Holiday pay: your right or just a nice bonus? Answers for employees!

Holiday pay: your right or just a nice bonus? Answers for employees!

In Germany, employees are entitled to regular wages during their vacation, while the payment of vacation pay is a voluntary benefit from the employer. As the South German newspaper reported, an entitlement to holiday pay is not anchored in law and rather depends on contractual provisions. Employers have the freedom to decide on the payment of holiday pay at their own discretion. This often happens in the same way as other performance-related payments such as Christmas bonuses or anniversary payments.

Holiday pay is typically paid in June or July and there is no statutory amount, meaning it can vary widely. However, the exact conditions and entitlements can be set out in collective agreements, employment contracts or company agreements. In addition, labor law specialist Kathrin Schulze Zumkley has noted that repeated and unconditional payments of holiday pay can, under certain circumstances, give rise to a legal claim, which is known as operational practice.

Contractual basis for holiday pay

The entitlement to holiday pay must be regulated contractually, either in an individual contract or through collective agreement regulations. Employers should not present these payments as a fixed obligation to avoid claims. According to the information from Haufe Regulations regarding the payment of holiday pay during parental leave may also vary. As a rule, however, there is no entitlement during this time.

A company practice can arise if the employer has paid holiday pay without reservation for at least three years. Conversely, such an exercise can also be repealed by company agreements as long as the basic rights of the employees are safeguarded.

Other aspects of holiday pay

Holiday pay is usually used to cover additional expenses during the holiday and is subject to social insurance contributions and full payroll tax. It is noteworthy that holiday pay cannot be seized as part of a wage garnishment as long as it does not exceed the usual amounts. Employees are entitled to vacation even if they are permanently unable to work; This entitlement to holiday pay is carried over up to 15 months after the end of the holiday year.

The employer is obliged to pay holiday pay as soon as the holiday pay is due and the corresponding holiday is taken. However, the statutory reduction in holiday pay is permitted during periods of incapacity for work, which can be important for many employees.