A last-minute holiday request, several employees wanting to take time off at the same time, or an employee calling in sick while on annual leave – questions surrounding annual leave are a common source of uncertainty for employers.

What is legally permitted? What obligations do employers have? And which mistakes can become costly later on?

In practice, annual leave is one of the areas of German employment law that is most frequently misunderstood. Many employers assume, for example, that unused annual leave expires automatically or that employees must remain available while on holiday. Neither assumption is correct.

This is particularly relevant for small and medium-sized businesses (SMEs) and start-ups, where HR responsibilities are often handled directly by the management team rather than by a dedicated HR department. Understanding the legal framework is therefore essential, as mistakes relating to annual leave can quickly lead to disputes, financial liabilities, or even employment law claims.

As an external HR partner, we support businesses with these questions every day. In this guide, we explain the most important rules in a practical and easy-to-understand way, based on the standard five-day working week commonly used in Germany.

Key Takeaways

✔ The statutory minimum annual leave entitlement is 20 working days for employees working a five-day week.
✔ Part-time employees do not automatically receive fewer days of annual leave.
✔ Employers may reject a leave request only if there are compelling operational reasons.
✔ Approved annual leave cannot generally be withdrawn by the employer.
✔ Sick days during annual leave do not count as annual leave, provided the legal requirements are met.
✔ Unused annual leave does not expire automatically.
✔ Annual leave cannot generally be paid out instead of being taken, except when employment ends.

What Is the Statutory Minimum Annual Leave Entitlement?

The statutory minimum annual leave entitlement is governed by the German Federal Vacation Act (Bundesurlaubsgesetz – BUrlG).
The Act is based on a six-day working week and provides a statutory minimum entitlement of 24 working days of annual leave.
Since most businesses today operate on a five-day working week, this entitlement is converted accordingly, resulting in a statutory minimum of 20 working days of paid annual leave per calendar year.
Many employers voluntarily grant more generous leave entitlements, typically between 25 and 30 days per year. In these cases, the applicable employment contract, collective bargaining agreement, or company agreement determines the contractual entitlement.

How Is the Statutory Annual Leave Entitlement Calculated?

The statutory minimum annual leave entitlement is calculated using the following formula:

Statutory minimum leave ÷ 6 × actual working days per week

Or, more specifically:

24 ÷ 6 × actual working days per week

Example 1: Five-day working week

24 ÷ 6 × 5 = 20 days of annual leave

Example 2: Two-day working week

24 ÷ 6 × 2 = 8 days of annual leave

Important

This calculation applies only to the statutory minimum leave entitlement under the German Federal Vacation Act. Many employers offer contractual annual leave of 25 to 30 days based on a five-day working week. Where employees work fewer or more days per week, this contractual entitlement must also be adjusted proportionately.

Pro-Rated Annual Leave When an Employee Joins or Leaves the Company

If an employee joins or leaves a company during the calendar year, the question often arises as to how much annual leave they are entitled to.
During the first six months of employment—known as the waiting period (Wartezeit)—employees generally accrue one-twelfth of their annual leave entitlement for each full month of employment.

The calculation is as follows:

Months of employment ÷ 12 × annual leave entitlement

Example

An employee works for seven months and has an annual leave entitlement of 24 days.

7 ÷ 12 × 24 = 14 days of annual leave

Under Section 4 of the German Federal Vacation Act (BUrlG), employees become entitled to their full statutory annual leave entitlement once the employment relationship has existed for at least six months.
If this waiting period is completed during the first half of the calendar year, employees are generally entitled to the full statutory annual leave entitlement. If employment ends during the year, the provisions of Section 5 BUrlG, which govern pro-rated leave, must also be taken into account.

Careful calculation is particularly important whenever employees join or leave the company. Mistakes often remain unnoticed until months later and can lead to unnecessary disputes or additional claims.

Annual Leave for Part-Time Employees

A common misconception is that part-time employees are automatically entitled to fewer days of annual leave than full-time employees.

In reality, the decisive factor is not the number of hours worked per day, but the number of working days per week.

For example, an employee who works four hours a day across five days a week is generally entitled to the same number of annual leave days as a full-time employee working five days per week.

However, if an employee works only three days per week, their annual leave entitlement must be adjusted proportionately based on the number of working days.

Practical Example

A full-time employee working a five-day week is entitled to 30 days of annual leave.
A part-time employee works three days per week.

The calculation is:
30 × 3 ÷ 5 = 18 days of annual leave

Employers should always document these calculations carefully. Transparent and well-documented leave entitlements help avoid misunderstandings and provide legal certainty for both parties.

Who Decides When Annual Leave Can Be Taken?

As a general rule, employees are free to request their preferred holiday dates.

However, this does not mean that every leave request must automatically be approved.

Employers are required to consider employees’ preferred holiday dates unless there are compelling operational reasons or conflicting leave requests from other employees that deserve priority.

Examples of legitimate operational reasons include:

• Seasonal peaks in workload
• Staff shortages
• Stocktaking or inventory periods
• Annual leave already approved for other employees
• Situations where business operations could no longer be maintained effectively

This issue frequently arises during school holidays or around Christmas, when several employees may wish to take leave at the same time.

Planning annual leave well in advance helps minimise scheduling conflicts while ensuring business continuity.

When Can an Employer Reject an Annual Leave Request

Not every leave request has to be approved.
Where there are legitimate operational reasons, employers may reject a leave request or propose an alternative period.
However, any decision should be objective, transparent and clearly justified.
Arbitrary decisions or unequal treatment of employees can negatively affect workplace morale and, in some cases, even result in employment law disputes.
In practice, clearly defined leave approval procedures and open communication prevent many of these issues before they arise.

Can an Employer Recall an Employee from Annual Leave?

This is one of the questions employers ask most frequently—particularly when unexpected staff shortages occur or urgent business issues arise.
The answer surprises many employers:
Generally, no.

Once annual leave has been approved, employers cannot normally revoke it unilaterally.
Annual leave exists to allow employees to rest and recover and is therefore afforded special legal protection under German employment law.
Legal scholars occasionally discuss highly exceptional circumstances such as national emergencies or disasters.

For normal business operations, however, the rule is clear:
Even significant staff shortages or critical business projects do not generally entitle an employer to interrupt an employee’s approved annual leave or require them to return to work early.

Employees may, of course, agree voluntarily to return.
If they do so, employers are generally responsible for reimbursing any additional costs incurred, such as:

• Rebooking travel
• Cancellation fees
• Early return travel expenses

Do Employees Have to Be Available While on Annual Leave?

This is another question that frequently causes uncertainty.
The legal position is straightforward:
No.

Employees are not required to remain available while on annual leave.
They are under no obligation to:

• Read work emails
• Answer business phone calls
• Respond to messages
• Perform work-related tasks

The purpose of statutory annual leave is to allow employees to recover both physically and mentally.
Meaningful recovery is only possible if employees are genuinely able to disconnect from work during their holiday.
For employers, this means that effective cover arrangements and clearly assigned responsibilities should be organised before an employee begins their leave.
Doing so ensures business continuity while allowing employees to enjoy their annual leave without interruption.

Unused Annual Leave: When Does It Expire?

Unused annual leave is one of the areas of German employment law that gives rise to the greatest number of misconceptions.
As a general rule, employees are expected to take their annual leave during the current calendar year.
Annual leave may only be carried over to the following year if there are valid operational or personal reasons preventing the employee from taking it—for example, a prolonged period of illness.

Any leave carried forward must generally be taken by 31 March of the following calendar year.
Does Unused Annual Leave Expire Automatically?
No.

Under current case law, unused statutory annual leave does not expire automatically.
For annual leave to lapse, employers must first fulfil their legal obligations by:

• Informing employees individually and in good time about their remaining annual leave entitlement.
• Clearly warning employees that their unused leave may expire.
• Giving employees a genuine opportunity to take their leave before it expires.

Only after these employer obligations have been fulfilled can statutory annual leave generally expire.
If an employer fails to provide the required notice, unused annual leave may remain valid for several years.
For this reason, employers should regularly review employees’ outstanding leave balances and notify them—preferably in writing—of both their remaining entitlement and any applicable deadlines.

Annual Leave During Long-Term Sickness

Special rules apply where employees are unable to take their annual leave because they are on long-term sick leave.
In these circumstances, statutory annual leave does not expire on 31 March of the following year.
Instead, statutory annual leave generally remains valid for 15 months after the end of the relevant leave year, provided the employee has been continuously unable to work throughout that period.
Employers should carefully monitor and document outstanding annual leave entitlements for employees on long-term sick leave.
These outstanding entitlements can have significant financial implications if the employment relationship later comes to an end.

When Can Annual Leave Be Paid Out?

Many employers and employees assume that unused annual leave can simply be compensated with a payment.

In reality, this is permitted only in exceptional circumstances.

The purpose of annual leave is to provide employees with an opportunity to rest and recover.

For that reason, unused annual leave cannot normally be replaced by financial compensation during an ongoing employment relationship.

Payment in lieu of annual leave—known in Germany as annual leave compensation (Urlaubsabgeltung)—is generally only permitted when employment ends and the employee is no longer able to take their remaining leave before their departure.

What Happens If an Employee Becomes Sick During Annual Leave?

Falling ill while on holiday is frustrating for any employee.
The good news is:

Certified sick days are generally not deducted from annual leave.
If an employee becomes ill during their annual leave, the days of certified incapacity for work will not count as annual leave, provided that:

• the employee obtains a medical certificate confirming their incapacity for work; and
• the employer is informed of the illness without undue delay.

The affected leave days are then credited back to the employee’s annual leave entitlement.
However, one important point should be noted:
Annual leave is not automatically extended by the number of sick days.
Instead, the reinstated leave days can be requested and taken at a later date.
Employers are often asked whether this also applies if the illness results from, for example, a sports injury or an accident during leisure time.

The answer is generally yes.
As long as the employee provides a valid medical certificate confirming incapacity for work and reports the illness correctly, the cause of the illness is usually irrelevant.
Only in extremely rare cases involving intentional or grossly reckless conduct may a different legal assessment apply.

Our Practical Advice for Employers

In our day-to-day work, we repeatedly find that problems relating to annual leave rarely arise because employment law is particularly complex.
More often, they result from unclear or inconsistent internal HR processes.

Employers who:

• process leave requests using clear and consistent procedures,
• calculate annual leave entitlements correctly,
• regularly monitor outstanding leave balances, and
• inform employees about their remaining entitlement in good time,

create transparency, improve legal compliance, and reduce the risk of disputes.
Accurate documentation is equally important—particularly for part-time employees, new hires, departing employees, and employees on long-term sick leave.

Well-organised HR processes help avoid unnecessary questions, disputes and financial claims later on.
Ultimately, clearly defined procedures benefit everyone involved.
Employers gain greater

Conclusion

At first glance, vacation law may seem relatively straightforward. However, in everyday business practice, employers quickly discover that numerous legal requirements and special regulations must be considered—from statutory minimum leave and part-time arrangements to prorated vacation entitlements, unused leave, long-term illness, and sickness during vacation.

Many employment law disputes arise not because the legislation is particularly complex, but due to incorrect calculations, unclear processes, or insufficient communication.

By calculating vacation entitlements correctly, handling leave requests transparently, regularly monitoring outstanding vacation balances, and informing employees in good time, employers not only ensure legal compliance but also strengthen trust within the team, reduce conflicts, and save time and avoidable costs in the long run.

As an outsourced HR department, we support businesses in designing legally compliant, efficient, and practical HR processes—from drafting legally sound employment contracts and managing day-to-day HR administration to providing expert advice on employment law matters.
This allows you to focus on your core business while we take care of your HR needs.

Frequently Asked Questions About Vacation Entitlement (FAQ)

How many vacation days are employees legally entitled to?
For employees working a five-day week, the statutory minimum annual leave is 20 working days.
The German Federal Vacation Act (Bundesurlaubsgesetz) is based on a six-day working week, providing a minimum of 24 working days. Vacation entitlement is adjusted according to the employee’s actual number of working days per week.

Many employers voluntarily grant additional annual leave, for example 25 to 30 vacation days. The applicable entitlement depends on the employment contract, a works agreement, or a collective bargaining agreement.

How is vacation entitlement calculated for part-time employees?

The decisive factor is not the number of hours worked per day, but the number of working days per week.
For example, if a part-time employee works three days per week and full-time employees working five days per week receive 30 vacation days, the calculation is as follows:

30 × 3 ÷ 5 = 18 vacation days
This ensures that part-time employees are treated fairly and receive leave in proportion to their regular working days.

How is prorated vacation entitlement calculated?

If an employment relationship begins or ends during a calendar year, vacation entitlement is generally calculated on a prorated basis.
The calculation is:
Months of employment ÷ 12 × Annual vacation entitlement
Example:

7 months of employment with an annual entitlement of 24 vacation days:

7 ÷ 12 × 24 = 14 vacation days

After six months of continuous employment, employees generally become entitled to their full statutory annual leave in accordance with Section 4 of the German Federal Vacation Act.

Can an employer reject a vacation request?

Yes.
An employer may refuse a vacation request if there are urgent operational reasons or if previously approved leave requests from other employees take priority.
Any refusal should be objectively justified and communicated transparently.

Can approved vacation be cancelled?

As a general rule, no.
Once vacation has been approved, an employer may revoke it only in exceptional circumstances. Even significant staffing shortages are generally insufficient to justify cancelling approved leave.
Employees may return voluntarily if they agree to do so. Any additional costs incurred are generally borne by the employer.

Are employees required to be available during their vacation?

No.
During annual leave, employees are generally under no obligation to read work emails, answer business calls, or perform work-related tasks.
Vacation is intended solely for rest and recreation.

Can unused vacation expire?

Yes—but not automatically.
Employers must inform employees individually and in good time about any remaining vacation entitlement, explain the potential forfeiture of unused leave, and provide a genuine opportunity to take the leave.
Only then can unused vacation generally expire.

What happens if an employee becomes ill during vacation?

If an employee becomes ill during approved vacation and provides a medical certificate confirming their incapacity for work, the days of illness are not deducted from their vacation entitlement.
The corresponding vacation days are credited back to the employee’s leave balance.

However, the vacation period is not automatically extended.

Can unused vacation be paid out?
Generally not during an ongoing employment relationship.
Payment in lieu of vacation (vacation compensation) is only permitted when the employment relationship ends and the remaining vacation entitlement can no longer be taken before termination.

What applies in cases of long-term illness?

If an employee is unable to take statutory vacation due to long-term incapacity for work, the statutory vacation entitlement generally remains valid for up to 15 months after the end of the relevant vacation year.
Employers should carefully document these outstanding vacation entitlements, as they may have financial implications if the employment relationship is terminated at a later date.