Remaining leave on termination - calculation, payment and forfeiture

When you’re made redundant, you often wonder: what happens to your remaining holiday entitlement? Do you still have to take it? Will you be paid for it? And how many days are you actually entitled to? In this guide, you’ll find out how to calculate your holiday entitlement if you’re made redundant and how to assert your rights.

How much holiday entitlement do I have if I’m made redundant?

Your holiday entitlement upon termination depends on when in the calendar year the employment relationship ends:

Example for termination on 31 March: 3 full months × 1/12 of 20 days = 5 days’ holiday.

Example for termination on 30 September: Full annual leave of 20 days — regardless of how many days have already been taken.

Important: Fractions of holiday days amounting to at least half a day are rounded up to full days.

Prerequisite: The qualifying period

Full holiday entitlement only arises after a six-month qualifying period (Section 4 BUrlG). In the first six months, you only accrue pro-rata holiday — one twelfth per month.

Must the remaining holiday be granted or paid out?

In principle, leave should be taken in kind — that is, as actual time off work. The employer may grant the remaining leave during the notice period. If the employee agrees or is irrevocably granted time off, the leave is thereby used up.

If the remaining holiday cannot be taken — for example, because the notice period is too short — it must be compensated financially in accordance with Section 7(4) of the German Annual Leave Act (BUrlG). This entitlement to holiday pay arises automatically upon termination of the employment relationship.

How is the holiday pay calculated?

The calculation is based on Section 11 of the German Annual Leave Act (BUrlG): the basis is the average earnings for the last 13 weeks prior to the start of the leave.

Formula for the daily rate:

Average gross salary for the last 13 weeks ÷ number of working days in those 13 weeks = value of one day’s holiday

Example: With a gross monthly salary of €3,500 and a 5-day working week, the daily value is approximately €161.54. With 8 days of outstanding leave, this results in a payment of approximately €1,292.

Not included in the calculation: overtime pay. Commissions and regular allowances, on the other hand, are taken into account.

Can remaining holiday entitlement lapse?

Unused holiday entitlement does not automatically lapse upon termination of employment. The general expiry rules apply:

Statutory holiday entitlement: Expires on 31 December of the current year. If carried over for urgent operational or personal reasons, the deadline is extended to 31 March of the following year.

Employer’s duty to notify: According to the case law of the Federal Labour Court and the European Court of Justice, leave only lapses if the employer has notified the employee in good time and in specific terms of the impending lapse and has requested that the employee take the leave. Without this notification, the leave cannot lapse.

In the event of long-term illness: If the leave could not be taken due to illness, it lapses 15 months after the end of the leave year.

Leave of absence during the notice period

If an employee is irrevocably granted leave of absence during the notice period, the remaining holiday entitlement is generally deemed to have been granted — provided this is expressly stated. A mere grant of leave of absence without the allocation of holiday entitlement is not sufficient.

The employee does not need to expressly agree to the granting of leave, but the employer must clearly and unambiguously state that the leave of absence (also) serves to settle the leave entitlement.

Remaining holiday entitlement in the event of a termination agreement

The entitlement to remaining holiday entitlement also applies in the case of a termination agreement. The termination agreement should clearly stipulate whether the holiday is still granted or whether compensation is paid. If no such provision exists, the entitlement remains.

Be cautious with wording such as “Upon fulfilment of this contract, all mutual claims are settled”: such settlement clauses may also cover the holiday entitlement. Check the contract carefully.

Frequently Asked Questions (FAQ)

Does my employer have to pay out my remaining holiday entitlement?

Yes, if the leave can no longer be taken due to the termination of the employment relationship. The entitlement to leave pay arises automatically upon the termination of the employment relationship.

How do I calculate my remaining holiday entitlement if I leave on 30 April?

If you leave in the first half of the year: 4 full months × 1/12 of the annual leave entitlement. For 30 days’ annual leave, that would be 10 days. Any leave already taken is deducted.

Can my employer force me to take my remaining holiday during the notice period?

In principle, the employer determines the timing of the holiday (management prerogative). They may therefore schedule the remaining holiday within the notice period — but must take your wishes into account.

Does my remaining holiday entitlement lapse upon termination?

Only if the employer has notified you in good time of the impending expiry and you have still not taken the leave. Without this notification, the entitlement remains.

Is holiday pay offset against unemployment benefit?

No. Since a change in the law, holiday pay is no longer deducted from unemployment benefit. You can therefore receive both benefits at the same time.

Am I entitled to holiday pay in the event of summary dismissal?

Yes. Even in the case of dismissal without notice, compensation must be paid for any remaining holiday entitlement accrued up to that point.

This article is for general information purposes only and does not replace individual legal advice. Every case is different — if you have specific questions, we recommend seeking legal advice at an early stage.