Holiday Pay: Preconditions, Amounts, Labour Law - Working-in-Germany
 
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Holiday Pay


Definition, Explanation

During an annual holiday employees continue to receive their income. In German labour law, this is the so-called Urlaubsentgelt (holiday allowance), according to § 11 BUrlG (the German Federal Leave Act), respectively so-called Entgeltfortzahlung (continued remuneration) for public servants. However, the term “Urlaubsgeld” also refers to a holiday benefit or bonus as additional payment, like the Christmas bonus.

Employees have no legal right to additional holiday benefits. However, an employee can be entitled to an additional holiday benefit on the basis of:

Contracts, agreements or written statements set out the terms and conditions for holiday benefits, such as the rate of holiday benefits, pay back clauses and length of employment.

Holiday benefits are usually paid once a year in addition to the employees’ regular salary, and are often paid out in May or June. A month’s salary is the usual guideline for the amount of holiday benefit an employee receives.

If a company provides an additional holiday benefit, then it must be paid to all employees, whether they are full-time employees, part-time workers, Minijobbers or marginal employees. Individual amounts of holiday pay are proportional to the working hours stated in the employment contract. Although such general entitlements might be established in a company, they can be void or reduced for a certain employee if:

  • >the required duration of company membership has not been reached
  • dismissal has ended the employment
  • a holiday entitlement becomes void due to sickness
  • the family status or the number of children are factors affecting the amount of holiday payments
  • the working hours are one factor for calculating the amount

In case of dismissal, an employee must pay back any holiday money he or she has received, but only in proportion to his or her reduced entitlement.

Tips, Checklist

  • Ask your employer which holiday pay regulations apply to you, if they are not set out in your employment contract. Companies often list conditions and regulations about payments and additional benefits on their intranets
  • Instead of holiday pay, an employee may be entitled to convalescence benefits (Erholungsbeihilfe), which are not subject to social insurance deduction. Instead, they are taxed at 25 % and the tax is deduced by the employer. Ceiling amounts are 156 Euros per employee, 104 for an employee’s spouse, and 52 Euros for every child of the employee
  • Holiday money is regarded as income and subject to taxation and social insurance contributions must also be paid
  • If you are a Minijobber, make sure your income does not exceed the 400 Euros limit when you receive additional holiday payments; otherwise your entire income is subject to tax and social-insurance contributions
  • If you become unemployed, holiday payments must be declared as income. Unemployment benefit I amount is determined on the basis of income including all special payments or benefits. But with Hartz IV holiday payments are not taken into account



Last update: 08/05/2010
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