When the employment relationship ends, any unused vacation that cannot be taken before the end date must be paid out in cash. This is the Urlaubsabgeltung under § 7(4) BUrlG, and it is the one situation where vacation is paid rather than taken as time off. For employees leaving a German job — especially expat employees who often have unused balances — this payout can be a substantial part of the exit settlement.
The legal basis
§ 7(4) BUrlG provides that vacation that cannot be granted because the employment ends must be paid out (abgegolten). The right is mandatory — it cannot be contractually waived during the employment, and it survives the end of employment as a monetary claim subject only to the general statute of limitations and the contractual Ausschlussfrist.
The payout right covers both the statutory minimum vacation (4 weeks under § 3 BUrlG) and any contractual vacation you have earned, unless your contract specifically distinguishes between the two and excludes contractual vacation from the payout. Such exclusion clauses exist but are often poorly drafted and unenforceable.
How the payout is calculated
The payout is calculated on the basis of your average gross daily salary over the 13 weeks (or three months) immediately before the end of employment, excluding overtime. The formula:
Daily rate = (gross salary over the last 13 weeks) ÷ (working days in those 13 weeks for your schedule)
Payout = daily rate × unused vacation days
Worked example: €6,500/month gross, 5-day working week, 8 unused vacation days. 13 weeks of pay ≈ €19,500. Working days in 13 weeks = 65 (assuming no holidays). Daily rate = €300. Payout = €2,400 gross.
What counts in the „gross salary” basis
- Base salary (always).
- Variable elements paid in the 13-week reference period (bonus paid in that period, commission, regular allowances).
- The cash value of regular benefits in kind (company car for private use, subsidised meals — calculated according to the Sachbezugsverordnung).
- Recurring allowances (housing, mobility).
What does NOT count: overtime pay (excluded by § 11 BUrlG), one-off bonuses that fell outside the 13-week window, reimbursable expenses, severance components.
Where bonus structure is annual, we often argue for inclusion of the pro-rated annual bonus average rather than literal reference to the 13-week window — this is contested but defensible.
The Ausschlussfrist trap on Urlaubsabgeltung
The Ausschlussfrist clock starts on the day the Urlaubsabgeltung claim becomes due — typically the last day of employment. From there: 3 months to assert in writing, 3 more months to file suit if the employer refuses. See our Ausschlussfrist article for the full mechanics.
The Max-Planck judgment and lapsing protection
The default rule under German law was that untaken vacation expires on 31 December (with a 3-month transfer window for valid reasons). The ECJ’s Max-Planck judgment (C-684/16, 6 November 2018) and the BAG’s follow-on case-law have substantially modified this:
Vacation does not lapse unless the employer has clearly and in good time informed the employee of:
- The number of vacation days still available;
- The need to take the vacation in time;
- The fact that the vacation will lapse if not taken.
Most employers do not do this properly. Generic „vacation calendar” notifications or HR portal reminders are not enough. The notification must be specific, in writing, and timely. Where it is missing, vacation from previous years is often still claimable at the end of employment.
The 15-month rule for illness
If you were prevented from taking vacation due to long-term illness, the vacation does not simply lapse — it survives until 15 months after the end of the leave year (BAG, 7.8.2012, 9 AZR 353/10, following the EuGH KHS case). So vacation from 2024 survives until 31 March 2026 for employees with long-term illness covering the relevant period.
This rule is particularly important for employees whose employment ends after extended sick leave. Months — sometimes years — of accrued but untaken vacation can still be paid out, often totalling several months of gross salary.
Garden leave and Anrechnung
Where you are placed on paid release (Freistellung) for the end of the notice period, the agreement should expressly state whether the vacation is „taken” during the Freistellung („unter Anrechnung der Urlaubsansprüche”) or remains payable. The wording matters:
- „unter Anrechnung”: the Freistellung counts as vacation taken — the Urlaubsabgeltung claim is satisfied.
- „ohne Anrechnung”: the Freistellung does NOT count as vacation — the Urlaubsabgeltung remains payable on top.
- Ambiguous: generally read in the employee’s favour (the vacation is not deemed taken).
Always pin this down in the Aufhebungsvertrag or Vergleich. We routinely add „ohne Anrechnung” wording where there is leverage — typically worth several thousand euros for senior employees with substantial unused balances.
What if the employer says the balance is zero?
This is the most common dispute we see at the end of employment. Three lines of defence:
- The employer’s notification duty (Max-Planck). Demand proof of compliant notifications for each year. Most employers cannot produce them — untaken vacation from previous years is recoverable.
- Inability to take. If you were prevented from taking vacation due to illness (15-month rule), maternity protection, or operational reasons, the vacation rolls over.
- Operational delays. If the employer refused vacation requests in time, the vacation rolls forward (the employer cannot benefit from its own delay).
How to claim — step by step
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Audit your vacation balance
Pull your HR records or vacation calendar. Identify all unused days for each year. Look back 3+ years where Max-Planck notifications were likely defective.
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Written Geltendmachung within 6 weeks of exit
A formal written claim listing the days, the years, and the calculated daily rate. This preserves the claim against the Ausschlussfrist.
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Mahnung if no payment in 14 days
Formal default starts default interest of 5 ppt above the base rate (§ 288 BGB).
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Zahlungsklage at the Arbeitsgericht
If still unpaid within the second 3-month window of the Ausschlussfrist. Typically settles at the Gütetermin with payment within 30 days.
Special situations
Mid-year exit and the second-half-of-year rule
If you have been at the company more than 6 months and leave in the second half of the year, you are entitled to the full annual vacation entitlement for that year, not a pro-rated amount (§ 5(1)(c) BUrlG). Many employers default to pro-rating in both cases — wrong for the second-half scenario. Always check.
Example: 30 contractual days/year, you leave 31 August (second half). Entitled to full 30 days for the leave year — not 30 × 8/12 = 20.
Sick leave at exit
If you are on sick leave at the exit date, vacation days that you could not take due to the illness are recoverable. The 15-month survival rule applies. We have seen cases where an employee on long-term illness recovered 60+ days of accrued vacation as Urlaubsabgeltung — substantial cash on exit.
Parental leave (Elternzeit)
Vacation accrual during Elternzeit is governed by § 17 BEEG. The employer can — but does not have to — reduce the entitlement by 1/12 for each full month of Elternzeit, but the reduction must be declared in writing during the employment relationship. Where no such declaration was made, the full vacation accrual applies.
Multiple employers in the leave year (Doppelte Inanspruchnahme)
If you took vacation at a previous employer in the same leave year, the current employer’s vacation entitlement is reduced by the days already taken (§ 6 BUrlG). The previous employer must issue a Vacation Certificate (Bescheinigung) on request — preserve this for proof.
Worked example
Anika, a project manager at a 250-employee tech company, ends her employment on 31 March 2026. €7,000/month gross. Her contract entitles her to 30 vacation days/year.
HR informs her that the balance is „zero” because she should have taken everything in 2025. We audit:
- 2024 carry-over: 8 days. HR never issued a proper Max-Planck notification. Recoverable.
- 2025 balance: 6 days untaken (Anika was busy on a critical project, no formal Max-Planck notification issued by HR). Recoverable.
- 2026 pro-rated: 30 × 3/12 = 7.5 days. Recoverable (because she left in the first half, pro-rating applies).
Total: 21.5 days. Daily rate = €7,000 × 3 ÷ 65 ≈ €323. Urlaubsabgeltung claim: 21.5 × €323 ≈ €6,944 gross. We send the Geltendmachung within 2 weeks of exit. Employer pays within 30 days. Total intervention: 4 hours of legal work.
Frequently asked questions
Can I just take the vacation before I leave instead of getting it paid out?
If the notice period is long enough — yes, the employer typically grants the vacation if requested. But for short-notice departures or where the employer needs you at the desk, the Urlaubsabgeltung is the fallback. The employer cannot refuse the payout once the employment ends.
Does Urlaubsabgeltung count as pensionable income?
Yes — it is subject to normal income tax and social-security contributions. It is not treated as severance (no Fünftelregelung benefit).
What if I take a new job before the old notice period ends and the old employer wants the vacation „taken” through garden leave?
Depends on the wording of the garden-leave order. If „unter Anrechnung”, the vacation is deemed taken and no payout. If „ohne Anrechnung”, the payout remains due. We negotiate this in every Aufhebungsvertrag.
How far back can I go to recover lapsed vacation?
The standard rule is 3 years (statute of limitations), but the Max-Planck framework lets you go back further where the employer’s notification duty was defective. We routinely recover vacation from 4–5 years back in extreme cases.