When a worker is made redundant (sometimes referred to as “laid off”), he is entitled to payment of the annual vacation that he has earned but has not been able to take during the year. Depending on the terms of their employment contract, you may be able to induce them to take unused vacation during the notice period. However, most people may have outstanding days when they leave employment – those outstanding days must be paid to them as vacation pay in their final taxable payment.
If, on the other hand, the employee has taken more vacation than he accumulated up to the end of the employment relationship, you can deduct the vacation pay from the last salary.
It is important to note that if your employees were unable to take vacation due to the pandemic, the law allows them to carry over that vacation to the next two years. We always recommend agreeing with the employee on how much vacation is due prior to final payroll.
If you make redundancies due to the bankruptcy of the company, your employees will still be entitled to the holiday pay described above and will be able to claim a refund of the money owed through the severance service of the bankruptcy service.
Ian Moore is the managing director of Lodge Court, a recruitment agency
Zero-hour contracts, vacation entitlement and vacation pay