Use it or lose it? Can employees carry over vacation beyond March 31?

As March 31 is a key date for the expiry of holiday entitlement in Germany, we want to provide you with a short update regarding holiday entitlements under German law.

Pursuant to the Federal Vacation Act (Bundesurlaubsgesetz, BUrlG) every employee is entitled to a minimum of 24 paid days of vacation based on a 6 day working week. As most employees nowadays have 5 day working weeks, they are entitled to 20 days of statutory paid vacation, unless a collective bargaining agreement or the individual employment contract grants more than 20 days of paid vacation. In general, employees must take their annual holiday during the calendar year and if they do not do so, the holiday entitlement expires at the end of the respective calendar year.

According to sec. 7 para. 3 of the Federal Vacation Act, the employee may carry untaken holiday over to the following year if the employee was not able to take the holiday for operational or personal reasons (i.e. permanent incapacity to work). But the right to carry forward holiday is not unlimited in time. Holiday carried forward to the next year must be taken by March 31 of the following year, unless the employer and the employee or the bargaining parties have agreed on diverging provisions, in particular longer periods for the transfer. According to the Federal Labour Court (Bundesarbeitsgericht, BAG – docket number 9 AZR 353/10), an exception also has to be made if the employee is permanently incapacitated for work beyond March 31 of the following year, in which case the employee is entitled to take the holiday beyond March 31 up until the expiry of 15 months after the end of the calendar year in which the holiday entitlement arose.

These rules do not apply to holiday granted in addition to the statutory minimum holiday whether by way of a collective bargaining agreement or the individual employment contract. Employers may therefore apply different conditions to any holiday entitlement which exceeds the statutory minimum.