Reimbursement is the right of every employee from an employment relationship. Below follows in detail: what is holiday pay, how it is paid and whether the company is obliged to pay holiday pay.
Reimbursement is compensation for the use of annual leave. How the employer will pay this type of compensation and in what amount must be defined by the company’s general act. That is, the employer determines this by internal work regulations or employment contract or collective agreement.
Employees are often not informed about regress recourse, therefore the employer should clearly define these provisions when establishing an employment relationship so that employees are aware of their rights. This ensures transparency, because in this way the employees of the company will have clear information about all rights from the employment relationship. In particular, the right to holiday allowance, the possibility of payment during the year and the amount of compensation.
The following is a detailed explanation of the use of holiday allowance pay.
Holiday pay is the legal right of every employee to have his employer pay him compensation for the costs of using annual leave.
On the one hand, holiday pay represents the employer’s obligation to the employee. On the other hand, it also represents the right of every employee to receive reimbursement of expenses for his future vacation.
Regress and hot meal are often mentioned together in practice, therefore it is important to separate these terms and give a thorough explanation. The allowance for a hot meal is a monetary reimbursement of expenses to employees for meals during working hours, while the holiday allowance is reimbursement of expenses for annual vacation. We wrote in detail about compensation for a hot meal.
The employer is legally obliged to pay the employee annual leave. Reimbursement for holiday pay is the right of every worker because he has the right to use annual leave, and it is defined by the Labor Law.
Compensation can be paid to workers once a month, but also several times a year, depending on the agreement between the employees and the employer. The amount of compensation is determined by the employer.
With regard to all recourse obligations, these include:
The employee acquires the right to the payment of compensation for vacation after the first month of work, i.e. it is acquired together with the right to use annual leave.
The right to use vacation days is acquired after one month of continuous work, starting from the date of employment. Annual leave does not have to be used immediately, so in practice it often happens that workers take annual leave and use it after several months of continuous work.
Employees receive annual vacation depending on the agreement with the employer and according to the needs of the job (depending on the business obligations and needs of the company, annual business plans and depending on the sequence of annual vacations of other employees). The employer decides on the use of annual leave and makes a decision for each employee individually.
Compensation is always paid to employees along with earnings, i.e. along with salary. The method of payment is determined independently by the employer. It is obliged to define the amount and method of payment by its internal general act, such as the work regulations, work contract or other internal documents.
The law does not prescribe the manner in which it will be paid, therefore the employer makes the decision on the method of payment of the holiday allowance himself. Payment can be:
When calculating and paying, holiday pay must be specified on the payslip for each employee or on the payroll statement.
Reimbursement, as compensation of expenses for the use of annual leave, is not included in earnings. However, it has the treatment of earnings because taxes and contributions are calculated and paid on that amount, just like for earnings.
According to the Labor Law, the holiday allowance belongs to the other incomes of employees, which are treated as wages. In addition to the appropriate salary that is paid to the employee for work based on the employment relationship, other payments with the character of salary include:
The employer independently determines the amount of compensation for the cost of vacation for the use of annual leave that will be paid to employees. The amount is defined by its regulations – collective agreement, employment contract or other general act.
The Labor Law does not specify or define the exact amount of the compensation. Therefore, the employer is not bound by the amount of this monetary compensation. It is a legal obligation to make the payment, and what amount it will be determined independently and according to its capabilities.
The amount of annual leave compensation must be the same for all employees in the company. The same amount is paid to all workers, regardless of what qualifications they have, what position they hold in the company or what function they perform.
If the employee does not use the right to annual leave, he/she cannot be entitled to a holiday allowance pay. These two rights are mutually related. The right to holiday allowance is lost if the annual leave is not used, because in that case the employee had no additional expenses and the company is not obliged to pay him the recourse.
An employee in an employment relationship has the right to the payment of wages for the period of annual leave. Reimbursement, as reimbursement of expenses for using annual leave, is also included in the calculation of earnings that the employee will receive during the use of annual leave.
If the employment relationship ends, that is, the employee is fired, the employer is obliged to pay him monetary compensation instead of using annual leave, if he did not use the annual leave, either in whole or in part. The compensation must be equal to the average salary for the previous 12 months. Also, it must be calculated in proportion to the number of unused vacation days.
It is also obliged to pay him all other unpaid wages, i.e. benefits – holiday pay, hot meals, transportation costs, unpaid wages and all other income that the employee earned up to the day of termination of the employment relationship. The deadline for payment is 30 days.
Workers hired on the basis of a non-employment contract do not have the right to reimbursement of expenses for annual leave, nor to paid annual leave. This applies to persons engaged under a contract for temporary casual work, then to workers who are engaged through a contract of work or on the basis of any contract on work engagement outside of the employment relationship.
The aforementioned rights are only available to workers who have established an employment relationship with the employer and have signed an employment contract. The company is under no obligation to pay severance pay to workers hired through non-employment contracts, regardless of the type of contract.
The accounting agency HLB TM DOO from Belgrade offers a wide range of accounting and bookkeeping services, including payroll services. Our team of experts can help you interpret and comply with legal regulations, so that the calculation of all fees is accurate. Contact us for more information to help you optimize your business as efficiently as possible.
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