Vacation Law 2026: Employers’ Obligations to Inform, Forfeiture and Illness

Vacation law regularly raises questions in day-to-day business practice. Key issues include the forfeiture of vacation entitlements and the applicable limitation periods, illness during vacation, calculating entitlements for part-time employees, and handling remaining vacation entitlements for employees on long-term sick leave.

A distinction must also often be made between statutory minimum leave and additional leave under an employment contract or collective bargaining agreement. Statutory minimum leave is subject to the specific requirements regarding employers’ obligations to inform, forfeiture and limitation periods explained below. For additional leave, however, different rules may be agreed under certain conditions. The specific provisions of the employment contract, collective bargaining agreement or works agreement are decisive.

As a general rule, vacation must be granted and taken in the current calendar year. However, unused statutory minimum leave does not automatically lapse at the end of the calendar year. Employers must generally inform employees specifically of their remaining vacation entitlement, actively ask them to take their vacation and explain that it may otherwise be forfeited if not taken in time. This information must be provided sufficiently early to give employees a genuine opportunity to take their vacation. A general reference to the statutory vacation rules or simply displaying the vacation balance in the HR system will generally not suffice. Employees should be able to identify how many vacation days remain available, when they must be taken and what may happen if they are not taken. Employers are therefore advised to establish a standardized, verifiable procedure. In the event of a dispute, it should be possible to demonstrate when and how employees were informed of their remaining vacation entitlements.

Calculating vacation entitlements can also present practical challenges. As a general rule, the decisive factor is not the number of hours worked per week, but the number of days on which the employee is required to work. An employee with a vacation entitlement of 30 days who works three rather than five days per week is entitled to 30 ÷ 5 × 3 = 18 vacation days. These 18 days likewise allow the part-time employee to take a total of six weeks of vacation per year. What matters is therefore the duration of the vacation, not the absolute number of vacation days. Part-time employees who work on the same days as full-time employees, but for fewer hours each day, have the same vacation entitlement. Particular care is required where working days vary, employees work shifts or employees move between full-time and part-time work. Where working days vary or shift systems apply, the calculation is based not on an individual week, but on the period over which the work pattern repeats and the regular weekly working hours are reached on average. Depending on the system, reference periods may range from two weeks to one calendar year. For shift workers, vacation is calculated by comparing the number of scheduled shifts per year with the number of scheduled working days per year for an employee working a five-day week. If the number of working days changes during the calendar year, for example when an employee moves from full-time to part-time work, the vacation entitlement must be calculated separately for each period and then added together. An employee with 30 vacation days who works full-time on a five-day week from January to August and three days per week from September is entitled to 30 × 173 ÷ 260 = approximately 20 vacation days for the first eight months and 30 × 54 ÷ 260 = approximately 6 vacation days for the remaining four months. This gives a total entitlement of approximately 26 vacation days. Vacation already accrued during full-time employment but not yet taken must not be reduced proportionately because the employee moves to part-time work. Conversely, when working hours increase, only the period following the increase is recalculated; the preceding part-time period is not adjusted retrospectively.

If an employee becomes ill during previously approved vacation and provides proper evidence of their incapacity for work, the corresponding days of illness are not deducted from their vacation entitlement. Those vacation days remain available and can generally be taken at a later date.

Special rules apply to employees on long-term sick leave: where an employee is continuously unable to work due to illness, vacation accrued in a given vacation year does not lapse at the end of that year or on March 31 of the following year. Instead, it generally lapses 15 months after the end of the vacation year, i.e. on March 31 of the second following year. This prevents vacation from accumulating indefinitely without causing it to lapse prematurely. However, for vacation to lapse at the end of this period, employers must generally have fulfilled their obligations to inform employees (see above). Vacation may lapse without such notification only if the incapacity for work begins so early in the vacation year that the employer had no opportunity to provide the information. More favorable provisions in collective bargaining agreements or employment contracts may preserve vacation entitlements beyond the 15-month period.

A clear and transparent approach to vacation entitlements helps prevent uncertainty and subsequent disputes. Particularly where remaining vacation from previous years, long-term sick leave or changes in working hours are involved, employers should carefully assess which vacation entitlements remain outstanding and how they should be handled.