Remaining Holiday After Dismissal: Your Entitlements

What Happens to Remaining Holiday When You Are Dismissed?

The short answer: nothing. Your holiday entitlement arises from the existence of the employment relationship (§ 1 BUrlG) and is not affected by a dismissal. Whether your employer gives ordinary notice, whether you resign yourself, whether a summary dismissal is on the table, or whether you agree on a termination agreement: the outstanding holiday days belong to you and must either still be taken or paid out at the end.

In practice, this is often overlooked. After a dismissal, everything revolves around deadlines, litigation, and severance pay, and the outstanding holiday days fall through the cracks. That is costly: with a gross monthly salary of €4,000, ten holiday days amount to around €1,850 gross that is owed to you without any need to negotiate.

Important: your holiday entitlement is independent of whether you challenge the dismissal. Even if you bring an unfair dismissal claim and the proceedings end in a settlement, the outstanding holiday days remain a separate item that should be expressly regulated.

And: your holiday entitlement does not end when the dismissal is received, but when the employment relationship ends. How long that still lasts depends on your notice period, in the standard statutory case governed by § 622 BGB. The longer the notice period, the more holiday you can still take during that time.

Take the Holiday or Have It Paid Out?

The Federal Holiday Act (Bundesurlaubsgesetz) has a clear order of priority here, and it is stricter than most people think: holiday must be granted as time off, not as money. Holiday serves recreation, and recreation cannot simply be transferred by bank payment. As long as your employment relationship continues, you cannot simply have your remaining holiday paid out, not even by agreement with your employer.

The one statutory exception is found in § 7 (4) BUrlG: if the holiday can no longer be granted, in whole or in part, because the employment relationship is ending, it must be compensated. That is exactly what applies to a dismissal. The right to compensation does not arise upon the dismissal itself but, legally, only at the moment the employment relationship ends. Until then, the principle of "holiday in kind" applies. You will find a concise definition of the term in our glossary under Holiday Compensation.

In practice, this means: if your notice period still has three months to run, you can apply for holiday normally during that time. Your employer may only refuse it if urgent operational reasons or the holiday wishes of other employees with a higher social priority stand in the way (§ 7 (1) BUrlG). A blanket refusal along the lines of "you're leaving anyway" does not hold up.

Note: conversely, your employer cannot simply order holiday unilaterally. What they can do is give you an irrevocable release from work with the remaining holiday offset against it. Why this wording is so decisive, you can read further below.

How Much Remaining Holiday Are You Entitled To? The One-Twelfth Rule

If you leave partway through the year, you do not automatically get the full annual holiday, but you also do not automatically only get a fraction. The rules are set out in § 5 BUrlG, and they follow a cut-off-date logic that surprises many people.

1) The qualifying period: the first six months

You first acquire the full holiday entitlement once the employment relationship has existed for six months (§ 4 BUrlG). Before that, you have a partial entitlement: one-twelfth of the annual holiday for each full month of the employment relationship. This applies even if you leave during the probationary period, more on that under Dismissal During the Probationary Period.

2) Leaving in the first half of the year: the one-twelfth rule

If you leave after the qualifying period has been met, but in the first half of a calendar year, meaning by 30 June, the one-twelfth rule also applies: one-twelfth of the annual holiday for each full month of the employment relationship in that calendar year.

3) Leaving from 1 July onwards: full annual holiday

If your employment relationship ends on or after 1 July and the qualifying period has been met, you are entitled to the full annual holiday, not just half of it. So someone leaving on 31 July is entitled to 30 of 30 days, even though they only worked for seven months. This is one of the few points in employment law where a single calendar day makes a very big difference. So if you are negotiating the termination date, it is worth looking at the calendar.

The Table: Remaining Holiday by Month of Departure

The following overview shows the partial holiday entitlement for leaving in the first half of the year, once for a contractual annual holiday of 30 days and once for the statutory minimum holiday of 24 working days for a 6-day week, which corresponds to 20 holiday days for the usual 5-day week (§ 3 BUrlG):

Note on rounding: fractions of holiday days amounting to at least half a day must be rounded up to full holiday days under § 5 (2) BUrlG. So 1.67 days becomes 2 days, and 12.5 days becomes 13 days. And one detail in your favour: if your employer has already granted you more holiday than you are entitled to under the one-twelfth rule, they cannot reclaim it under § 5 (3) BUrlG, either as days or as money.

The termination date is negotiable, and it is worth real money: Work out with our severance calculator in 2 minutes what is realistically achievable in your case overall.

Calculating Holiday Compensation: The Formula and Two Examples

The amount of holiday compensation is based on the holiday pay, which is calculated under § 11 BUrlG: what counts is your average earnings over the last 13 weeks before the start of the holiday, excluding any pay given additionally for overtime. Reductions in earnings due to short-time work, work stoppages, or absence through no fault of your own are disregarded, so they must not reduce your daily rate.

With a constant monthly salary, this can be greatly simplified. 13 weeks correspond exactly to three months, and 13 weeks with 5 working days come to 65 working days. This gives us the rule of thumb for a 5-day week:

Daily rate = (gross monthly salary x 3) : 65

For a 6-day week, you calculate with 78 working days, and for part-time work with the actual number of working days within the 13 weeks. Commissions, allowances, and regular variable components are factored into the average, but pure overtime pay is not.

Example 1: Tobias, €4,200 gross, 10 outstanding holiday days

Tobias works a 5-day week and earns €4,200 gross per month. His employment relationship ends on 31 August, and he will not be able to take 10 holiday days by then.

Example 2: Sina, €3,000 gross, 8 outstanding holiday days

Sina earns €3,000 gross on a 5-day week and leaves on 30 June. With 30 days of contractual annual holiday, she is entitled to 15 days under the one-twelfth rule, 7 of which she has already taken in spring. So 8 days remain outstanding.

Both amounts are gross figures. How much of that arrives net depends on your tax bracket and social security contributions, and that is exactly where the decisive difference from severance pay lies. More on that shortly in the section on tax and social security contributions.

Release from Work: Why a Single Word Decides Your Holiday

After a dismissal, many employers want you to no longer show up at work. They release you from work: you no longer have to work but remain employed until the termination date and continue to be paid. Whether your remaining holiday is used up in the process hinges on a single distinction. The basics are summarised in our glossary entry on Release from Work.

Revocable Release: Your Holiday Remains

With a revocable release, the employer reserves the right to call you back at any time. This means exactly what makes holiday what it is, is missing: secure, plannable time off. Under the case law of the Federal Labour Court, a revocable release therefore cannot fulfil your holiday entitlement. Your remaining holiday remains fully in place and is compensated at the end, even though you were at home for months and continued to be paid.

Irrevocable Release: Only With Express Offsetting

Only an irrevocable release can fulfil holiday, and even then only if the employer expressly states the offsetting against the holiday entitlement. The standard wording reads roughly: "You are irrevocably released from your work obligations from DD.MM.YYYY, with continued payment of your salary and with the outstanding remaining holiday of X days offset against it." If this addition on offsetting against holiday is missing, your holiday entitlement remains, even with an irrevocable release.

Important: read the dismissal letter literally on this point. If it only says "released" without "irrevocably" and without "with the holiday offset against it", there is a strong case that your remaining holiday must still be paid out in addition at the end. This is one of the most common, and at the same time easiest, points where checking the letter pays off immediately.

Release From Work, Benefit Suspension Period, and Unemployment Benefit

A side effect you should know about: with an irrevocable release, the compulsory insurance relationship with unemployment insurance regularly ends as soon as the release begins, even though the employment relationship legally continues. A benefit suspension period (Sperrzeit) under § 159 SGB III is not triggered by the release as such, but may be triggered under certain circumstances by the way the employment relationship was ended. Details are under Benefit Suspension Period for Unemployment Benefit and, for the amicable ending, under Termination Agreement and Unemployment Benefit.

Related, but not the same: the turbo clause, with which you can exit the employment relationship early and take the remaining salary along as additional severance pay. Here too, the remaining holiday must be expressly regulated, otherwise you accidentally negotiate it away.

Tax and Social Security Contributions: the Key Difference From Severance Pay

If you take away only one section from this article, make it this one. Holiday compensation and severance pay are treated completely differently for tax and social security purposes, and anyone who lumps the two together loses money.

Holiday compensation counts as ongoing wages. It is remuneration for working time not taken and therefore employment income in the classic sense. Consequence: it is fully subject to income tax and fully subject to social security contributions, so contributions to health, long-term care, pension, and unemployment insurance are deducted. The one-fifth rule (Fünftelregelung) under § 34 EStG does not apply to it, because it is not a compensation payment but regular wages.

Severance pay is the exact opposite: it is compensation for the loss of the job, not payment for work performed. That is why it is exempt from social security contributions and can be tax-privileged as remuneration for several years via the one-fifth rule. How that works in detail and what it means for the net amount, you can read under Severance Pay and Tax.

Note: since the 2025 tax year, the one-fifth rule is no longer applied directly during payroll tax deduction by the employer, but only taken into account as part of your income tax return. The tax privilege has therefore not disappeared, it just arrives later. So do not expect the net amount an online calculator for the one-fifth rule spits out to show up in your first payslip.

Want to know what adds up in total in your case? The severance calculator shows you your personal indicative severance figure in 2 minutes, add the remaining holiday separately using the formula above.

The Costly Mistake in the Termination and Settlement Agreement

The previous section leads to what is probably the most common avoidable mistake in termination negotiations: quietly folding the remaining holiday into the severance sum. The sequence is almost always the same. You agree on a round figure, say €30,000, and at the end of the agreement there is a sentence like: "Upon fulfilment of this agreement, all mutual claims arising from the employment relationship and its termination are settled, regardless of the legal basis."

That can mean your holiday compensation claim is treated as settled, even though it was never discussed. In effect, you have then paid for your own holiday out of your own severance pay. And even if the severance pay is clearly intended to also cover the holiday, the portion attributable to it remains, by its nature, employment income subject to contributions. If this is picked up on later, part of the sum risks being reclassified for social security purposes.

Here is what the clean solution looks like. The remaining holiday belongs expressly in the contract, in one of two variants:

1. Holiday is granted: "The employee is irrevocably released from their work obligations from DD.MM.YYYY, with continued payment of salary and with the outstanding remaining holiday of X days offset against it." This fulfils the holiday cleanly and verifiably.
2. Holiday is compensated: "The outstanding holiday entitlement of X days is compensated with an amount of Y € gross and paid out with the final settlement. This amount is not part of the severance pay under clause Z." This records it as a separate, individually quantified item.

Both work. What does not work is silence. Also check whether the number of holiday days in the contract matches your own calculation, the one-twelfth table further above will help with that. We have compiled sample wording and the typical pitfalls in Termination Agreement: Sample, and you will find the overall overview of the negotiation under Termination Agreement and, for weighing it up against a normal dismissal, under Termination Agreement or Dismissal.

Important: never sign on the spot. A termination agreement, unlike a dismissal, can practically no longer be reversed once signed, and there is no right of withdrawal for it. Take the draft with you, read it calmly, and have it checked. How this affects the overall severance amount, you can read under Severance Pay: Amount.

Lapse and Limitation: When Is Old Holiday Really Gone?

Many employers fend off compensation claims with a single sentence: "The holiday from last year has lapsed." In most cases, that is no longer true.

The Basic Rule: Calendar Year and Carry-Over Until 31 March

Under § 7 (3) BUrlG, holiday must be granted and taken within the current calendar year. A carry-over into the next year is only permitted if urgent operational reasons or reasons relating to your person justify it. In that case, the holiday must be taken by 31 March of the following year, otherwise it lapses under the wording of the law.

The Decisive Restriction: the Employer's Duty to Give Notice

This automatic lapse no longer applies as such today. Under the case law of the European Court of Justice and the Federal Labour Court, holiday only lapses if the employer has fulfilled their duty to give notice and prompt you. They must, in good time within the current year,

• specifically inform you how many holiday days you still have,
• prompt you to take this holiday, and
• clearly point out that the holiday will otherwise lapse at the end of the year or on 31 March.

If they have not done so, and in practice this is often omitted, the holiday does not lapse. It is carried over into the next year and combines there with the new entitlement. This is how employees who are dismissed after several years can sometimes end up with very high remaining holiday claims.

Limitation: Three Years, but the Start Is Shifted

Holiday claims generally become time-barred after three years. However, under the case law of the Federal Labour Court, this period for holiday not taken only begins at the end of the year in which the employer fulfilled their duty to give notice and prompt you. If you were never informed, the limitation period never started to run for you. That is why it is worth looking back at older years before you sign a contract.

Long-Term Illness: the 15-Month Limit

If you were continuously unfit for work and objectively unable to take the holiday for that reason, it lapses under case law 15 months after the end of the holiday year, meaning on 31 March of the year after next. This limit also applies without any notice from the employer, because a notice would not have changed anything given the continuous illness. If you were fit for work in between, the duty to give notice revives for those periods. More under dismissal due to illness.

By the way: the claim to holiday compensation is a pure monetary claim and can therefore be caught by exclusion periods in your employment or collective agreement, which are often just two or three months. The statutory minimum holiday is protected from this, but contractual additional holiday is not necessarily. Check your employment contract and, if in doubt, assert your claims early and in writing.

Special Cases: Summary Dismissal, Probationary Period, Parental Leave, Death

Summary Dismissal

Even with a summary dismissal, your holiday entitlement remains in place, the Federal Holiday Act does not provide for forfeiture of holiday as a sanction for misconduct. It simply converts immediately into a compensation claim, because the employment relationship ends from one day to the next. If you successfully challenge the summary dismissal, the employment relationship ends later, and further holiday accrues for that additional period.

Probationary Period and the First Six Months

Before the qualifying period expires, the one-twelfth rule applies: 1/12 of the annual holiday per full month. With 30 days of annual holiday and leaving after four full months, that is 10 days, which are compensated as normal. More under Dismissal During the Probationary Period.

Parental Leave

During parental leave you continue to accrue holiday entitlements, but the employer may reduce them: under § 17 BEEG they may reduce annual leave by one-twelfth for each full calendar month of parental leave. This is a discretionary right, so they must expressly declare the reduction while the employment relationship still exists. Once it has ended, this is no longer possible, because by then the holiday entitlement has turned into a monetary claim. If you continue to work part-time during parental leave, no reduction may be made for that period. More under Dismissal During Parental Leave.

Death of the Employee and Part-Time Work

If an employee dies while holiday is still outstanding, the entitlement does not disappear: under the case law of the European Court of Justice and the Federal Labour Court, it converts into an inheritable compensation claim that the heirs can assert. Part-time employees and mini-job workers have the full pro-rata entitlement, converted to their weekly working days: someone working three days a week is entitled to 18 holiday days where full-time employees have 30.

What You Should Do Now

The dismissal is on the table and the clock is ticking, for the claim deadline just as much as for your holiday days. You will find the general guide under Received a Dismissal: What to Do? Here are the steps specifically for your remaining holiday:

1. Have your remaining holiday quantified in writing. Ask HR for a current holiday overview as at the termination date, by email, so that you have it in black and white. Compare the figure against your own calculation using the one-twelfth table.
2. Check old years too. Ask explicitly about remaining holiday from previous years and whether and when you were warned about the risk of it lapsing. Without documented notice, the old entitlements usually continue.
3. Read the dismissal letter for the release clause. Does it say "irrevocably" and "with the remaining holiday offset against it"? If not, there is a good case that your holiday must be paid out in addition despite the release.
4. Take the holiday if possible. Paid time off before the end date is often worth more net than the later compensation, because tax and social security contributions on the compensation all fall due in a single month. Submit the request in writing.
5. Check exclusion periods in your employment contract. If you find a clause with two or three months, assert your compensation claim immediately in writing, even while negotiations are ongoing.
6. Do not sign anything in which the holiday is not expressly regulated. Neither a termination agreement, nor a settlement agreement, nor a court settlement text. A blanket settlement clause without a holiday arrangement costs you money.
7. Keep the 3-week deadline in mind. If you want to challenge the dismissal itself, you must bring an unfair dismissal claim within 3 weeks of receiving it. Holiday matters, but the claim deadline cannot be reversed.

First get an overview of the whole package: The severance calculator shows you in 2 minutes what severance is realistic as an indicative figure in your case, the remaining holiday comes on top.

How Can We Help You?

Remaining holiday is the item that gets lost most quietly in termination negotiations. It rarely takes centre stage, never makes a headline, and yet, depending on salary and outstanding days, it quickly amounts to four-figure sums that are owed to you by law. We review your case together with lawyers specialising in employment law: how many days are you really entitled to under the one-twelfth rule? Does the release clause fulfil your holiday or not? Are old claims still alive because the notice was missing? And is the holiday regulated in the draft contract in a way that it does not disappear into the severance pay?

We carry the risk: purely success-based, no upfront cost, paid only on success. Start with an initial assessment via our severance calculator, it only takes 2 minutes. And if a dismissal is on the table at the same time: keep the 3-week deadline in mind, it runs from the day you receive it.