In the midst of the vacation season, many employers in Germany are prompted to address old and new questions surrounding the issue of vacation. This Insight series “On your mark! Get set! Vacation!” is designed to help employers keep track of recurring issues and answer important questions about German vacation law. In Part 3, we look at:
Must-Knows upon Termination of Employment
Question 1: Must a terminated employee be granted the full annual leave entitlement?
Again, it depends on the individual case. The decisive factor is the point in time at which the employee leaves the employment relationship. If an employee leaves the employment relationship in the first half of the calendar year (ie., by June 30), vacation will only be granted on a pro rata basis—one-twelfth of the annual vacation for each full month of the existence of the employment relationship (§ 5 para. 1 lit. c BUrlG). In this case, the annual leave entitlement accrued on January 1 is reduced retroactively.
If, on the other hand, the employment relationship continues at least until July 1 of the respective calendar year, the employee must be granted the full annual leave entitlement.
Question 2: Does a leave of absence after notice of termination affect existing vacation entitlements?
Yes, a declaration of release from work can cause vacation entitlements to lapse. However, this applies only if the release is irrevocable. In this case, the employee can use the free time to which they are entitled on the basis of the vacation entitlement without restriction and in a self-determined manner. If the employee is only conditionally released from the obligation to perform work, the vacation entitlement is not fulfilled. This is because in this case the employee must expect to be called back to work at any time during the leave of absence, and is thus restricted in the self-determined use of this time.
Question 3: What information must be included in a leave certificate?
The leave certificate must include the name of the employee, the duration of the employment relationship in the current calendar year, and the periods of leave granted or compensated. In this context, the statutory minimum vacation is not (only) to be taken into account, but also the vacation entitlement actually received. The new employer can therefore also benefit from a higher vacation entitlement with the previous employer. In the construction industry, there are also special regulations via the system of vacation and supplementary pension funds that prevent too much or too little vacation from being granted in the event of a change of employer.