Vacation Policies During Notice Periods: What You Need to Know

All good things come to an end - including the employment relationship. Regardless of whether they simply don't want to work anymore or have been accepted for another position, at some point employees have to move on.

In most cases, if someone decides to leave the company, they must immediately submit their resignation and continue working until they leave. This is part of the employment contract - they can't just leave whenever they want. This helps the rest of the company prepare for the employee's absence.

A question that often arises during the notice period is: "What happens if the employee has not taken all of their annual leave?

If the employee still has accrued vacation days, the question arises for management as to whether they can afford to release them from work or not.

Below we will delve into the details. Whether you are an employee or a manager, this short guide should help clear up any confusion.

Annual holiday allowance

In theory - yes - employees can take holiday during their notice period, but this depends on the individual's circumstances and the terms of the employment contract.

Whether an employee can take vacation during the notice period depends first of all on whether he or she has still accumulated annual vacation. This can be calculated based on the amount of annual leave and the time of termination compared to the annual leave already taken.

Let's take the following standard scenario: For a vacation year that runs from January to December, a full-time employee is entitled to 28 days of vacation.

If he cancels in June, he will only be entitled to 6/12 or half of this full entitlement (14 days). If he has not yet used these 14 days, he can request to take them during the notice period.

Please note that annual leave continues to be taken into account during the notice period - in the example above this would be 2.33 days per month.

In addition, if the employee has used up their annual leave during this period, they should continue to receive their normal salary for it.

Can an employer refuse annual leave during the notice period?

In most cases, the employer will grant employees their accumulated annual leave during the notice period. However, if this is not possible for operational reasons, he can reject a vacation request. In this case, the employee is paid in lieu of vacation.

It is important that an employer provides a valid reason for refusing leave during the notice period so that this is not viewed as discrimination.

Companies should carefully consider whether it is more cost-effective to pay for vacation instead of time off or to allow the employee to take their outstanding annual vacation. It often makes more financial sense to let an employee use up their annual leave during the notice period (so they don't have to pay extra), but if the company is short-staffed and needs the help, it may be worth keeping the employee.

What if an employee takes more vacation than they have accrued?

There is another situation where an employer does not provide vacation during a notice period.

This is the case if the employee has already taken more vacation than he has accumulated. In this case, the employer can deduct the additional vacation days taken from the last salary payment. However, this should be clearly stated in a written employment contract and the employee must agree to this in writing.

Can employers force someone to take vacation during the notice period?

Under the Working Time Regulations 1998, employers can also force terminated employees to take their remaining annual leave. This means that the employer can tell employees when they have to take their remaining vacation, but he must inform them of this.

For each day of annual leave imposed, the employer must give at least two days' notice, unless otherwise stated in the employment contract. For example, if three days of vacation need to be taken, the employer must give six days' notice.

Forced vacation can be broken down into individual days rather than taken all at once. This can be useful if the number of accumulated days is large and there is not enough time to meet the required notice period.

The question of whether employees can take vacation during the notice period is not an easy one to answer. Employers should therefore ensure that all possible questions on this topic are precisely regulated in the employment contracts so that there are no ambiguities later in the employment relationship.

How to calculate the final vacation pay?

You can find a guide to calculating holiday pay in our article on remaining holiday pay.

Understanding the rules around vacation during notice periods is crucial for both employees and employers. Clear policies and communication can mitigate confusion. Explore streamlined HR solutions with IceHrm.