# Paying for paid leave: Calculation methods

14/11/2018 by Hicham HMICHE​

## Pay vacation pay as an allowance

At the time of going on paid leave, the employee is entitled to the corresponding allowances. Its absence therefore has no negative impact on its budget. From the employer's point of view, it is about paying for paid leave and not the usual salary. There are two methods of calculating the compensation to be paid, depending on the length of the leave.

### a) Salary maintenance

The principle is simple since it involves compensating the employee up to the level of the remuneration he would receive if he remained in his position. The calculation takes into account the gross salary received during the period preceding the start of the leave and the working hours that the employee should work over the duration of the leave.

Let us suppose that an employee paid 1820 € per month takes 14 days of paid leave. He usually works 7 hours a day and the month in which he goes on holiday is 21 working days. The working time during the month is therefore 7 x 21 = 147 hours. 10 working days (i.e. 70 hours of working time) are treated as paid leave taken during the month concerned.
The employer is required to pay paid leave at the rate of: 1820 € x (10 x 7) ÷ (21 x 7) = 866.66 €.

### b) The 10th method

The employer must calculate the total annual remuneration received by the employee during the reference period. The paid leave allowance corresponds to 1/10th of the result obtained. Since an employee is entitled to 30 days of paid leave per year, the compensation to be paid must be calculated on a pro rata basis.

Let us take the previous example again, assuming that the employee received the same salary over the reference period, i.e. 1,820 € x 12 months = 21,840 €.

The calculation is as follows 21,840 ÷ 10 ] x[12 working days of leave taken ÷ 30 days of annual leave] = 873.60 €.
This is the most advantageous result for the employee that is taken into account in order to pay for paid leave. In this specific case, the employee takes 14 working days' vacation with a compensation of €873.60.

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## Pay paid leave under an employment contract

In the event of termination of his employment contract, an indemnity to compensate for paid leave earned but not taken must be included in the balance of any employee's account. This right applies to resignations, dismissals or the expiry of a non-renewed fixed-term contract. However, the employee must be able to prove that he or she has been unable to enjoy his or her right to paid leave. This is the case, for example, when the employer refuses to grant the requested leave or if the employee is subject to a heavy workload that prevents him from taking leave.

According to article L3141-26 of the Labour Code, the employer is not obliged to pay paid leave if the employee is dismissed for gross negligence. However, Decision No. 2015-523 QPC of 2 March 2016, this is a provision that goes against the Constitution. As a result, compensation for untaken paid leave is due, including in cases of dismissal for serious misconduct.

The calculation is exactly the same as for paid leave that the employee actually enjoys. The methods of salary maintenance and the 10th mentioned above are therefore the references taken by the employer to pay for paid leave. It should be noted that this compensatory allowance is similar to salary. It is therefore subject to social security contributions. It is also taken into account in the calculation of income tax. The accrued paid leave allowance not taken can be combined with other allowances, which are then included in the balance of any employee's account. Cumulation is carried out in particular with severance pay or dismissal pay, depending on the case.

## How are acquired rights calculated?

Each employee is entitled to 2.5 days of paid leave per month, for a total of 30 days over the reference period. The latter runs from June 1 of the previous year to May 31 of the current year. This reference period may be different if it is determined by collective agreement or written agreement. According to article L3141-12 of the Labour Code, it is possible to take paid leave as soon as the employee is hired. The enjoyment of this right must take place during the reference period. Otherwise, the leave is permanently lost.

Nevertheless, it is possible to carry forward earned leave in the event of an agreement between the employer and the employee. Untaken paid leave can then be carried over to the next period. In the event of an occupational disease, an accident at work or an absence due to parental leave, the employee may request that his leave be carried over. It is important that absences occur before the holidays so that the employee can postpone them to dates later than his or her return to work. In the case of illness occurring during the period of paid leave, the employee is not entitled to an extension of his leave, unless there is a collective agreement or specific agreement. The CET system (time savings account) also allows the accumulation of paid leave. In all cases, the employee must send a request for postponement to his employer in order to benefit from this right.

## Impact on the pay slip

The number of days of paid leave earned must appear at the bottom of the page of the pay slip. In this way, the employee knows exactly how many days he has taken and how many days he has left over the reference period. An automatic update is carried out at each departure on leave, whether the 30 days are taken consecutively or split into several departures.