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How much money can you possibly recover from unused holidays?

Published in: Employment law
by Antonella Marmo
Home > How much money can you possibly recover from unused holidays?

Often the employee accumulates several days of unused holidays during the year and consequently finds himself at a crossroads between the possibility of delaying his holidays, postponing them to the following year, and indulging the temptation of monetising them.

Is it really possible to sacrifice one’s holidays in order to receive monetary compensation? Well, it is true that the employee can obtain an allowance in lieu, but this only applies in certain cases

In this article we will discuss the following aspects more closely:

  1. What the Italian law says about unused holidays.
  2. Time limits for holidays not taken.
  3. What if holidays are not taken within the limits?
  4. How to monetise unused leaves.
  5. A weapon in the employee’s defence.


1. What the Italian law says about unused holidays.

The current Italian legislation concerning unused holiday time is complex. Misunderstandings often arise as to whether it can be waived in exchange for additional pay.

First and foremost, the right to take holidays is a constitutionally guaranteed right.

Article 36 of the Italian Constitution provides, among other things, a worker’s right to weekly rest and paid annual leave.

The Italian Constitution specifically states that the right to weekly rest and the right to annual leave is an inalienable right. This means that there is a real prohibition against monetising them during the employment relationship. The employee cannot give up the holiday in exchange for a sum of money.

On the contrary, it is required by law that they be taken within the current or the following year. This is for the protection of the worker’s health. Everyone needs a break from the labours of the working year. Therefore, this (constitutionally guaranteed) right cannot be treated as a free-trade commodity.

2. Time limits for holidays not taken.

The institution of holidays and the ways they can be taken are now governed by Article 10, Legislative Decree No. 66/2003, which stipulates the worker’s right to a minimum of four weeks’ holiday per year.

Of these four weeks:

  • two must be taken in the year in which they accrue,
  • while the other two must necessarily be taken within the following 18 months (at the end of the year of accrual).

3. What if holidays are not taken within the limits?

Holidays must be taken within the 18 months following the year in which they accrue. Therefore, on 30 June of each year, leave from two years earlier must be used up.

The employer must ascertain that the entitlement in question is actually taken by the employee. Should this not be the case, sanctions may be imposed on the employer alone.

While the above is the general rule… specific cases exist in which, if certain requirements are met, the employee may obtain the monetisation of unused working days.

These requirements are generally tied to the termination of the employment contract (resignation or dismissal). In such situations, the holiday “rest” could overrun the term of the employment relationship. It would therefore be unfair to prevent the monetisation of holidays (which the employee may not materially have time to enjoy).

In the case of a fixed-term contract with a tight expiry date, the employee will be able to opt against taking leave and have it paid at the end of the employment relationship.

On the other hand, in the case of an open-ended contract, the exception is the employee who resigns or is dismissed during the year, who will then be entitled to payment for untaken holidays (both those accrued during the year and those remaining).

The last exception concerns those lucky employees who, by virtue of specific decisions taken in agreement with their employer, are granted more than 4 weeks of leave per year. These will be able to monetise any untaken leave that exceeds the minimum required by law (so-called ‘holiday allowance’).

4. How to monetise unused leaves.

Leave entitlement differs from holiday entitlement.

In accordance with his or her employment contract and the relevant national collective agreement, each worker accrues a number of hours of leave (so-called ROL) each month in his or her pay slip, to be used according to his or her needs.

As opposed to holidays which, with the exceptions illustrated above, must be materially taken, unused leave can be monetised and will not be forfeited. Thus, the basic rule is precisely the opposite.

The employee may use them up to the 30th of June of the year in which they accrue, and if they remain unused, the company must liquidate them in the June pay slip.

While leave is requested solely on the basis of the employee’s personal needs and is therefore not always agreed upon with the employer, it is the employer who has the last word when it comes to holidays (Art. 2109 Italian Civil Code), as she/he must take into account not only the employee’s needs but also the interests of her/his company.

5. A weapon in the employee’s defence.

Employees must never forget that a legal entitlement is promptly available to them: in all those cases in which the employer does not pay the holiday allowance (e.g. those in which they are entitled to weeks of holiday in addition to the minimum four weeks required by law), the employee can obtain recognition by the Employment Tribunal.

The employee will take legal action requesting payment of the allowance in lieu for untaken leave. It will be sufficient to produce the pay slips for the days worked to prove that work was performed on the days set aside for holidays.

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Publication date: 26 September 2018
Last update: 7 September 2023

Antonella Marmo

A Lawyer at the Canella Camaiora Law Firm, a member of the Milan Bar, she focuses on Commercial and Employment Law.
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