK.

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