Overview of the Principles of Annual Leave Accrual, Utilization, and Expiration
Overview of the Principles of Annual Leave Accrual, Utilization, and Expiration
The new calendar year has begun, which means that by the end of the first quarter at the latest, employers must confirm the holiday schedule and make it known to their employees. The holiday schedule is compiled for each new calendar year, taking into account the reasonable wishes of employees and in agreement with the employer, based on the specific nature and characteristics of the company's work. In this light, it is appropriate to recall the principles of the accrual, utilization, and expiration of the main vacation.
Accrual and Use of the Main Vacation
According to the Employment Contracts Act (hereinafter referred to as the ESA) § 55, it is presumed that the employee's annual main vacation is at least 28 calendar days, unless the employer and employee have agreed on more vacation days, or the law stipulates otherwise (see also ESA § 56-§ 58).
Every employee under an employment contract accrues at least 28 main vacation days in one calendar year, including those working part-time. It is important to note that the 28 calendar days accrue only for the time worked during the entire calendar year from January to December. A new employee is entitled to request a vacation only after having worked for the employer for at least six months.
Example: An employee started work on September 11, 2023. In this case, the number of their main vacation days is calculated as follows: number of main vacation days / number of days in 2023 * number of days worked. From September 11 to December 31, there are 112 calendar days. In this example, the employee accrues 8.59 vacation days for 2023 (28/365*112), but the right to request a vacation arises only in March 2024. The actual number of main vacation days is calculated to two decimal places.
It is a common misconception that 2.33 vacation days accrue per month, using the calculation 28/12 (number of main vacation days / 12 months). However, this is not correct, as each month has a different number of calendar days. For example, in January, an employee accrues 2.38 (28/365*31) vacation days, but in February, only 2.15 (28/365*28) days. For months with 30 calendar days, 2.30 vacation days accrue.
Note that in 2024 there are a total of 366 calendar days, as February has 29 calendar days. Thus, in calculating vacation days, for instance, in January 2024, 2.37 days accrue (28/366*31) and in February, 2.22 days (28/366*29).
It should be kept in mind that an already confirmed vacation schedule can only be changed by mutual agreement. If the vacation is not marked in the vacation schedule, the employee must notify the employer of the desire to use the vacation in a form that can be reproduced in writing 14 calendar days before the start of the vacation.
An employee must use at least 14 consecutive calendar days of vacation, and the employer has the right to refuse to divide the main vacation into parts shorter than seven days (ESA § 68 (5)).
However, the employer must take into account some exceptions stipulated by law. ESA § 69 (7) lists five exceptions under which an employee has the right to demand the main vacation at a time suitable for them:
Expiration and Suspension of Main Vacation
Unused parts of the vacation are carried over to the next calendar year. Note that the claim for the main vacation expires one year after the end of the calendar year for which the vacation is calculated (ESA § 68 (5) and (6)).
In this context, it is important to note and take into account the decision of the European Court. According to this, if the employer has not actually, for reasons attributable to the employer (e.g., due to a high workload in the company), allowed the employee to take the unused main vacation days within the expiration period, or has not proactively informed the employee about the expiration of vacation days, then the vacation days do not expire. Read more about this here.
Example: The employee's remaining main vacation as of December 31, 2022, was 18 days. The employee accrued an additional 28 vacation days for 2023. In total, the employee had 46 main vacation days to use in 2023. The employee used 14 main vacation days in 2023, and as of December 31, 2023, the remaining main vacation is 32 days. However, in the new calendar year, the main vacation for 2022 begins to expire, i.e., as of January 1, 2024, the employee's 4 main vacation days from 2022 expire, and in 2024 the employee has a total of 56 calendar days to use (28 calendar days for 2024 and an additional 28 main vacation days from 2023).
Vacation expiration is suspended while the employee takes maternity leave, paternity leave, adoption leave, or parental leave, as well as if the employee is in military or alternative service (ESA § 68 (6)).
Our payroll specialists' daily work involves explaining the principles of the accrual and calculation of main vacation to our clients, taking into account the specifics of the companies themselves. If you want your company's vacation pay to always be correctly calculated on time and in accordance with the law, or if you have questions about payroll, contact our payroll specialists and request a consultation today.
Accrual and Use of the Main Vacation
According to the Employment Contracts Act (hereinafter referred to as the ESA) § 55, it is presumed that the employee's annual main vacation is at least 28 calendar days, unless the employer and employee have agreed on more vacation days, or the law stipulates otherwise (see also ESA § 56-§ 58).
Every employee under an employment contract accrues at least 28 main vacation days in one calendar year, including those working part-time. It is important to note that the 28 calendar days accrue only for the time worked during the entire calendar year from January to December. A new employee is entitled to request a vacation only after having worked for the employer for at least six months.
Example: An employee started work on September 11, 2023. In this case, the number of their main vacation days is calculated as follows: number of main vacation days / number of days in 2023 * number of days worked. From September 11 to December 31, there are 112 calendar days. In this example, the employee accrues 8.59 vacation days for 2023 (28/365*112), but the right to request a vacation arises only in March 2024. The actual number of main vacation days is calculated to two decimal places.
It is a common misconception that 2.33 vacation days accrue per month, using the calculation 28/12 (number of main vacation days / 12 months). However, this is not correct, as each month has a different number of calendar days. For example, in January, an employee accrues 2.38 (28/365*31) vacation days, but in February, only 2.15 (28/365*28) days. For months with 30 calendar days, 2.30 vacation days accrue.
Note that in 2024 there are a total of 366 calendar days, as February has 29 calendar days. Thus, in calculating vacation days, for instance, in January 2024, 2.37 days accrue (28/366*31) and in February, 2.22 days (28/366*29).
It should be kept in mind that an already confirmed vacation schedule can only be changed by mutual agreement. If the vacation is not marked in the vacation schedule, the employee must notify the employer of the desire to use the vacation in a form that can be reproduced in writing 14 calendar days before the start of the vacation.
An employee must use at least 14 consecutive calendar days of vacation, and the employer has the right to refuse to divide the main vacation into parts shorter than seven days (ESA § 68 (5)).
However, the employer must take into account some exceptions stipulated by law. ESA § 69 (7) lists five exceptions under which an employee has the right to demand the main vacation at a time suitable for them:
- For a woman immediately before and after maternity leave and for the other parent during the woman's maternity leave;
- For a parent immediately after parental leave;
- For a parent raising a child under seven years of age;
- For a parent raising a child between seven and ten years old – during the child's school holidays;
- For a school-age minor – during school holidays.
Expiration and Suspension of Main Vacation
Unused parts of the vacation are carried over to the next calendar year. Note that the claim for the main vacation expires one year after the end of the calendar year for which the vacation is calculated (ESA § 68 (5) and (6)).
In this context, it is important to note and take into account the decision of the European Court. According to this, if the employer has not actually, for reasons attributable to the employer (e.g., due to a high workload in the company), allowed the employee to take the unused main vacation days within the expiration period, or has not proactively informed the employee about the expiration of vacation days, then the vacation days do not expire. Read more about this here.
Example: The employee's remaining main vacation as of December 31, 2022, was 18 days. The employee accrued an additional 28 vacation days for 2023. In total, the employee had 46 main vacation days to use in 2023. The employee used 14 main vacation days in 2023, and as of December 31, 2023, the remaining main vacation is 32 days. However, in the new calendar year, the main vacation for 2022 begins to expire, i.e., as of January 1, 2024, the employee's 4 main vacation days from 2022 expire, and in 2024 the employee has a total of 56 calendar days to use (28 calendar days for 2024 and an additional 28 main vacation days from 2023).
Vacation expiration is suspended while the employee takes maternity leave, paternity leave, adoption leave, or parental leave, as well as if the employee is in military or alternative service (ESA § 68 (6)).
Our payroll specialists' daily work involves explaining the principles of the accrual and calculation of main vacation to our clients, taking into account the specifics of the companies themselves. If you want your company's vacation pay to always be correctly calculated on time and in accordance with the law, or if you have questions about payroll, contact our payroll specialists and request a consultation today.