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Rest and recovery are crucial factors that affect an employee's physical and mental health. Fall is in full swing now, and hopefully, all employees have recharged their energy during the summer. Employers have a clear responsibility to ensure that employees take their vacation in the form of time off, especially during the summer period. Most companies are aware of this and place great importance on planning for the summer. However, many forget to follow up on the summer that has passed and only notice any discrepancies when the vacation year is coming to an end, at which point the opportunity to take time off for the current vacation year is very limited. In addition to leading to an increased administrative burden, tracking vacation time is an important part of a company’s sustainability efforts.
Systematic Follow-up on Vacation Days
A lot can happen over the summer – some employees may have fallen ill or taken another type of leave instead of vacation time. Perhaps an employee had to cut their vacation short to return to work for some reason. Therefore, regular checks of vacation balances should be part of the company's sustainability strategy to ensure that all employees get the rest they need – this shows care for their health and well-being.
The consequences of not following up on vacation days can vary. Firstly, it creates some administrative work at the end of the vacation year. Accumulating a large vacation liability is not good for the company's financial results. Additionally, vacation liabilities are recalculated during salary revisions, and the company risks fines and penalties if it does not comply with the vacation law and applicable collective agreements.
But most importantly, it can lead to overworked staff, increased sick leave, and a deteriorating work environment.
What Does the Vacation Law Say?
According to the vacation law, an employee is entitled to 25 days of leave. The employee must be allowed to take these during four consecutive weeks between June 1st and August 31st. Vacation planning should be done in consultation with your employees, but if you cannot agree, it is always the employer who has the final say.
The employer is obligated to ensure that employees take at least 20 vacation days per year. If the employee still has days left after taking their 20 days, they have the right to save the remaining days for the following year. By law, vacation days can be saved for up to five years. If certain criteria are met, they can be saved for an additional year.
However, there is a limitation to the rule regarding saved vacation days: it is not allowed for an employee to save vacation days in a year when they are using saved days. This means that the employee must use all paid vacation days for the year before the saved days can be used. Remember, the requirement to take at least 20 days applies only to paid days, not unpaid or advance vacation days.
Can Unused Vacation Days Be Paid Out?
A common question employers face is whether they can pay out unused vacation days in cash. Often, some employees feel they cannot or do not want to take their 20 vacation days during the year. However, the law is very clear: vacation is for rest and recovery and cannot be replaced with money. This rule cannot be waived, even if the employee wishes to receive cash instead of time off.
However, there are some exceptions where vacation days can be paid out:
- If an employee has been ill all year and could not take their vacation
- If an employee leaves the company and has unused or saved vacation days
- In the case of a fixed-term employment that lasts less than three months
Even saved vacation days are intended to be taken as time off. The purpose of this regulation is to ensure that vacation is used for recovery and not as a form of savings, and to prevent employers from buying their way out of the responsibility of providing time off.
Contract Terms, Collective Agreements, and Procedures
Although the vacation law forms the basis for how vacation is regulated, as an employer you can, in some respects, agree on other terms with individual employees or be part of a collective agreement with different provisions. Keep in mind that it is always about providing better terms than the law – it is not permissible to worsen what the law stipulates.
Our Recommendations
Make sure you have procedures that support the regulations you follow, and also establish a routine for checking vacation balances after the main vacation period, so that a plan can be made with an employee who has remaining vacation days. Be proactive in the fall to avoid situations where too many unused days remain at the end of the vacation year. Highlight these procedures as part of the company's sustainability efforts!
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