Now that the holidays are over for most people, it’s a good idea to check your employees’ holiday balances. Have they taken too many days’ holiday?
Legal
The legal principle is that employees accrue annual leave during the calendar year. Often, the collective agreement or employment contract specifies a certain number of days’ annual leave per calendar year (for example, 28 days’ annual leave per year).
However, as mentioned, these holiday entitlements must be accrued over the course of the year. For every hour an employee works, they accrue a proportionate number of holiday hours. This means that, in principle, as an employee, you do not have all your holiday entitlement at your disposal immediately on 1 January of the year. In practice, however, it is often the case that employees can simply take days off based on the number of annual leave days allocated to them on an annual basis, regardless of whether these have actually been accrued or not.
No longer in service
The problem that can arise in this context is that, when an employee resigns or is made redundant, or when an employment contract is not renewed, the employee may have a negative holiday balance. As an employer, you would expect these excess holiday hours to be settled in the final pay statement.
And that’s where things often go wrong. It is, in fact, the employer’s responsibility to ensure that their employees only take holiday for the hours they have already accrued. Of course, in practice, this is easier said than done.
The employer is responsible
By allowing your employees to go on holiday even though they have not yet accrued sufficient holiday entitlement, you, as an employer, run the risk of being unable to offset the negative holiday balance against the final settlement when their employment ends. After all, it is your responsibility to check the holiday balance when a holiday request is made.
If an employee’s request would result in them having a negative balance of holiday hours, you could, in principle, refuse the request; otherwise, these costs may ultimately be borne by you as the employer.
Employment contract
To avoid the risk mentioned above, it is advisable to include a clause in the employment contract stating that the employer is entitled to offset any excess holiday hours taken at the end of the employment relationship. Alternatively, whenever an employee submits a holiday request and has not accrued sufficient leave, the confirmation of this request should state that any excess holiday hours taken will be offset if the employment relationship ends and a negative holiday balance remains at that time. It may also be the case that any applicable collective labour agreement contains such a provision for offsetting.