Unused holiday entitlement: when it is paid and how to manage it

The unused holiday entitlement This raises a fairly common question: if there are days left over, are they forfeited, carried over to another period, or paid out?

There is no single answer for any given situation. It is necessary to ascertain why the leave was not taken, whether the employment relationship continues, and what is stipulated in the regulations, the collective agreement and the contract.

For the company, the first step is to have reliable information: days accrued, days already taken, approved requests and changes made during the year.

What are unused holiday entitlements?

These are days of paid annual leave that a person has accrued but has not yet taken.

To calculate the balance correctly, you need to distinguish between three concepts:

• Holiday entitlement accrued: days corresponding to the period worked.
• Holidays enjoyed: days taken as rest days.
• Holiday entitlement: the difference that remains to be enjoyed.

There may also be days that have been requested and approved for a future date. Even if they have not yet been taken, they are already part of the planning and should appear on the calendar.

Can outstanding holiday entitlement be paid out?

In Spain, whilst the employment relationship continues, annual leave is intended for rest and, as a general rule, cannot be replaced by financial compensation.

The situation changes when the contract ends. If there are any accrued but unused days remaining, their treatment must be reviewed when preparing the final settlement.

Before calculating any figure, it is advisable to check:

• The start and end dates of the employment relationship.
• The relevant holiday entitlement.
• The days we have already enjoyed.
• Applications that have been approved or amended.
• The computer system used.
• The applicable agreement and contract.

The tool can provide the balance and transaction history, but the final calculation of the severance pay must be reviewed in accordance with the relevant employment and payroll guidelines.

What happens if the employment relationship continues?

If the person is still working for the company, the aim should be to plan how to take their outstanding holiday entitlement.

It is not a good idea to wait until the end of the year to check your balances. A regular review allows you to spot:

• People with a large number of outstanding days.
• Approved applications that do not yet appear on the calendar.
• Differences between HR and the team lead.
• Periods when it will be difficult to maintain coverage.

This allows us to organise breaks and operations before any planning issues arise.

Holidays and temporary incapacity

A period of temporary incapacity may prevent you from taking your holiday on the dates originally planned. In such cases, the same criteria should not automatically be applied as for days that were simply not requested.

Spanish legislation distinguishes between certain situations relating to pregnancy, childbirth, breastfeeding or suspensions of the employment contract, and other situations of temporary incapacity.

Article 38 of the Workers’ Statute sets out specific conditions and time limits, including a limit of eighteen months for certain cases of temporary incapacity, calculated from the end of the year in which the holiday entitlement arose.

Each case must be reviewed with the relevant documentation and advice.

How to calculate outstanding holiday entitlement

The calculation depends on the number of days in a year, the time worked and the calculation method used by the company.

1. Identify the applicable annual holiday period.
2. Calculate the portion generated to date.
3. Subtract the days already taken.
4. Review the approved applications for future dates.
5. Check previous adjustments, revisions or changes.
6. Confirm the outcome in the agreement and the contract.

Illustrative example: If the entitlement is 30 calendar days per year and the employee has worked six full months, the initial pro-rata calculation would be approximately 15 days. If 10 days have already been taken, there would be around 5 days remaining.

This is just an example. The actual result may vary depending on the exact dates, the calculation method, the agreement and the individual’s circumstances.

What to check in each situation

What to check before drawing up a settlement agreement

When an employment relationship ends, it is not advisable to calculate the remaining days using just a standalone spreadsheet.

HR or the person in charge should verify:

• Date of enrolment and date of withdrawal.
• Applicable annual fee.
• Holiday entitlement accrued to date.
• Days well spent.
• Applications approved, cancelled or amended.
• Possible issues with your balance.
• Applicable payroll and contribution criteria.

Keeping a record of the history helps to explain the calculation should a discrepancy arise after the transaction has been processed.

Common mistakes when checking outstanding holiday entitlement

• Record requests received by post, via WhatsApp or verbally.
• Keep different balances in various spreadsheets.
• Do not update a cancelled or amended application.
• Confusing days requested with days already taken.
• Do not check your balance before leaving the company.
• Apply the same criteria to all cases of temporary incapacity.
• Do not retain the history of approvals and changes.

These errors are usually spotted when preparing a statement or when the person enquires about their balance – at which point there is little scope to piece the information together.

Unused holiday entitlement and Spanish legislation

Article 38 of the Workers’ Statute governs annual leave, its minimum duration, the setting of dates and certain circumstances in which it coincides with a period of temporary incapacity or a suspension of the contract.

You can check the updated text of Article 38 in the Official State Gazette (BOE). The specific case should be reviewed in conjunction with the collective agreement, the contract and the relevant employment advice.

How to manage holidays with Staffy

Staffy centralises requests for holidays, leave and absences so that HR and line managers can check their status and history.

With the request manager, you can:

• Record requests for holiday and absences.
• Check statuses, approvals and changes.
• Check balances and the periods requested.
• Ensure that the information remains available to authorised users.

Where there is documentation relating to an employee’s departure or termination, this can also be managed via the relevant document management system.

Frequently asked questions about unused holiday entitlement

Can you be paid for unused holiday leave?

Whilst the employment relationship continues, in Spain annual leave is intended for rest and, as a general rule, is not replaced by a cash payment. Where the contract ends whilst there are still days of leave outstanding, the way these are dealt with in the final settlement must be reviewed.

Is any outstanding holiday entitlement included in the severance payment?

They may affect the final settlement when the employment relationship ends. You need to check the days accrued, those taken and the outstanding balance.

What happens if they coincide with a period of sick leave?

You may be entitled to take them at a later date, but the conditions and time limits depend on the type of incapacity and the specific circumstances.

Are they lost if they aren’t used up during the year?

You should not reply automatically. You must check the reason, the dates, the collective agreement, the applicable regulations and whether the company actually authorised the leave.

How can you avoid errors in your balance?

By centralising requests, approvals, changes and days taken, and by regularly checking balances.