Release from work to reduce working time credits in court settlement must be clearly recognizable, BAG, judgment of 20.11.2019 - 5 AZR 578/18, press release no. 40/19

Facts of the case: The plaintiff was dismissed by the defendant without notice. In the dismissal protection proceedings, the parties reached a settlement according to which the employment relationship was to end through ordinary termination by the employer in compliance with the applicable notice period. Until the termination date, the plaintiff was irrevocably released by the defendant from the obligation to perform work, with continued payment of remuneration. During this period, the remaining vacation was also to be taken. The settlement does not contain a general compensation and settlement clause. After termination of the employment relationship, the plaintiff demanded compensation from the defendant for 67.10 good hours on the working time account plus interest.

The labor court upheld the claim, considering the wording of the settlement to be "unproductive in this respect". The interests involved also did not indicate that the plaintiff's entitlement to time off had been fulfilled by the leave of absence. The agreement did not primarily serve to fulfill the plaintiff's claims, but was intended to regulate the work obligation until the end of the employment relationship. The plaintiff was therefore still entitled to compensation for the time credit. The defendant did not agree with this decision and lodged an appeal. The Regional Labor Court ruled in favor of the defendant and dismissed the claim. It was true that the wording of the settlement was unproductive. Legally, however, it must be taken into account that the reduction of an existing time balance in favor of the employee is generally an instruction on the distribution of working hours. The employer could do this unilaterally, so that no provision was required in the settlement.

The BAG restored the first-instance ruling in the appeal and ruled in favor of the plaintiff: If the employment relationship ends and good hours in the working time account can no longer be compensated by time off, they must be compensated by the employer in cash. The release of the employee from the obligation to work in a court settlement is only suitable for fulfilling the entitlement to compensatory time off to reduce good hours in the working time account if the employee can recognize that the employer wants to release him from the obligation to work in order to fulfill the entitlement to compensatory time off. This was not the case here. In the court settlement, it is neither explicitly nor implicitly stated with sufficient clarity that the time off is also intended to reduce the working time account or that it is intended to fulfill the claim to compensatory time off from the working time account.

Conclusion: The decision illustrates the importance of careful and, in particular, unambiguous wording in settlements and termination agreements. As far as possible, all outstanding claims should be expressly agreed between the parties. In addition, a "total settlement clause" should always be included, according to which all reciprocal claims are settled. Although there are indispensable claims, the vast majority of payment claims can be settled with such an agreement.