Remaining Leave After Dismissal: Your Entitlements

What happens to remaining leave when you’re dismissed?

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

In practice, this often gets overlooked. After a dismissal, everything revolves around deadlines, claims, and severance pay, and outstanding leave days slip through the cracks. That’s costly: at a gross monthly salary of €4,000, ten leave days amount to around €1,850 gross that you’re entitled to without having to negotiate for it.

Important: your holiday entitlement exists independently of whether you challenge the dismissal. Even if you file an unfair dismissal claim and the case ends in a settlement, your outstanding leave remains a separate item that should be expressly addressed.

And: your holiday entitlement doesn’t end when you receive the dismissal, but when the employment relationship actually ends. How long that takes depends on your notice period, which in the standard statutory case follows § 622 BGB. The longer the notice period, the more leave you can still take during that time.

Take leave or have it paid out?

The Federal Leave Act (Bundesurlaubsgesetz) has a clear order of priority here, and it’s stricter than most people think: leave must be granted as time off, not as money. Leave exists for recovery, and recovery can’t be wired to your bank account. As long as your employment continues, you can’t simply have your remaining leave paid out, not even with your employer’s agreement.

The one statutory exception is in § 7 Abs. 4 BUrlG: if leave can no longer be granted, in whole or in part, because the employment relationship is ending, it must be paid out in lieu. That’s exactly the situation with dismissal. The claim for payment in lieu doesn’t arise at the moment of dismissal, but legally only the instant the employment relationship ends. Until then, the principle of “leave in kind” still applies. You’ll find a concise definition in our glossary under Holiday Pay in Lieu.

In practice that means: if your notice period still has three months to run, you can apply for leave as normal during that time. Your employer may only refuse it if urgent operational reasons or other employees’ leave requests with greater social priority stand in the way (§ 7 Abs. 1 BUrlG). A blanket refusal along the lines of “you’re leaving anyway” doesn’t hold up.

Note: conversely, your employer can’t simply impose leave on you unilaterally. What they can do is release you from work irrevocably while crediting it against your remaining leave. You’ll find out below why this wording matters so much.

How much remaining leave are you entitled to? The pro-rata rule

If you leave partway through the year, you don’t automatically get your full annual leave, but you don’t automatically only get a fraction either. The rules are 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 after the employment relationship has existed for six months (§ 4 BUrlG). Before that, you have a partial entitlement: one-twelfth of your annual leave for each full month of employment. This also applies if you leave during your probationary period, more on that under Dismissal During Probation.

2) Leaving in the first half of the year: pro-rata

If you leave after completing the qualifying period but still within the first half of the calendar year, that is, by 30 June, the pro-rata rule still applies: one-twelfth of your annual leave for each full month of employment in that calendar year.

3) Leaving on or after 1 July: full annual leave

If your employment ends on 1 July or later and the qualifying period has been met, you’re entitled to your full annual leave, not just half of it. So someone leaving on 31 July is entitled to all 30 of 30 days, despite having worked for only seven months. This is one of the few points in employment law where a single calendar day makes a huge difference. So if you’re negotiating your leaving date, it’s worth checking the calendar.

The table: remaining leave by month of departure

The table below shows the pro-rata leave for leaving in the first half of the year, once for a contractual annual leave entitlement of 30 days and once for the statutory minimum of 24 working days based on a 6-day week, which equates to 20 leave days under the usual 5-day week (§ 3 BUrlG):

Note on rounding: fractions of leave days amounting to at least half a day must be rounded up to full days under § 5 Abs. 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 leave than you’re entitled to under the pro-rata rule, they can’t reclaim it under § 5 Abs. 3 BUrlG, neither as days nor as money.

Your leaving date is negotiable, and it’s worth real money: Use our severance calculator to work out in 2 minutes what’s realistically achievable in your case.

Calculating holiday pay in lieu: the formula and two examples

The amount of holiday pay in lieu depends on your holiday pay rate, which is calculated under § 11 BUrlG: what counts is your average earnings over the 13 weeks before the leave would have started, excluding any extra pay for overtime. Reductions in earnings due to short-time work, lost working time, or absence through no fault of your own are disregarded, so they can’t push your daily rate down.

If your monthly salary stays constant, this can be greatly simplified. 13 weeks equal exactly three months, and 13 weeks at 5 working days each come to 65 working days. That gives you the rule of thumb for a 5-day week:

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

For a 6-day week, use 78 working days; for part-time work, use the actual number of working days within the 13 weeks. Commissions, allowances, and regular variable components are included in the average, pure overtime pay is not.

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

Tobias works a 5-day week and earns €4,200 gross per month. His employment ends on 31 August, and he can no longer take 10 leave days by then.

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

Sina earns €3,000 gross on a 5-day week and leaves on 30 June. With a contractual annual leave entitlement of 30 days, the pro-rata rule gives her 15 days, of which she’s already taken 7 in spring. That leaves 8 days outstanding.

Both figures are gross amounts. How much of that you actually take home net depends on your tax bracket and social security contributions, and that’s exactly where the key 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 leave

After a dismissal, many employers want you to stop coming into the workplace. They release you from work: you no longer have to work but remain employed and continue to be paid until your leaving date. Whether this uses up your remaining leave hinges on a single distinction. You’ll find the basics explained concisely in our glossary entry on Release from Work.

Revocable release: your leave remains

With a revocable release, your employer reserves the right to call you back to work at any time. That removes exactly what makes leave what it is: guaranteed, plannable time off. Under case law from the Federal Labour Court, a revocable release therefore cannot satisfy your holiday entitlement. Your remaining leave stays fully intact and gets paid out at the end, even though you spent months at home while still being paid.

Irrevocable release: only with explicit crediting

Only an irrevocable release can satisfy your leave entitlement, and even then only if your employer expressly states that it’s being credited against your holiday. The standard wording reads roughly: “From DD.MM.YYYY you are irrevocably released from work duties, with continued pay, crediting X days of outstanding remaining leave.” Without that crediting clause, your holiday entitlement survives, even with an irrevocable release.

Important: read the dismissal letter literally on this point. If it only says “released from work”, without “irrevocably” and without “crediting against leave”, there’s a strong case that your remaining leave still has to be paid out separately 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, and unemployment benefit

One side effect you should know about: with an irrevocable release, your compulsory unemployment insurance status typically ends as soon as the release begins, even though the employment relationship legally continues. The release itself doesn’t trigger a benefit suspension period under § 159 SGB III, but the way the employment relationship ended might. Details under Benefit Suspension Period and Unemployment Benefit and, for a mutually agreed ending, under Termination Agreement and Unemployment Benefit.

Related, but not the same: the turbo clause, which lets you leave the employment relationship early and take the remaining salary as additional severance. Here too, your remaining leave must be expressly addressed, otherwise you might accidentally negotiate it away.

Tax and social security contributions: the key difference from severance pay

If you take just one section away from this article, make it this one. Holiday pay in lieu and severance pay are treated completely differently for tax and social security purposes, and lumping the two together costs you money.

Holiday pay in lieu counts as ongoing wages. It’s payment for working time you didn’t take, and therefore employment income in the classic sense. The result: it’s fully subject to wage tax and fully subject to social security contributions, so deductions are made for health, long-term care, pension, and unemployment insurance. The one-fifth rule under § 34 EStG does not apply to it, because it isn’t compensation, but regular pay.

Severance pay is the exact opposite: it’s compensation for the loss of your job, not pay for work performed. That’s why it’s exempt from social security contributions and can receive favourable tax treatment under the one-fifth rule as compensation spread across several years. For the details and what that means for your net pay, see Severance Pay and Tax.

Note: since the 2025 assessment period, the one-fifth rule is no longer applied directly by your employer when deducting wage tax, but only taken into account later in your income tax return. The tax relief hasn’t disappeared, it just arrives later. So don’t expect your first payslip to show the net amount an online calculator spits out for the one-fifth rule.

Want to know what adds up for you overall? Our severance calculator gives you a personal estimate for your severance pay in 2 minutes; add the remaining leave separately using the formula above.

The costly mistake in termination and settlement agreements

The previous section leads to probably the most common, avoidable mistake in termination negotiations: silently folding your remaining leave into the severance figure. The pattern is almost always the same. You agree on a round number, say €30,000, and the agreement ends with a sentence like: “Upon fulfilment of this agreement, all mutual claims arising from the employment relationship and its termination are settled, regardless of legal grounds.”

That can mean your claim to holiday pay in lieu is treated as settled too, without it ever having been discussed. In effect, you’ve paid for your own leave out of your own severance pay. And even if the severance payment is clearly meant to cover the leave as well, the portion attributable to it remains, by its nature, contributory employment income. If this is picked up on later, part of the sum risks being reclassified for social security purposes.

Here’s what a clean solution looks like. Your remaining leave belongs explicitly in the contract, in one of two forms:

1. Leave is granted: “From DD.MM.YYYY, the employee is irrevocably released from work duties, with continued pay, crediting X days of outstanding remaining leave.” That satisfies the leave entitlement cleanly and verifiably.
2. Leave is paid out: “The outstanding leave entitlement of X days is paid in lieu at a gross amount of €Y and disbursed with the final payslip. This amount is not part of the severance payment under clause Z.” This records it as a separate, distinctly quantified item.

Both approaches work. What doesn’t work is silence. Also check whether the number of leave days in the contract matches your own calculation, the pro-rata table above will help with that. We’ve put together sample wording and typical pitfalls in Termination Agreement: Sample Wording, you’ll find a general overview of the negotiation under Termination Agreement and, for weighing it up against an ordinary dismissal, under Termination Agreement or Dismissal.

Important: never sign on the spot. Unlike a dismissal, a termination agreement can practically never be undone once signed, and there’s no right of withdrawal for it. Take the draft away, read it carefully, and have it checked. For how this affects the overall severance amount, see Severance Pay: Amount.

Lapse and limitation: when is old leave really gone?

Many employers fend off claims for payment in lieu with one line: “Last year’s leave has lapsed.” In most cases, that’s no longer true.

The basic rule: calendar year and carry-over until 31 March

Under § 7 Abs. 3 BUrlG, leave must be granted and taken within the current calendar year. Carrying it over into the next year is only permitted if justified by urgent operational reasons or reasons relating to you personally. In that case, the leave must be taken by 31 March of the following year, otherwise it lapses under the wording of the law.

The crucial qualification: the employer’s duty to notify

This automatic lapse no longer applies as described. Under case law from the European Court of Justice and the Federal Labour Court, leave only lapses if your employer has fulfilled their duty to notify and call on you to take it. That means they must, in good time during the year,

• specifically tell you how many leave days you still have,
• ask you to take that leave, and
• clearly warn you that otherwise the leave will lapse at the end of the year or by 31 March.

If they haven’t, and in practice this is often the case, the leave doesn’t lapse. It carries over into the next year and merges there with the new entitlement. That’s how, after several years, employees can end up with very substantial remaining leave claims when dismissed.

Limitation period: three years, but the clock starts later

Holiday claims generally become time-barred after three years. However, under case law from the Federal Labour Court, this period for untaken leave only starts at the end of the year in which your employer fulfilled their duty to notify and call on you to take it. If you were never informed, the limitation period never started running. That’s why it’s worth looking back at older years before you sign any contract.

Long-term illness: the 15-month limit

If you were continuously unfit for work and genuinely couldn’t take the leave as a result, case law says it lapses 15 months after the end of the leave year, meaning 31 March of the year after next. This limit applies even without any notice from your employer, because a notice wouldn’t have changed anything during continuous illness. If you were fit to work in between, the duty to notify applies again for those periods. More under illness-related dismissal.

By the way: the claim to holiday pay in lieu is a purely monetary claim, so it can fall under contractual or collective exclusion periods, which are often only two or three months long. The statutory minimum leave is protected from this, but contractual leave on top isn’t necessarily. Check your employment contract and, if in doubt, assert your claims early and in writing.

Special cases: summary dismissal, probation, parental leave, death

Summary dismissal

Even with a summary dismissal, your holiday entitlement remains intact, the Federal Leave Act doesn’t recognise forfeiting leave as a penalty for misconduct. It simply converts immediately into a claim for payment in lieu, 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 leave accrues for that extra period.

Probation and the first six months

Before the qualifying period ends, the pro-rata rule applies: one-twelfth of annual leave per full month. With 30 days of annual leave and departure after four full months, that’s 10 days, which are paid out in lieu as normal. More under Dismissal During Probation.

Parental leave

You continue to accrue holiday entitlement during parental leave, but your employer can reduce it: under § 17 BEEG, they may cut your annual leave by one-twelfth for each full calendar month of parental leave. This is a right they must actively exercise, so they have to expressly declare the reduction while the employment relationship still exists. Once it has ended, this is no longer possible, because the leave entitlement has by then become a monetary claim. If you keep working part-time during parental leave, no reduction is allowed for that period. More under Dismissal During Parental Leave.

Death of the employee and part-time work

If an employee dies while leave is still outstanding, the claim doesn’t disappear: under case law from the European Court of Justice and the Federal Labour Court, it converts into an inheritable claim for payment in lieu, which the heirs can assert. Part-time employees and those in mini-jobs have the full entitlement pro-rated to their working days per week: someone working three days a week is entitled to 18 leave days where full-time employees get 30.

What you should do now

The dismissal is on the table, and the clock is ticking, both for the claim deadline and for your leave days. You’ll find the general guide under Received a Dismissal: What to Do? Here are the steps specifically for your remaining leave:

1. Get your remaining leave confirmed in writing. Ask HR for a current leave statement as at your leaving date, by email, so you have it in black and white. Compare the figure against your own calculation using the pro-rata table.
2. Check older years too. Ask explicitly about remaining leave from previous years and whether, and when, you were warned about impending lapse. Without a documented notice, old claims generally remain valid.
3. Check the dismissal letter for the release clause. Does it say “irrevocably” and “crediting remaining leave”? If not, there’s a strong case your leave still needs to be paid out on top, despite the release.
4. Take the leave if you can. Paid time off before your leaving date is often worth more net than a later payout, because payment in lieu triggers tax and social security deductions all in one month. Submit your request in writing.
5. Check for exclusion periods in your contract. If you find a clause with a two or three month limit, assert your claim for payment in lieu in writing straight away, even while negotiations are ongoing.
6. Don’t sign anything that doesn’t expressly address your leave. Not a termination agreement, a settlement agreement, or a court settlement text. A blanket settlement clause without a leave provision costs you money.
7. Keep the 3-week deadline in mind. If you want to challenge the dismissal itself, you must file an unfair dismissal claim within 3 weeks of receiving it. Your leave matters, but the claim deadline can’t be reversed.

Start by getting an overview of the whole package: The severance calculator shows you in 2 minutes what severance is realistically achievable as a guide in your case, with remaining leave on top.

How can we help you?

Remaining leave is the item that gets lost most quietly in termination negotiations. It rarely takes centre stage, never makes headlines, and yet depending on salary and outstanding days, it can quickly add up to four-figure sums you’re legally entitled to. We review your case together with lawyers specialising in employment law: how many days are you really entitled to under the pro-rata rule? Does the release clause satisfy your leave or not? Are old claims still alive because you were never notified? And is your leave set out in the draft contract so it doesn’t disappear into the severance pay?

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