Vacation entitlement upon termination: claims, remaining vacation & exceptions

A termination is a difficult and emotionally taxing process for many people. There are many open questions and uncertainties that need to be clarified. One of these is vacation entitlement: How much vacation time are you still entitled to when you are terminated? Can you take all the remaining vacation, or are you required to work through it?

What happens if you can’t take the remaining vacation due to the termination? These and other questions about vacation entitlement upon termination are addressed in this article.

I. Introduction

Why is vacation entitlement upon termination an important topic?

Vacation entitlement upon termination is an important issue because both employees and employers need to understand their rights and obligations regarding any remaining vacation. According to the law, every employee is entitled to paid leave, which is based on the duration of their employment.

This entitlement is regulated by the Federal Vacation Act (BUrlG), which typically grants 24 working days of vacation per year. However, there are exceptions, such as for shift workers or certain professions. The statutory vacation entitlement serves to ensure rest and promote the health of employees, making it a critical component of labor law.

It is common for employees to resign or be terminated during their vacation period. In such cases, the question arises as to how the remaining vacation entitlement is handled and whether the employee can still take the vacation or if the employer can refuse it. According to the BUrlG, employees are required to take any remaining vacation within a reasonable time frame (§ 7 Abs. 3 BUrlG).

However, there are also exceptions, such as when an employer denies vacation for important reasons or when it is impossible for the employee to take the vacation due to circumstances beyond their control. In such cases, the employee may receive compensation for unused vacation days. Therefore, it is crucial to be well-informed in advance and understand your rights to avoid unnecessary disputes and conflicts.

II. Statutory vacation entitlement

How much vacation is an employee legally entitled to?

According to the Federal Vacation Act (BUrlG), employees in Germany are generally entitled to a minimum of 20 vacation days per year based on a 5-day workweek, or 24 days for a 6-day workweek (§3, BUrlG). This corresponds to 4 weeks or 28 calendar days of vacation. The exact entitlement, however, also depends on the length of service and the employee’s weekly working hours.

Employees who have been employed for less than a year are entitled to 1/12 of the annual vacation for each completed month of service. For example, someone employed for 6 months is entitled to 2 weeks of vacation.

Employees who have been with the company for more than a year are entitled to the full annual vacation of 4 weeks. However, if an employee works less than 15 hours per week, the vacation entitlement is reduced proportionally, with 1/15 deducted per week of reduced working hours.

It is also possible that an employee may have a higher vacation entitlement than the statutory minimum due to a collective bargaining agreement, company agreement, or individual employment contract. In such cases, the higher entitlement applies.

It’s important to note that vacation must be taken within the calendar year unless there are valid reasons preventing this (e.g., illness). The employer can determine when the vacation is taken, but must consider the employee’s preferences wherever possible.

How to calculate vacation entitlement upon termination?

The calculation of vacation entitlement upon termination depends on several factors, such as the timing of the termination and when the vacation is to be taken. Here’s an example:

Let’s assume you have been employed since January 2020, and you’ve already taken 14 vacation days during the year. In November 2020, you resign from your job and wish to take another week of vacation in December. Your legal vacation entitlement is 20 working days per year, which corresponds to four weeks. Since you have already taken 14 days of vacation and want to take another week, that means you would have taken a total of 21 days. You would still have 3 vacation days remaining (20 working days - 21 days taken = 3 vacation days).

It is important to note that vacation entitlement refers to a calendar year, not the employment year. This means that you are still entitled to your full vacation allowance, even if you resign during the calendar year. For instance, if you resign on November 1, 2020, and have not used your full vacation entitlement yet, you are still entitled to the remaining vacation days for the calendar year 2020.

When must vacation be taken?

According to the Federal Vacation Act (BUrlG), vacation must be taken within the calendar year, unless there are valid reasons preventing it (e.g., illness). The employer can determine when the vacation is taken, but they must take the employee’s preferences into account where possible. It is important for both parties to communicate early to plan vacation and avoid conflicts.

There are, however, some rules governing when vacation must be taken in special cases. For example, vacation that is not taken by March 31 of the following year must be used by September 30 of that year. If the vacation is not taken by that time, it is forfeited automatically. However, it is possible for the employer and employee to agree that vacation can be taken after September 30. In this case, the agreement should be made in writing.

Can the employer deny or refuse vacation?

Yes, in some cases, the employer can deny or refuse vacation. However, the employer generally needs a valid reason to do so. Examples of valid reasons might include:

• The company has an unusually high workload at that time and lacks sufficient staff to cover the vacation period.
• The vacation is planned during an inconvenient time for the company, such as during peak season or a crucial project phase.

In such cases, the employer can deny the vacation but must offer an alternative, such as suggesting a different time for the vacation.

III. Vacation entitlement upon termination by the employer

How is vacation entitlement handled when the employer terminates the contract?

When the employer terminates the employment relationship, the employee is generally entitled to the full statutory vacation for the current calendar year. This applies even if the termination occurs during an already commenced vacation period. The employee is then entitled to compensation for the unused vacation.

The entitlement to the statutory minimum vacation under the Federal Vacation Act (BUrlG) remains even if the employment relationship is terminated through extraordinary dismissal by the employer. However, in this case, the employee does not have the right to payment for unused vacation, as the employer typically does not have a payment obligation in the case of extraordinary dismissal.

The entitlement to the statutory minimum vacation under the Federal Vacation Act (BUrlG) remains even if the employment relationship is terminated through extraordinary dismissal by the employer. However, in this case, the employee does not have the right to payment for unused vacation, as the employer typically does not have a payment obligation in the case of extraordinary dismissal.

Vacation Entitlement in the Case of Extraordinary Termination

In the case of extraordinary termination, the employee generally has the right to any remaining paid vacation up until the termination date. This entitlement is regulated by § 7 Abs. 4 of the Federal Vacation Act (BUrlG). The remaining vacation must be approved by the employer and should be taken before the end of the termination period.

However, there are exceptions to this rule:

• If the employee resigns during the probationary period, they have no entitlement to remaining vacation.
• If the employee works in a company where a collective agreement specifies that no remaining vacation is granted, they also have no entitlement to the remaining vacation.
• If a collective agreement states that remaining vacation is compensated in cash, the employee is entitled to monetary compensation instead of taking the remaining vacation.

It’s important to note that in the case of extraordinary termination, the employee not only has the right to paid remaining vacation but may also be entitled to severance pay. The amount of severance pay is regulated in § 1a of the Employment Protection Act (KSchG) and depends on the length of employment, the employee’s age, and their gross salary. It is advisable to consult a specialist in advance for advice.

Vacation Entitlement in the Case of Ordinary Termination

If an employee is terminated ordinarily, they are entitled to vacation for the duration of their employment. This entitlement is derived from § 7 of the Federal Vacation Act (BUrlG). The vacation entitlement remains valid even if the employment relationship is prematurely terminated, for example, through a termination notice.

In such cases, the employee has the right to vacation compensation, meaning they are not required to take the vacation but will receive financial compensation instead. This compensation must be paid within 14 days after the employment relationship ends.

However, it’s important to note that the right to vacation compensation only applies if the employee has not taken their full vacation or any part of it. If the employee has already used their entire vacation, they no longer have the right to compensation. It is therefore advisable to take the vacation before the employment relationship ends, whenever possible.

Can the employee take all remaining vacation?

Yes, the employee can generally take all remaining vacation, as long as it is taken within the same calendar year. However, there are some exceptions to this rule.

If the employment relationship ends during an already commenced vacation period, the employee is entitled to compensation for any unused vacation. In this case, the employee no longer needs to take the vacation.

It is also possible for the employer to deny vacation for an important reason, such as when business conditions do not allow it or if the vacation is requested during a period when the company cannot operate due to seasonal fluctuations or other reasons. In such a case, the employer must grant the employee an equivalent substitute vacation if the employee wishes to take the vacation within three months after the end of the vacation year.

In cases where the employee cannot take the vacation due to illness, the vacation is carried over to the next calendar year. If the employee recovers within six months of the end of the vacation year, they are entitled to the carried-over vacation. However, if the employee remains ill for more than six months, the carried-over vacation expires.

What happens if the employee cannot or does not want to take the remaining vacation?

If the employee cannot or does not want to take the remaining vacation, they can carry the vacation over to the next calendar year, provided this is agreed upon with the employer. The employee must inform the employer by their last working day before the desired vacation period that they do not wish to take the vacation.

It is also possible for the employer to deny the vacation for important reasons, such as when business conditions do not allow it or if the vacation is requested during a period when the company cannot operate due to seasonal fluctuations or other reasons. In such cases, the employer must grant the employee an equivalent substitute vacation if the employee wishes to take the vacation within three months after the end of the vacation year.

If the employee cannot take the vacation due to illness, the vacation is carried over to the next calendar year. If the employee recovers within six months of the end of the vacation year, they are entitled to the carried-over vacation. However, if the employee remains ill for longer than six months, the carried-over vacation expires.

IV. Vacation Entitlement when the Employee Resigns

How is vacation entitlement handled if the employee resigns?

When the employee resigns, they generally retain the right to the full statutory vacation entitlement for the current calendar year. This applies even if the resignation occurs during an already commenced vacation period. In such cases, the employee is entitled to compensation for any unused vacation.

However, if the employment relationship ends due to mutual agreement or if the employee is terminated due to misconduct, the entitlement to statutory minimum vacation may be forfeited. Nevertheless, if the employee has a higher vacation entitlement based on a collective agreement, company agreement, or employment contract, this entitlement remains valid. In such cases, the employee is still entitled to compensation for unused vacation.

What happens if the employee cannot or does not want to take the remaining vacation?

If the employee cannot or does not want to take the remaining vacation, they can carry over the vacation to the next calendar year, provided this is agreed upon with the employer. However, the employee must inform the employer by their last working day before the desired vacation period that they do not wish to take the vacation.

In some cases, the employer may need to refuse the vacation for important reasons, such as if business conditions do not allow it or if the vacation is scheduled during a period when the company cannot operate due to seasonal fluctuations or other reasons. In such instances, the employer must offer the employee an equivalent substitute vacation, allowing the employee to take the vacation within three months after the end of the vacation year.

If the employee cannot take the vacation due to illness, the vacation is carried over to the next calendar year. If the employee recovers within six months of the end of the vacation year, they are entitled to take the carried-over vacation. However, if the employee remains ill for longer than six months, the carried-over vacation expires.

Vacation Entitlement During Termination in the Probationary Period

During the probationary period, employees generally do not have an entitlement to paid vacation. This means they cannot request vacation during this time. However, there are some exceptions to this rule:

• Illness during the probationary period: If the employee becomes ill during the probationary period, they are entitled to continued payment during sickness. In this case, vacation is not deducted, and the illness extends the probationary period accordingly.
• Death during the probationary period: If the employee dies during the probationary period, the surviving dependents are entitled to the paid vacation that the employee had accrued.
• Resignation during the probationary period: If the employee resigns during the probationary period, they are entitled to the paid vacation they have accrued up to the termination date. This vacation must be approved by the employer..
  

Do I have the right to remaining vacation if I resign?

Yes, in principle, employees in Germany are entitled to paid remaining vacation when they resign. The entitlement to remaining vacation arises if the employee has worked more during the calendar year than the vacation days they have taken. The remaining vacation must be approved by the employer and taken before the end of the notice period.

However, there are exceptions to this rule:

• If the employee resigns during the probationary period, they are not entitled to remaining vacation.
• If the employee works in a company where a collective agreement specifies that no remaining vacation is granted, they are not entitled to remaining vacation.
• If the employee works in a company where a collective agreement stipulates that remaining vacation is compensated in cash, they are not entitled to remaining vacation but to a cash settlement instead.

V. Conclusion

Tips for Employees and Employers on Optimal Handling of Vacation Entitlement Upon Termination

For Employees:

1. Claim your vacation entitlements: Ensure that you claim all your accumulated vacation entitlements during your employment. This should be done as early as possible to ensure you have enough time to take any remaining vacation before your employment ends.
2. Take your remaining vacation early: Try to take your remaining vacation as early as possible. If you don’t take your remaining vacation before the end of your employment, you will likely lose the ability to claim it.
3. Be aware of exceptions: Know the exceptions that may apply to your vacation entitlements. In some cases, there may be exceptions to the general rules, such as if you are pregnant or have had a prolonged illness. Inform yourself about these exceptions and consult with your union or other advisory bodies if necessary to ensure you claim all your rights.

For Employers:

1. Follow the rules and regulations: Ensure that you comply with the applicable rules and regulations regarding vacation entitlement. This includes timely approval of vacation requests and granting remaining vacation when the employment relationship ends.
2. Accommodate employees' vacation requests: As far as possible, accommodate your employees' vacation requests, as long as it’s feasible for the company. Doing so can improve workplace morale and boost employee motivation and satisfaction.
3. Be open and transparent: If you have to deny an employee’s vacation request, be open and transparent about the reasons. Explain your decision and, if possible, offer an alternative, such as suggesting a different time for the vacation.

3 Tips for Vacation Entitlement Upon Termination from an Employee's Perspective

1. Claim all your vacation entitlements: Ensure you claim all the vacation days you have accumulated during your employment. This can be done directly with your employer or through your union. It’s important to act early to ensure you have enough time to take your remaining vacation before your employment ends.
2. Take your remaining vacation early: Try to use up your remaining vacation as soon as possible. If you don’t take your vacation before the end of your employment, you may lose the ability to claim it. It’s advisable to negotiate with your employer to ensure you have enough time to take your remaining days off.
3. Be aware of exceptions: Understand any exceptions that might apply to your vacation entitlement. For example, there could be exceptions to the general vacation rules if you are pregnant or have had a prolonged illness. Make sure to familiarize yourself with these exceptions and consult with your union or an advisory service if needed to ensure you claim all your rights.