In a decision dated 20 March 2012 (docket no. 9 AZR 529/10), which caused quite a stir, the BAG ruled that the scaling of holiday claims according to age pursuant to the Collective Agreement for the Public Service (TVöD) was age discriminatory and therefore invalid. In the opinion of the BAG, such unequal treatment can only be remedied with an "upwards" adjustment, that is to say by granting the full holiday claim to all age groups.

Pursuant to Sec. 26 para. 1 TVöD, the scaled holiday claim for an employee working a five-day week is 26 work days if such employee is under the age of 30, 29 work days if under the age of 40, and 30 work days after reaching the age of 40. The claimant wanted the court to establish that she was already entitled to the maximum claim of 30 days' holiday before she was 40. She deemed the holiday scale to be an impermissible age discrimination.

The BAG initially established that the holiday scale directly disadvantages employees under the age of 40. Upon further examination, the BAG could not find any justification for this disadvantage. The unions, the case law of several regional labour courts and prevailing legal literature have thus far considered an age-based holiday scale to indeed be justified on grounds of the legitimate purpose of considering older employees' increased need for recreation time. However, an employee's increased need for recreation time from as early as the age 30 or 40 was not acknowledged by the BAG, and it derived herefrom a violation of the prohibition of age discrimination. This could only be remedied through an "upwards" adjustment, that is to say by granting the full holiday claim to all employees irrespective of their age. The 39-year-old claimant was subsequently awarded a further day of holiday for each of the years 2008 and 2009 as compensatory holiday.

In practice, this decision has far-reaching consequences: The decision, which is currently still only available in the form of a press release, suggests that although an age-based scaling of the duration of the holiday is not ruled out from the outset, the scaling must be correctly chosen in order to duly take into consideration the increased need for recreation time of older employees. Hence, age scales as of the age of 50 or 60 could certainly be legitimate. Employers should therefore check whether the holiday scales contained in the applicable collective agreements or shop agreements meet these requirements and adjust them where applicable.

Not yet clarified is the important follow-up question of whether employees affected by this are now also entitled to claim retroactive compensation for holiday for concluded holiday years. We consider it unlikely that the Federal Labour Court's decision will only apply to the new holiday year 2012. Employers confronted with corresponding claims should therefore initially refer to the applicable collectively or individually agreed preclusion periods, respectively transitional periods. Following the case law of the ECJ on the accumulation of holiday claims (cf. our Newsletter IV/2011), one could also argue that only holiday claims accrued within the last 15 or 18 months after the end of the respective holiday year must be corrected (see in this connection ECJ dated 22 November 2011, docket no. C-214/10; Regional Labour Court [Landesarbeitsgericht, LAG] Baden-Württemberg dated 28 December 2011, docket no. 10 Sa 19/11). In the worst case scenario, however, a retroactive compensation of holiday claims extending back as far as the general threshold of the statute of limitation is possible, i.e. for the last four years. Which solution will be chosen by jurisprudence remains to be seen.

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