Payout of remaining vacation days? Here's what to consider!

memduh turan

Memduh Turan

May 8, 2024 • 5 minutes read

Often, employees face remaining vacation days towards the end of the year due to reasons such as high workload or an unexpected termination of the employment relationship. There are various ways to deal with such unused vacation days. In this article, we'll go through the most prevalent ones.


Can you have the remaining vacation paid out?

Let's first look at the following scenario: you were unable to use all of your vacation days and the end of the year is approaching. How do you deal with the remaining leave?

The basic rule: open vacation days cannot be paid out by the employer. This is because the purpose of vacation entitlement is to maintain working capacity and motivation. Especially when it comes to preventing overwork or burnout, making use of ones vacation days is of great importance.

Paying out remaining leave - only in special cases

There is one situation in which payment of remaining vacation is possible: In the event of a termination agreement with immediate effect or termination without notice. This is because the termination of the employment relationship makes it de facto no longer possible to take the remaining vacation days. Another special case for a payout is given if the chairman of an existing employment relationship cannot grant a requested vacation because the person is indispensable for the company or because there is an overload of work.

How is vacation pay calculated?

Calculating the compensation for the remaining leave is quick and easy. The basis of this calculation is made up of two aspects. Firstly, we need to know the total amount of vacation days per year and how many days are still outstanding. One vacation day corresponds to the value of one working day, i.e. the pay for one vacation day corresponds to the average earnings of one working day. We use the past 13 weeks as a reference for the calculation. The procedure works as follows:

  1. Calculation of the quarterly salary.
  2. To determine the monthly salary, the quarterly salary is divided by three.
  3. To determine the weekly salary, divide the monthly salary by 4.
  4. The weekly salary is now divided by five to obtain the daily salary.
  5. The daily salary is multiplied by the number of remaining vacation days. Et voilà!

What to do with outstanding vacation days?

Whether remaining vacation can be taken into the next year and how many days are permitted varies from company to company. According to the law, a vacation entitlement expires on December 31. Under certain conditions, however, vacation days can still be taken into the new year:

  • Contractual regulation: It was included in the employment contract that the remaining vacation can be carried over to the following year.
  • Missed notification: The employer has missed the obligatory notification of the employee's remaining vacation.
  • Cases of illness: Due to a prolonged illness, the employee was unable to fully take the leave entitlement.
  • Liabilities incurred by the employer: Due to pivotal events such as customer campaigns, a vacation ban was imposed by the employer.

When does the entitlement to remaining leave expire?

Even if the remaining leave is carried over into the new year, those days must be used within the first three months of the new year, i.e. by March 31 at the latest. Only in very rare cases can the remaining leave be granted beyond this limit. In these cases, the employee must agree to an extension of the deadline with the employer if this has not already been contractually agreed.

What employers have to keep in mind

In the case of unused vacation days within a year, employers are legally obliged to record the number of these unused vacation days and include them in the balance sheet. This is because although the costs are incurring only in the following year, they are in fact part of the previous year's accounts. This difference must be recorded.

A vacation provision is therefore calculated based on the vacation pay of the respective employee and the number of remaining vacation days. Various factors speak for or against such a provision. For example, in a year in which a lot of profit was made, the employer can reduce this by making provisions. This would result in a lower tax burden.

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