Holiday entitlement despite long-term illness: transfer, expiry and practical pitfalls

Long-term illnesses regularly raise complex issues in labour law - especially when it comes to leave.

For employers, there is a Significant riskOutstanding holiday entitlements can accumulate over years and lead to high compensation claims in the event of termination of the employment relationship.

The current case law of the ECJ and BAG has also significantly tightened the requirements.

Why holidays after a long illness are a risky topic

In principle, the following applies:
Holiday entitlement continues to accrue even during illness.

In practice, this means that considerable holiday entitlements can accumulate over longer periods of time.

Risks for employers:

• High financial burden upon termination (holiday pay in lieu)
• Lack of transparency about existing claims
• Complex legal requirements for forfeiture

The assumption that „holidays expire automatically“ is therefore simply wrong in many cases.

Principle: Illness protects holiday - but not indefinitely

The central principle is:
Illness prevents the forfeiture of holiday - but only within certain limits.

15-month limit

According to case law, leave can generally be taken in the event of continuous incapacity to work. 15 months after the end of the holiday year expire.

In concrete terms, this means
Leave from 2024 can remain in place until 31 March 2026 if the illness continues.

Important case law and its effects

The current case law of the European Court of Justice and the Federal Labour Court has a decisive influence on the handling of holiday entitlements in the event of long-term illness:

ECJ (22/09/2022 - C-518/20)

The ECJ provides for a 15-month limit, but makes it clear:

Holidays are generally forfeited only if the employer has been actively informed beforehand and has of the holiday. No forfeiture without notice - even in the event of illness.

BAG (31.01.2023 - 9 AZR 107/20)

The BAG ruling of 31 February 2023 implements and confirms the requirements of the ECJ:

• The 15-month period also applies in principle if the employer has not previously informed the employee of the holiday entitlement and its expiry, as the illness is the sole cause of the non-utilisation and not the employer's lack of obligation to cooperate

BAG (15.07.2025 - 9 AZR 198/24)

The BAG has stated:

• The parties to an employment contract can deviate from the 15-month period by contractual agreement and stipulate that the statutory minimum leave is retained in the event of incapacity to work due to illness. 

Whether and when holiday expires therefore depends on the interaction Duty to inform, illness and contractual regulations There is no automatism.

Obligation to provide information: When employers must take action

A central point is the so-called Obligation to co-operate or provide information.

Employers must provide cumulative and transparent information at the end of a calendar year:

• point out existing holiday entitlements
• request utilisation
• draw attention to the impending decline

Only if these obligations are fulfilled can holidays be forfeited. 

No forfeiture without notice - This principle remains central. 

Practical pitfalls and recommendations for action

Typical errors in practice:

• No systematic holiday documentation
• Missing or delayed information to employees
• incorrect assumptions about automatic expiry

Recommended:

• Structured notification process (annual)
• clean documentation
• Clear internal responsibilities

Conclusion

Holiday entitlement in the event of long-term illness is one of the most complex issues in labour law.

Current case law clearly shows this:
The forfeiture of leave is not automatic, but is linked to specific conditions.

Employers should therefore review and actively manage their processes in order to avoid legal and financial risks.

If you have any questions on this or other topics, please contact us - we will be happy to advise you.

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