Annual leave in Germany: entitlement, carry-over and expiry done right

In August, annual leave feels like a side issue in most companies. Requests have been approved, cover is arranged, the rest seems to sort itself out in the calendar. Yet this is exactly when the mistakes are made that turn expensive in December. How much leave is still open at year end, who may carry it over and when it actually expires follows rules most spreadsheets do not model. Here are the key provisions of the German Federal Leave Act (Bundesurlaubsgesetz, BUrlG), and how dCM applies them automatically.

How much leave the law grants

Section 3 of the German Federal Leave Act sets a statutory minimum of 24 working days per calendar year. Working days here means all days from Monday to Saturday, not only the days actually worked, so anyone on a five-day week has a minimum of 20 days. Most employment and collective agreements go beyond that, with 25 to 30 days being common.

For part-time staff, the calculation is based not on hours but on the number of working days per week. Someone working three days a week has 18 days where full-time staff have 30. If a person moves between full-time and part-time during the year, the entitlement has to be calculated separately for each period. This is one of the points where manual overviews regularly drift apart.

Qualifying period and pro-rata entitlements

The full entitlement arises for the first time after six months of employment (section 4 BUrlG). Before that, employees earn one twelfth of the annual leave per full month (section 5). The same twelfths rule applies when someone leaves in the first half of the year; leaving in the second half, after the qualifying period, preserves the full annual entitlement. Leave not taken must be paid out when employment ends (section 7 subsection 4), whereas payment in lieu during ongoing employment is not provided for.

Carry-over and expiry: the real sticking point

The basic rule is that leave must be taken in the current calendar year. Under section 7 subsection 3 BUrlG, carrying it over is only permitted where urgent operational reasons, or reasons relating to the employee, justify it. Carried-over leave must then be taken by 31 March, after which it expires.

That deadline, however, is far from the end of the story. Under the 2018 case law of the European Court of Justice (ECJ) and the 2019 decision of the German Federal Labour Court (Bundesarbeitsgericht, BAG) built on it, leave only expires if the employer has met its duty to cooperate: it must have specifically asked the employee to take the leave and told them clearly and in good time that it will otherwise expire. Without that notice, remaining leave moves into the next year without limit.

In 2022, relying on an ECJ judgment from the same year, the Federal Labour Court went further: even the standard three-year limitation period only starts to run once the employer has complied with that duty. Employers who never documented that and when they alerted staff to the impending expiry may face substantial legacy claims. A demonstrable notice, ideally in text form and per employee, is therefore not a formality. It is the precondition for the expiry rule to apply at all.

Special case: long-term illness

Where an employee cannot take leave because of continuous incapacity for work, the entitlement expires not on 31 March but 15 months after the end of the leave year concerned. Here too the courts have tightened the requirements on employers, so writing off old balances after a long illness is not advisable.

Falling ill during leave

Employees who fall ill during their leave and provide a medical certificate have those days credited back under section 9 BUrlG; they do not count as leave taken. What they may not do is extend the holiday on their own initiative, because the credited days must be requested again.

Why spreadsheets reach their limits here

Entitlement, twelfths, carry-over, expiry date, sick days during leave, changing weekly working days and a documented notice per person and year: seven variables that influence one another. In a spreadsheet this quickly becomes a file only one person really understands, and whose intermediate states nobody can reconstruct when an employee disputes a balance. Yet that traceability is precisely what counts in a dispute.

How dCM handles leave

In dCM, leave calculation is part of time tracking and tied into the personnel file. The statutory rules live in the system, not in a side calculation:

• Entitlement and twelfths: the annual entitlement is calculated, pro rata under section 5 BUrlG for staff joining during the year.
• Carry-over with expiry on 31 March: remaining leave moves into the following year and is accounted for on the cut-off date.
• Illness during leave: absence types carry legal attributes, among them whether they consume leave, so a certified illness does not reduce the leave account.
• Leave account: entitlement, days taken, carry-over, manual corrections and the remaining balance are visible at any time, for employees and HR alike.
• Absence calendar: a team-wide and company-wide view shows who is away and when, which makes planning easier and reveals bottlenecks early.
• Approval workflow: requests are submitted, managers approve or reject them with a reason, including forwarding and delegation for a manager's own time off.
• Audit log: every change is recorded with timestamp, originator and before and after values, so it can be proven how a balance came about.

Public holidays for all 16 German federal states are held in the system, with the correct state calendar per employee, so day counts add up across multi-site companies too.

Three things worth doing now

• Make remaining leave visible early: knowing in late summer how many days are open lets you steer the planning through to December instead of merely administering it.
• Document your notices: a demonstrable notice to every employee stating that remaining leave should be taken and when it expires belongs in the annual routine.
• Review historic balances: leave assumed to have expired may still exist if the required notices were missing, so check the balances before claims are raised.

Conclusion

Leave law looks simple as long as nothing goes wrong. As soon as someone joins mid-year, switches to part-time, falls ill on holiday or asserts entitlements from the previous year, the underlying data decides the case. A system that calculates entitlement and expiry by the statutory rules and logs every change does more than take work off HR. It makes the numbers hold up. We would be happy to show you what that looks like in dCM.

Note: This article provides general information about the rules of the German Federal Leave Act. It does not constitute legal advice.

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