1 December 2014

No pay in the notice period during unpaid parental leave

In a recent ruling, the Supreme Court has definitively established that an employee dismissed during unpaid parental leave was not entitled to salary in the notice period.

FEMALE EMPLOYEE TERMINATED HER EMPLOYMENT AFTER THE 14TH WEEK OF PARENTAL LEAVE

According to the contract of employment, a salaried employee on parental leave was to receive full salary for 14 weeks after birth and was then to receive benefits. But after the 11th week, the employer ceased paying her salary.

Due to the lacking salary payment, the employee's union terminated the employment claiming payment of salary for the remaining leave and full salary in the notice period. However, the employment was not terminated until after the 14th maternity week and therefore not until the period when the employee was on unpaid parental leave.

As the employer was subject to bankruptcy proceedings, the wage claim was made against the Employees' Guarantee Fund (Lønmodtagernes Garantifond). The Fund accepted to compensate the lacking salary in the parental leave period, but objected to the employee being entitled to salary in the notice period.

SUPREME COURT RULING - NOT UNLAWFUL DISCRIMINATION

The parties agreed that the purpose of salary in a notice period is to replace the employee's loss of earnings, and that an employee only entitled to benefits during parental leave is not suffering a loss of earnings.

The claim could therefore not be based on the provision in the Salaried Employees Act according to which an employee is entitled to salary in a notice period if the employee is terminated within 14 weeks after birth. In this case, the employee was terminated at a later stage.

As there were no grounds under Danish law to award salary to the employee in the notice period, the union referred to the recent practice of the European Court of Justice, the EU framework agreement on parental leave and the general prohibition against discrimination due to gender.

The union found that a practice according to which an employee on unpaid parental leave is not entitled to salary in a notice period constitutes unlawful indirect discrimination as women are more likely to take parental leave than men.

The Supreme Court denied that the lacking salary constituted discrimination as the court found that an employee on unpaid parental leave is not in a comparable situation with an employee who is working at the time of the termination resulting in the employer having an obligation to pay salary to the employee.
The Supreme Court further denied that the EU framework agreement on parental leave and the practice referred to could justify a different result as the Danish rules had been construed accordingly.

The employee was therefore not entitled to salary in the notice period.

COMMENTS

With this ruling, the Supreme Court affirms previous practice according to which an employee terminated during unpaid parental leave is not entitled to salary in a notice period.

The ruling of the European Court of Justice in the Meerts case did in fact question whether this practice could be maintained lawfully under EU law, but this has now been confirmed by the Supreme Court.

In practice, this means that an employer is free to dismiss an employee on unpaid parental leave as long as the dismissal is fair and thereby not wholly or partially reasoned by the employee's leave. However, please remember that it is for the employer to prove the objectivity of the dismissal, and that this has turned out to be difficult according to case law.

The content of this Newsletter is not, and should not replace, legal advice.

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