Vacation Compensation

If the employment relationship ends and the employee’s holiday entitlement is not completely fulfilled, the employee is entitled to vacation compensation. This follows from Section 7 (4) of the Federal Leave Act (BUrlG) as well as from European law requirements. The reason for the termination is not substantial: It does not play a role whether the employer-employee relationship ends because of notice, limited time, termination agreement or pension entrance. Even if the employment relationship is terminated due to the death of the employee, his heirs can demand payment. The ECJ (C-118/13) decided this in the so-called “Gülay Bollacke-Judgement”.

Vacation compensation: calculation

Large amounts can quickly accumulate, as the following example illustrates.

The employee is entitled to 20 days’ leave per calendar year. He earns €2,500.00 gross per month and works from Monday to Friday. In 2014, 2015 and 2016, he was continuously unable to work and was therefore unable to take any leave. The employment relationship ended on 01.03.2016 due to retirement.

Vacation days:

20 days for 2014 (the entitlement for 2014 has not expired as you can read here) plus 20 days for 2015 plus 3.33 days (20 days * 2 months ./. 12 months) pro rata for 2016: 43.33 days

Daily earnings:

2.500,00 € * 3 months ./. 65 days (this formula is given by the law in § 11 BUrlG!) = 115,38 € gross


43,33 days * 115,38 € = 5.000,00 € gross

Observe short deadlines!

The entitlement to holiday compensation is subject to short deadlines. Often the claim must be made within only two or three months. Otherwise it expires. Forfeiture periods or time limits are often included in employment contracts and collective wage agreements in Germany. You should therefore act quickly if the employer does not make the payment immediately after termination of the employment relationship. Legislators consider such stipulations as legally valid, even though they shorten the relatively longer legal deadlines for filing/appeal.