Holiday in labour law: judicial settlement does not waive statutory minimum leave

In settlements before the labour courts, it is common practice to record that an employee’s holiday has been “taken and granted in natura”. The Federal Labour Court has now drawn a line under this practice in its judgment of 3 June 2025: statutory minimum leave cannot effectively be waived, not even through a judicial settlement.

The case

In the case at hand, an employee had been unable to take his holiday in 2023 due to illness. In a judicial settlement, he and his employer agreed to terminate the employment relationship against payment of €10,000. The settlement contained a clause stating that holiday had already been “granted in natura”, although the employee had repeatedly pointed out during negotiations that statutory minimum leave cannot validly be waived.

Subsequently, the employee claimed compensation for seven days of holiday in the amount of €1,615.11 plus interest. Both the lower courts and the Federal Labour Court ruled in favour of the employee.

The Federal Labour Court’s decision

The Court clarified:

• Statutory minimum leave can neither be excluded nor waived in advance (§ 13 (1) sentence 3 of the Federal Holiday Act – BUrlG).
• Such a clause is also invalid in a judicial settlement. Nor does it amount to a permissible “factual settlement” to which § 13 (1) sentence 3 BUrlG would not apply. A factual settlement requires a genuine uncertainty about the existence of a holiday entitlement, which the agreement then resolves. This was not the case here, as the employee had been continuously unfit for work.
• The claim for holiday compensation arises automatically upon termination of the employment relationship if the holiday can no longer be taken due to illness (§ 7 (4) BUrlG).
• An employee may only waive additional contractual or collectively agreed holiday entitlements, not statutory minimum leave.

The employer could not rely on the employee’s agreement to the clause. In the Court’s view, the employer was not entitled to rely on the validity of a provision that was manifestly unlawful.

Non-waivable: statutory minimum leave

Statutory minimum holiday is mandatory. It can only be satisfied by actual release from work or, upon termination of employment, through financial compensation. Any waiver – including in the context of a judicial settlement – is invalid during the employment relationship.