As a result of the COVID-19 pandemic and its impact on company business, many companies have been forced to use temporary contract suspension and reduced working hour procedures. When deciding what measure to implement, one of the issues that arises is the accrual of vacation during an ERTE. ¿Are workers still entitled to 30 days’ annual vacation (or the number established in the applicable collective-bargaining agreement) or is the number of accrued vacation days reduced?

Article 38 of the Workers’ Statute provides for remunerated annual vacation of 30 calendar days. In order to be entitled to 30 calendar days of remunerated vacation, the worker must have provided services for the entire year, with a reduction of the relevant number of days if the term is less than one year. This is established not only in the above-mentioned article, but also in article 4.1 of the WLO Convention 132.

Therefore, in the case of ERTEs consisting in a suspension of employment, there is a complete cease of services, even if temporary, and vacation is therefore not generated.

However, in the case of an ERTE that reduces working hours, even though the provision of services is not full-time, it is maintained, which means that remunerated vacation days continue to generate.

This difference between contract suspension and the reduction of working hours in relation to the generating of vacation days was analyzed by the Central Labor Court in its judgment of February 4, 1987, in which it upheld the proportionality of the accrual of vacation in the event of contract suspension, but not in cases of a reduction in working hours. In particular, the court based its decision “on the fact that even though a worker does not work the maximum number of hours authorized according to the relevant order, he/she is nevertheless under a duty to attend work, thus producing a similar situation to that of part-time employment. In such case, the above-mentioned doctrine that suspension only contemplates a suspension of total employment is not applicable. This being the case, it must be concluded that, as the labor relationship is maintained for the entire year, there is no reason that justifies the application of the principle of proportionality to the reduction of working hours”.

What happens with the vacation remuneration during a contract subject to a reduction in working hours? Does the conclusion vary depending on whether vacation is taking during the term of the reduction in working hours or after it has concluded and the full-time provision of services resumes? The answer to this question is much more controversial.

According to the judgment of the European Union Court of Justice of 22 April 2010 in the case of Zentralbetriebsrat der Landeskrankenhäuser Tirols vs. Land Tirol, it can be understood that when vacation is generated during working hours, the annual remunerated vacation to which the worker is entitled depends on the period and remuneration conditions under which said vacation accrues.

The judgment states that “in the case of a modification of an employee’s working hours, the part of vacation yet to be taken must be adapted proportionally to the new working hours, meaning that if an employee’s working hours are reduced from full to part-time, his/her acquired right to annual remunerated vacation will be reduced, without having the possibility to exercise it during the time worked on a full-time basis and thereafter only able to take vacation as a part-time worker, with reduced remuneration”.

Along the same lines, in relation to a collective layoff procedure, the High Court of Justice of Castilla y León judgment of February 19, 2016 stated that the reduction of working hours does not have an effect on the duration of vacation, but does affect its remuneration.

Also using the same criteria, although in relation to a change from full-time to part-time services in a case of partial retirement, is the judgment by the High Court of Justice of Galicia of February 27, 2017.

Nevertheless, the judgment by the Labor Chamber of the National Court of May 30,, 2018 questioned this criteria, when it considered a company practice to be lawful that consisted in the payment of remuneration during the vacation period according to the remuneration in force at the time vacation was taken, considering the extensions and reductions of working hours that may take place during the term of accrual as indifferent. However, this judgment was recently revoked by the Supreme Court Labor Chamber of May 22, 2020. The Supreme Court upheld an appeal filed by the trade union defendant and concluded that extensions of working hours that are ongoing, even if of a certain duration and limited in time, should indeed be effectively be taken into account in the remuneration of vacation.

In any case, in the aforementioned judgment, the impact of changes in working hours on the remuneration of vacation is increasing and, in the case of reduction in working hour proceedings, it is decreasing. Therefore, if the issue arises in relation to reduction in working hour proceedings, the conclusion may not necessarily be the same.

In short, given the discrepancy in criteria as to the remuneration of vacation accrued during periods of extension and reduction of services, it would be advisable to deal with the issue during the consultation period of the reduction in working hour proceedings and therefore avoid unexpected consequences.

Elizabet Sánchez-Guardamino Sáenz

Garrigues Employment & Labor Law Department