Germany: Recent Developments In Vacation Law

Last Updated: 31 December 2012
Article by Georg Mikes

Vacation is an important aspect of the employment relationship. Problems in this context arise mostly when employment is interrupted by long-term illness or concluded by termination or death. Several recent decisions have addressed this issue.

Payment in Lieu of Vacation—Abandonment of the "Surrogate" Theory

The German Federal Vacation Act (Bundesurlaubsgesetz; BUrlG) assumes the basic principle that vacation is to be granted and taken in each calendar year and will lapse if not taken. As an exception to this rule, carry-over to the next quarter is possible if "urgent operational reasons or reasons concerning the person of the employee justify this" (Section 7 Para. 3 Sentence 2 BUrlG); "reasons concerning the person of the employee" are usually health issues. Upon the expiration of the three-month carry-over period, the vacation lapses unless a further exception occurs, i.e., an incapacity to work extending beyond the transfer period. This extension was introduced in accordance with the established practice of the European Court of Justice (ECJ).

A further provision holds that if vacation cannot be taken due to the employee's termination, financial compensation is to be paid (Section 7 Para. 4 BUrlG). In this context, the German Federal Labor Court (Bundesarbeitsgericht; BAG) thus far has treated the compensation payment as a "surrogate" of the actual grant of vacation and has therefore based its expiration on the same time periods that apply to the expiration of the actual vacation claim.

In a case dated May 4, 2010 (9 AZR 183/09), the BAG indicated that it intended to abandon the surrogate theory; in a judgment dated June 19, 2012 (9 AZR 652/10, Press Release 43/12), it actually did so, deeming the statutory vacation claim a "purely pecuniary claim" that is not subject to the time limits of the BUrlG. Contrary to the judgment of 2010, the BAG expressly confirmed that an incapacity to work is not relevant in this context. For employers, this means that vacation which has not lapsed but cannot be taken due to termination will regularly have to be compensated for and that employees may assert this compensation claim after December 31 of the vacation year and/or March 31 of the subsequent year. Section 195 of the German Civil Code states that the compensation claim is subject to a three-year statute of limitations unless a shorter preclusive period under a collective bargaining agreement or employment agreement is already in effect.

Scaling of the Duration of Vacation Depending on Age

In a judgment dated March 20, 2012 (9 AZR 529/10, Press Release 22/12), the BAG held that granting older employees more vacation time than younger employees constitutes discrimination against the young. In this particular case, the employer granted employees 26 vacation days until the 30th birthday, 29 days until the 40th birthday, and 30 days thereafter. The action was brought by a female employee entitled to 29 vacation days who also requested the 30th day. In this case, the BAG could find no justification for disadvantaging those under 40 and thus held that vacation time must be equal for all. Nevertheless, the court recognized that additional vacation days might be justified for employees nearing retirement, since these workers usually have decreased resistance to fatigue, illness, and stress. Consequently, while employers can avoid charges of age discrimination by granting the same amount of vacation time to all employees, it may also be permissible to provide extra time to those in their 50s and 60s.

Release From Work by Set-Off Against Vacation

In the context of terminations, it frequently happens that the employer wants to release the employee from work during the notice period. This usually includes the desire to set off the release time against the employee's vacation time. From the BAG judgment dated May 17, 2011 (9 AZR 189/10, Press Release 37/11), it may be inferred that the employer can also release the employee in advance from the vacation time owed to him/her in the following year if the notice term extends from one year to the next. The judgment held that the employer must clearly express whether the set-off refers to all of the employee's vacation time or only part of it, with the employer bearing the risk resulting from any ambiguous statements.

In the case at hand, on November 13, 2006, the employer notified the employee of the termination of the work relationship, effective March 31, 2007. The employee was to receive remuneration while being released from work, combined with a set-off against his vacation days during the four-and-a-half-month notice period. When the termination was subsequently held to be ineffective, the employee returned to work after the scheduled termination date.

Had the termination been effective, the employee would have been entitled to partial vacation for 2007 (pursuant to Section 5 Para. 1 c) BUrlG), so a dispute arose as to how much of the vacation claim from 2007 had already been granted. The employer contended that the employee had used all his vacation time for 2007 during the notice period; the employee stated that he was entitled to additional vacation because the employer's statement at the time of the notification had been unclear. The BAG sided with the employee because of the ambiguity in the original statement. Had the employer clearly informed the employee that the release from work covered any vacation claim, no further time would have been awarded.

Lapse of Vacation Claims

As stated above, payments in lieu of vacation come into consideration only if the vacation has not lapsed. A BAG judgment dated August 9, 2011 (9 AZR 425/10; Press Release 64/11) returned to this issue, providing further guidance on when vacation can be held to have lapsed. The complaining employee in this case had been continuously incapable of working due to illness from 2005 through the middle of 2008, at which time he returned to his duties. In the second half of 2008, he was granted 30 vacation days. In 2009, however, the employee demanded a declaratory judgment stating that he was entitled to 90 additional vacation days covering the years 2005 through 2007.

The BAG denied this. It stated that an employee who recovers early enough in the calendar year to take all his/her accumulated vacation days within that year must do so. Failure to take the vacation before the end of the year will cause the claim for accrued vacation time to lapse. In this case, the employee's claim for the accumulated vacation time lapsed on December 31, 2008.

In the meantime, the ECJ also passed guiding decisions on the total amount of vacation that can be accrued. Following a series of rulings indicating that employees incapable of working due to illness could accumulate vacation claims to an unlimited extent, the court now appears to be accepting limits. In a judgment dated November 22, 2011 (Case C-214/10), the ECJ made no objection to a transfer period of 15 months under collective bargaining law. Since the substantiation applied by the ECJ is applicable to statutory vacation pursuant to the BUrlG, accumulation of three years' worth of vacation should no longer be feared.

Transferability by Succession

Last but not least, the BAG dealt with the question of the transferability of vacation claims by succession. The fact that a deceased employee cannot take vacation goes without saying. However, the question might be raised whether his/her heirs could assert a monetary claim against the employer. In this particular case, the employee in question had been employed during the years 2008 and 2009 but suffered from a long-term illness that prevented him from taking his vacation. After his death, his heirs requested payment from the employer in lieu of vacation, which the Regional Labor Court awarded. However, in a judgment dated September 20, 2011 (9 AZR 416/10, Press Release 72/11), the BAG decided differently: it assumed that a vacation claim becomes extinct with the employee's death and is not transformed into a claim for payment, pursuant to Section 7 Para. 4 BUrlG.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions