Compensatory leave with pay
Verified 30 May 2023 - Legal and Administrative Information Directorate (Prime Minister)
The contract of employment may be terminated or come to an end before the employee has taken all his paid leave entitlements. In this case, the employer must pay him compensation for paid leave.
What is PTO? In what cases does it have to be paid? How is it calculated? What is the tax and social system of the allowance?
We're doing an update on the regulations.
The calculation of the PTO differs depending on whether the employee is in DTA: titleContent, in CSD: titleContent or on assignment in a temporary company of work.
DTA
The PTO is a sum of money paid by the employer to his employee at the fine-minded of his employment contract.
It corresponds to the number of days of paid leave that the employee has acquired and not taken at the time of this break-up.
This compensation shall be due irrespective of the origin of the breakup the employment contract.
It may be at the initiative of salaried worker or the employer.
It shall be paid, in particular, in the following cases:
- Dismissal (including for gross negligence)
- Resignation
- Conventional breakage
- Departure in retreat
- Rupture of trial period
FYI
this allowance is also due to assigns of the employee whose death occurs front that he has taken his paid annual leave.
It shall be paid when the contract of employment is terminated.
When paid, the compensatory leave allowance shall feature on the receipt for balance of any account.
Please note
some companies have the obligation to join a paid leave fund (companies of sectors of the CONSTRUCTION: titleContent, transport, shows...). In this case, when the contract is terminated, the employer shall give the employee a supporting certificate paid leave entitlements. It is the paid leave fund that pays the paid leave compensation to the employee.
Calculation methods
PTO is calculated based on same rules that the paid leave allowance.
It is calculated by comparison between 2 calculation modes:
- 1re method: the holiday pay is equal to 1/10e of the total gross remuneration received during the reference period
- Method 2: the paid leave allowance is equal to the remuneration which the employee would have received if he had continued to work (salary maintenance)
That's the amount on more advantageous which is paid to the employee.
In making this calculation, the employer may take into account the actual schedule of the month, the fairest method recognized by the case law.
Example :
The employee received a salary of €21,840 crude during the reference period taken into account for the calculation of his allowances (either €1,820 per month).
If he takes 2 weeks of paid leave, the 2 calculation methods are as follows:
Salary maintenance method | Method of 10e |
|---|---|
Taking into account the actual time of the month (7 hours per day) during a month that has 21 working days, the actual number of hours worked in the month is fixed at 147 hours (21 x 7) and the number of hours not worked due to paid leave at 70 hours (10 x 7). The calculation is as follows: 1 820 x (7x10) / (7x21) = €866.66 | The 1/10 calculatione of gross remuneration is as follows: (21 840/10) = €2,184 for leave of 30 years working days (or 25 working days). For a fraction of 2 weeks' leave, the calculation is as follows: |
The employee then receives the most favorable amount, either €873.60 for its 2 weeks paid leave.
Are all amounts taken into account in the calculation of the PTO?
Some sums are taken into account, others no to determine the paid leave allowance.
Sum | Taking into account |
|---|---|
Salary basic | Yes |
Wage increase (overtime, night work, etc.) | Yes |
Salary replenished during periods treated as actual work (maternity leave, paternity and childcare leave or work stoppage for industrial accident or occupational disease for example) | Yes |
Paid leave allowance of the previous year | Yes |
Seniority premium (if not paid for the year, periods of work and leave combined) | Yes |
Monthly attendance premium | Yes |
Yes | |
Sales Commissions | Yes |
Expatriation grant | Yes |
Benefits in kind | Yes |
End-of-year bonus | No |
Incentive | No |
Balance sheet premium | No |
Participation premium | No |
Business Expenses | No |
13e month (if not paid for the year, including periods of work and leave) | Yes |
Partial activity | Yes |
Financial contribution for the non-compete obligation | Yes |
Compensatory leave with pay, considered to be salary is submissive to income tax.
Compensatory leave with pay, considered to be salary is liable to seizure and assignment in the same limits than the salary.
Compensatory leave with pay, considered to be salary, is submissive to social contributions.
CSD
The PTO is a sum of money paid by the employer to his employee at the fine-minded of his employment contract.
It corresponds to the number of days of paid leave that the employee has acquired and not taken to the date of rupture or fine-minded of sound employment contract.
The compensatory allowance for paid leave is due to the employee on a fixed-term contract when his contract reaches his term.
It is also due when the CDD is broken by anticipation, i.e. before the scheduled end date initially.
Early termination of the CDD may occur in the following cases:
- Rupture of trial period
- Hiring in DTA in a other employer
- Serious misconduct
- Case of force majeure
- Joint Agreement of the parties
- Incompetence declared by the occupational doctor
FYI
this allowance is also due to assigns of the employee whose death occurs front that he has taken his paid annual leave.
It shall be paid to the fine-minded or at the breakup the employment contract.
When paid, the compensatory leave allowance shall feature on the receipt for balance of any account.
Please note
some companies have the obligation to join a paid leave fund (companies of sectors of the CONSTRUCTION: titleContent, transport, shows...). In this case, when the contract is terminated, the employer shall give the employee a supporting certificate paid leave entitlements. It is the paid leave fund that pays the paid leave compensation to the employee.
Calculation method
The compensatory leave allowance shall be equal to 1/10e of the total gross remuneration received during the duration of the employment contract.
Example :
For an employment contract of a duration of 10 months of 1er january 2022 as of october 31, 2022, the employee received a salary of €18,300 raw. At the end of his contract, he shall receive a termination indemnity of €1,830.
His compensatory allowance for paid leave is €2,013 (18 300+1 830)/10.
Are all amounts taken into account in the calculation of the PTO?
Some sums are taken into account, others no to determine the paid leave allowance.
Sum | Taking into account |
|---|---|
Salary basic | Yes |
Wage increase (overtime, night work, etc.) | Yes |
Salary replenished during periods treated as actual work (maternity leave, paternity and childcare leave or work stoppage for industrial accident or occupational disease for example) | Yes |
Paid leave allowance of the previous year | Yes |
Seniority premium (if not paid for the year, periods of work and leave combined) | Yes |
Monthly attendance premium | Yes |
Yes | |
Sales Commissions | Yes |
Expatriation grant | Yes |
Benefits in kind | Yes |
End-of-year bonus | No |
Incentive | No |
Balance sheet premium | No |
Participation premium | No |
Business Expenses | No |
13e month (if not paid for the year, including periods of work and leave) | Yes |
Partial activity | Yes |
Financial contribution for the non-compete obligation | Yes |
Allowances of termination of contract (so-called precarious pay) for a fixed period | Yes |
Compensatory leave with pay, considered to be salary is submissive to income tax.
Compensatory leave with pay, considered to be salary is liable to seizure and assignment in the same limits than the salary.
Compensatory leave with pay, considered to be salary is submissive to social contributions.
Mission Contract - Interim
The PTO is a sum of money paid by the employer to his employee at the fine-minded of his employment contract.
It corresponds to the number of days of paid leave that the employee has acquired and not taken to the date of rupture or fine-minded of sound employment contract.
The compensatory allowance for paid leave is due to employee in assignment contract when his contract reaches his term.
It shall also be payable where the contract of assignment is broken by anticipation, i.e. before the scheduled end date initially.
Early termination of the contract of assignment may occur in the following cases:
- Rupture of trial period
- Hiring in DTA in a other employer
- Serious misconduct
- Case of force majeure
FYI
this allowance is also due to assigns of the employee whose death occurs before that compensation is paid to him.
It shall be paid to the fine-minded or at the breakup the employment contract.
When paid, the compensatory leave allowance shall feature on the receipt for balance of any account.
Please note
some companies have the obligation to join a paid leave fund (companies of sectors of the CONSTRUCTION: titleContent, transport, shows...). In this case, when the contract is terminated, the employer shall give the employee a supporting certificate paid leave entitlements. It is the paid leave fund that pays the paid leave compensation to the employee.
Calculation method
The compensatory allowance for paid leave shall be calculated on the basis of the duration of the contract of assignment.
It may not be less than 1/10e of the total gross remuneration perceived during the mission.
Example :
The employee has completed an assignment 18 days of 1er February 2022 to February 18, 2022. During this mission, he received gross remuneration of €1,500. At the end of his mission, he shall receive an end-of-mission allowance of €150.
His compensatory allowance for paid leave is €165 (1500+150)/10.
Are all amounts taken into account in the calculation of the PTO?
Some sums are taken into account, others no to determine the paid leave allowance.
Sum | Taking into account |
|---|---|
Salary basic | Yes |
Wage increase (overtime, night work, etc.) | Yes |
Salary replenished during periods treated as actual work (maternity leave, paternity and childcare leave or work stoppage for industrial accident or occupational disease for example) | Yes |
Paid leave allowance of the previous year | Yes |
Seniority premium (if not paid for the year, periods of work and leave combined) | Yes |
Monthly attendance premium | Yes |
Yes | |
Sales Commissions | Yes |
Expatriation grant | Yes |
Benefits in kind | Yes |
End-of-year bonus | No |
Incentive | No |
Balance sheet premium | No |
Participation premium | No |
Business Expenses | No |
13e month (if not paid for the year, including periods of work and leave) | Yes |
Partial activity | Yes |
Financial contribution for the non-compete obligation | Yes |
Termination benefits of acting contract | Yes |
Compensatory leave with pay, considered to be salary is submissive to income tax.
Compensatory leave with pay, considered to be salary is liable to seizure and assignment in the same limits than the salary.
Compensatory leave with pay, considered to be salary, is submissive to social contributions.
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Entitlement to compensatory leave with pay
Paid Leave Fund
BTP Paid Leave Fund
CDD and entitlement to compensatory leave with pay
Temporary employment contract and entitlement to compensatory leave with pay