Abstract

According to German law, every employee is entitled to paid annual leave. The amount of pay is generally calculated based on the current salary (known as the “principle of loss of pay”) but a reduction of working hours during the year does not lead to a reduction of entitlement to holiday pay for previously acquired holiday entitlements. If the entitlement was already acquired before the reduction of working time (which can happen because in Germany holiday entitlement is acquired at the beginning of the calendar year), pay during leave will be based on the salary agreed between the employer and employee when the holiday entitlement was acquired and thus, based on the ‘old’ salary.