Remaining Annual Leave (Resturlaub) – Definition, Forfeiture & HR Tips

Remaining annual leave (Resturlaub) is the portion of an employee's yearly holiday entitlement that was not taken during the current calendar year and can, under certain conditions, be carried over into the following year. As a general rule, any unused leave expires on 31 December – unless urgent operational or personal reasons justify a carry-over to no later than 31 March of the following year. Importantly: since a landmark ruling by the Court of Justice of the European Union (CJEU) in 2018, leave may only lapse if employers have actively and in good time informed employees of the imminent forfeiture.

What Is Remaining Annual Leave?

Remaining annual leave refers to the portion of an employee's statutory or contractual holiday entitlement that has not been used by the end of the calendar year. It arises when employees do not take all of their leave in the current year – whether due to illness, high workload, or operational requirements.

One important distinction must be kept in mind: the statutory minimum leave under § 3 of the Federal Leave Act (Bundesurlaubsgesetz, BUrlG) amounts to 24 working days per year (based on a six-day working week) or 20 working days for a five-day working week. In addition, employment contracts or collective agreements (Tarifverträge) may provide for contractual additional leave. Statutory minimum leave and contractual additional leave can be subject to different forfeiture and carry-over rules – a distinction that frequently causes confusion in practice.

When Does Remaining Annual Leave Expire? Deadlines and Exceptions

The Default Rule: Expiry on 31 December

Under § 7 para. 3 BUrlG, leave must be taken within the current calendar year. Unused leave generally expires on 31 December. The legislator thereby established the principle that leave serves the purpose of rest and recuperation and should be taken promptly.

Carry-Over to 31 March: When Is This Permitted?

A carry-over of remaining leave to the following year is permissible under § 7 para. 3 sentence 2 BUrlG only under two conditions: if urgent operational reasons (e.g. unforeseen project requirements) or personal reasons (e.g. a planned but unrealisable break) justify it. Carried-over leave must then be taken by no later than 31 March of the following year – otherwise it expires at that date.

Special Case: Illness – The 15-Month Rule

When employees are unable to take their leave due to prolonged illness, a special rule applies: the CJEU established in its case law, confirmed and applied by the Federal Labour Court (Bundesarbeitsgericht, BAG) for Germany, that holiday entitlements in cases of long-term illness do not expire until 15 months after the end of the leave year. Leave accrued in 2024 would therefore, in the event of sustained illness, expire at the earliest on 31 March 2026 – not already on 31 December 2024 or 31 March 2025.

Special Case: Parental Leave

During parental leave (Elternzeit), employers are entitled to reduce the holiday entitlement proportionately – by one-twelfth for each full month of parental leave (§ 17 of the Federal Parental Allowance and Parental Leave Act, BEEG). Leave that was not taken prior to parental leave may be requested upon the employee's return. Here too, employers are well advised to initiate the conversation early and to document any outstanding entitlements transparently.

The Employer's Duty to Notify – The Underestimated CJEU Ruling

This is the point most frequently overlooked in practice: in its rulings C-619/16 (Kreuziger) and C-684/16 (Max-Planck-Gesellschaft) of 2018, the CJEU clarified that leave may only lapse if employers have notified employees in good time and transparently that their leave is at risk of expiring. The Federal Labour Court confirmed and refined this case law in its subsequent rulings (including 9 AZR 541/15 and 9 AZR 116/21).

What does this mean in practice? Employers who fail to send such notifications risk that holiday entitlements do not expire even after 31 December or 31 March – and continue to exist as valid claims. It is advisable to send a written notice to all employees no later than October or November, stating the current remaining leave balance and drawing attention to the imminent forfeiture.

Remaining Leave Upon Termination: What Applies?

Holiday Pay in Lieu – Financial Compensation Instead of Leave

When an employment relationship ends and remaining leave has not yet been taken, it must be compensated financially. This so-called holiday pay in lieu (Urlaubsabgeltung) is governed by § 7 para. 4 BUrlG and applies both to ordinary and summary dismissal – regardless of which party terminates the employment.

Important: during an ongoing employment relationship, there is no entitlement to a cash payment in lieu of actual leave days. Conversion into money is only permissible upon termination of the employment relationship.

Calculating Holiday Pay in Lieu

The calculation is based on the average daily earnings:

Formula: (gross monthly salary × 3) ÷ 65 × number of remaining leave days

Alternative (simplified): gross monthly salary ÷ 21.75 (average working days) × remaining leave days

For a gross salary of €3,000 and 5 remaining leave days, the compensation amounts to approximately €690 gross. The exact calculation should be verified on a case-by-case basis, as variable remuneration components may need to be included.

Calculating Remaining Leave: Practical Examples

Full-Time Example

An employee with 30 days of annual leave per year and a five-day working week joins on 1 April. Her pro-rated annual leave entitlement is: 30 days × (9 months ÷ 12 months) = 22.5 days (rounded up: 23 days). If she has taken 18 days by the end of the year, 5 days remain as carry-over leave.

Part-Time Example

For part-time employees, the holiday entitlement is calculated proportionately based on the number of working days per week. The formula is: (annual leave days ÷ 5 working days) × actual weekly working days.

Example: 20 leave days, three-day working week → 20 ÷ 5 × 3 = 12 leave days per year. This entitlement is equivalent to that of a full-time employee, relative to the respective working time.

Practical Tips for HR Professionals

Managing remaining annual leave is one of the most common operational challenges in day-to-day HR work. Clear internal policies and proactive communication help to avoid disputes.

Year-End Management Checklist:

• October/November: Notify all employees in writing of their current remaining leave balance and the imminent forfeiture (duty to notify!)
• Document transparently: Record the remaining leave balance for each person in writing
• Review internal policies: Are there extended carry-over rights under a collective agreement or works agreement (Betriebsvereinbarung)?
• Handle special cases separately: Assess illness, parental leave, and part-time individually
• Plan early: Begin leave planning for the following year in autumn to avoid year-end accumulation

References to Health in the Workplace should not be overlooked here: accumulated remaining leave is often a sign of chronic overload – an early warning signal for HR professionals. How companies connect Employer Branding with fair leave practices is likewise an underappreciated topic.

Frequently Asked Questions About Remaining Annual Leave

When does remaining annual leave expire?

As a general rule, remaining annual leave expires on 31 December of the leave year (§ 7 para. 3 BUrlG). A carry-over to 31 March of the following year is possible where urgent operational or personal reasons exist. Crucially: since the 2018 CJEU ruling, leave only lapses if employers have notified employees in good time of the imminent forfeiture. Without this notification, the entitlement remains valid.

Does remaining leave expire during illness?

No – a special rule applies in cases of prolonged illness. Holiday entitlements in such cases do not expire until 15 months after the end of the leave year. Leave accrued in 2024 would therefore, in the event of continued illness, expire at the earliest on 31 March 2026.

What happens to remaining leave upon termination?

Untaken leave must be financially compensated (§ 7 para. 4 BUrlG). This applies regardless of which party issued the notice of termination. Payment is based on the average daily earnings multiplied by the number of remaining leave days.

Are employers required to notify employees of impending leave forfeiture?

Yes – this has been clearly established since the CJEU rulings C-619/16 and C-684/16 (2018) and the subsequent BAG case law. Employers must inform employees in good time, clearly and transparently. If this notification is absent, leave does not lapse – not even after 31 March of the following year. Recommendation: send notification letters no later than October or November.

Can the employer refuse to grant remaining leave?

Generally no. The entitlement to leave is a statutory right of employees. Employers may, for urgent operational reasons, influence the timing of leave – but they cannot cancel the entitlement itself. Where operational grounds are invoked, these must be stated concretely and be comprehensible.

How is remaining leave calculated for part-time employees?

The holiday entitlement for part-time employees is calculated proportionately based on the number of working days per week. Formula: (annual leave days ÷ 5 working days) × actual weekly working days. An employee working three days per week with a contractual entitlement of 25 days would therefore receive 25 ÷ 5 × 3 = 15 leave days.

What is the difference between remaining annual leave and holiday pay in lieu?

Remaining annual leave refers to the outstanding holiday entitlement that must be taken as actual time off during an ongoing employment relationship. Holiday pay in lieu (Urlaubsabgeltung) is the financial compensation of this entitlement – and is only permissible upon termination of the employment relationship. Converting leave into a cash payment while the employment continues is not permitted under German law.

How long does remaining leave remain valid during parental leave?

During parental leave, employers may reduce the holiday entitlement by one-twelfth for each full month of parental leave (§ 17 BEEG). Untaken leave accrued prior to parental leave may be requested upon return. The forfeiture rules apply analogously – for longer periods of parental leave, individual clarification with a specialist employment lawyer is recommended.

Conclusion

Remaining annual leave is more than an administrative matter: incorrectly handled forfeiture deadlines can prove costly for companies – through retrospective claims, compensation payments, or employment law disputes. The key points in summary: leave generally expires on 31 December, carry-over to 31 March is possible under certain conditions, and the 15-month rule applies in cases of illness. The duty to notify is decisive: employers who fail to alert employees in good time to imminent leave forfeiture risk the entitlement remaining in force indefinitely.

HR professionals are well advised to approach this topic proactively: with transparent communication, clear internal guidelines, and structured year-end planning.

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Sources

• Federal Leave Act (Bundesurlaubsgesetz, BUrlG), in particular §§ 1, 3, 7, 11. Federal Ministry of Justice. https://www.gesetze-im-internet.de/burlg/
• CJEU rulings C-619/16 (Kreuziger) and C-684/16 (Max-Planck-Gesellschaft). Court of Justice of the European Union, 2018. https://curia.europa.eu
• BAG ruling 9 AZR 541/15 – Employer's duty to notify of impending leave forfeiture. Federal Labour Court, 2017. https://www.bundesarbeitsgericht.de
• BAG ruling 9 AZR 116/21 – Forfeiture of holiday entitlements. Federal Labour Court, 2022. https://www.bundesarbeitsgericht.de
• Federal Parental Allowance and Parental Leave Act (BEEG), § 17. Federal Ministry of Justice. https://www.gesetze-im-internet.de/beeg/__17.html
• Federal Ministry of Labour and Social Affairs (BMAS): Information on leave law. https://www.bmas.de/DE/Arbeit/Arbeitsrecht/urlaub.html