Holiday pay
Holiday pay – your entitlement to payment for unused holiday leave
If your employment contract ends and you still have unused holiday entitlement, you are entitled to a cash payment in lieu of holiday. This entitlement applies regardless of the reason for termination – whether it be dismissal, a mutual termination agreement or the expiry of a fixed-term contract. Nevertheless, employers often refuse to pay or calculate the amount incorrectly. Our specialist employment lawyers in Augsburg will assess your claim and ensure it is upheld.
When are you entitled to payment in lieu of holiday leave?
Under Section 7(4) of the Federal Leave Act (BUrlG), any leave that can no longer be granted due to the termination of the employment relationship must be compensated. The entitlement to compensation arises automatically upon termination of the employment relationship – no separate application is required. It applies regardless of whether the employer or the employee gave notice, and also in the case of summary dismissal or a termination agreement.
The statutory minimum annual leave entitlement for a 5-day week is 20 working days per year (Section 3 BUrlG). Many employment contracts or collective agreements grant additional leave beyond this. If an employee leaves in the second half of the year and the employment relationship lasted longer than six months, they are entitled to the full annual leave entitlement. If they leave in the first half of the year, a pro-rata entitlement of one twelfth per full month of employment arises.
In our practice in Augsburg, we regularly see that employers calculate holiday pay at too low a rate, incorrectly reduce pro-rata entitlements, or offset the holiday against time off without this having been clearly agreed in the notice of termination.
Lapse and limitation periods – recent case law from the ECJ and the Federal Labour Court
The legal position regarding the forfeiture of annual leave has shifted fundamentally in favour of employees as a result of case law from the European Court of Justice (ECJ) and the Federal Labour Court (BAG). According to the ECJ’s landmark ruling of 6 November 2018, holiday entitlement now only lapses if the employer has specifically and in good time informed the employee of the impending lapse and urged them to take their holiday. Without this notification, the holiday entitlement cannot lapse – not even at the end of the year or on 31 March of the following year.
A special rule applies in the case of long-term illness: holiday entitlement that could not be taken due to illness lapses no later than 15 months after the end of the holiday year – but only if the employer has previously fulfilled their duty to notify. The three-year limitation period for the claim for financial compensation generally begins at the end of the year in which the employment relationship ends. Here too, the Federal Labour Court (BAG) has clarified that the limitation period can only begin once the employer has fulfilled their duty to cooperate (BAG, ref. 9 AZR 456/20).
Tell us about your situation - without obligation and nationwide.
Holiday pay calculator: How much are you entitled to?
Calculate your estimated holiday pay. This calculator provides a rough guide – the actual amount will depend on the details of your employment contract.
Calculation of holiday pay
The calculation of holiday pay is based on average earnings. There are various factors that employees in Augsburg should be aware of.
Calculation basis under the German Annual Leave Act (BUrlG)
The daily holiday pay is calculated on the basis of the average earnings from the last 13 weeks prior to the end of the employment relationship (Section 11 of the German Annual Leave Act). The calculation is based on the gross salary, including regular allowances and commissions. Overtime pay is only taken into account if overtime is worked on a regular basis. Any pay rise during the reference period is taken into account – the increased salary applies.
Partial leave and pro rata calculation
If your employment ends in the first half of the year, you are entitled to one twelfth of your annual leave for each full month of employment. In the second half of the year, you are generally entitled to your full annual leave entitlement, provided that the employment relationship has lasted for at least six months. Be careful with termination agreements: if the agreement contains a lump-sum settlement clause, your entitlement to paid leave may lapse – unless it is expressly excluded in the agreement.
Special cases regarding holiday pay
In addition to standard termination, there are certain situations that raise further questions regarding the payment of accrued holiday leave.
Compensation for unused holiday entitlement in the event of illness
If you are unable to work due to illness at the time of termination, this does not affect your entitlement to compensation. The holiday entitlement is paid out in cash – it is not possible to ‘grant’ it by giving you time off work if you are ill. For employees on long-term sick leave, substantial claims for financial compensation may arise if the employer has failed to fulfil their duty to notify the employee of the expiry of their holiday entitlement. In practice, we regularly encounter cases in Augsburg involving claims for financial compensation spanning several years.
Leave of absence and holiday entitlement
If an employee is placed on leave following their dismissal, the employer may count the holiday entitlement against the period of leave – but only under certain conditions. The leave must be irrevocable, and the employer must expressly state that the holiday entitlement will be deducted. Simply placing the employee on leave without specifically mentioning that the holiday entitlement will be deducted is not sufficient. If this statement is missing, the entitlement to financial compensation remains.
Frequently asked questions about holiday pay
Further information on employment law
You might also be interested in these topics:
This information does not constitute legal advice in individual cases.
MAXERA Lawyers support clients throughout Germany - digitally, efficiently and with a clear strategy.
Specialised, fast, clear
Our law firm in Augsburg's Maximilianstraße combines personal advice on site with digital client management. Whether labour law or insurance law - we employ specialist lawyers who not only know their field of law, but live it every day.
Call us, write to us or use the form - we will get back to you within 24 hours.
Describe the situation
Briefly describe your request - we will get back to you with an initial assessment.
