Holiday Pay Supplement (Ferienentschädigung)
Ferienentschädigung is a cash payment owed to an employee for unused vacation days they do not take. It arises when employment ends or, in some cantons, when accrued leave expires. Swiss employment law treats unused vacation as a wage claim the employer must settle in cash unless the employee actually takes the time off.
Ferienentschädigung literally means 'holiday compensation'—it is the monetary equivalent of vacation days an employee did not use. When an employee leaves your company or reaches the end of a calendar/contract year with unused leave, you must pay them for those days at their regular wage rate.
The obligation exists under the Code of Obligations (OR, Article 329c) and is reinforced in most cantonal employment laws. It protects employees from losing earned time off as a financial loss.
When Ferienentschädigung is Due
Ferienentschädigung is mandatory when an employee's contract ends—whether they resign, are dismissed, or reach retirement. You must calculate unused vacation days accrued up to the termination date and pay the equivalent in CHF.
Some cantons (e.g., Zurich, Bern) also require payment if vacation days roll over and the employee does not take them within a specified carry-over window. Check your canton's rules; they vary. During active employment, vacation should normally be taken, not paid out.
- Triggered at contract termination (resignation, dismissal, retirement)
- Also required if cantonal law limits carry-over and days expire
- Calculated as: (unused days) × (daily wage or Pensum ÷ working days per year)
- Must appear on the final payslip or settlement
- No set deadline in OR, but settlement must be prompt and transparent
- Applies regardless of employee Pensum (100%, 80%, part-time, etc.)
Your Obligation as Employer
You must keep accurate records of vacation accrual and use. At termination, calculate remaining days clearly and include the cash value on the final pay or a separate settlement document. The employee has a wage claim under OR Article 322; failure to pay is a serious breach.
If a GAV (collective labour agreement) applies, it may set stricter accrual or carryover rules. Always verify your industry and cantonal requirements before finalizing a termination settlement.
- Document vacation taken and accrued throughout employment
- Calculate daily rate fairly (annual salary ÷ working days per year)
- Include Ferienentschädigung in final settlement without deduction
- Provide written itemization to the departing employee
- Do not offset against other claims without written consent
- If a GAV applies, follow its vacation and payment rules
Most Common Mistake
The biggest mistake is treating vacation as a discretionary benefit and denying payout on the grounds that 'the employee should have taken time off.' Swiss law treats accrued vacation as earned wages. If days are not taken, you owe the cash equivalent.
A second frequent error: using an incorrect daily rate, or deducting Ferienentschädigung from severance or final pay without clear documentation. Always calculate transparently and settle promptly to avoid disputes and claims under the Statute of Limitations (five years for OR claims).
- Assuming you can refuse payment if the employee 'didn't ask for time off'
- Using an inflated calculation or daily rate to reduce your payout
- Forgetting to account for part-time Pensums or unequal working weeks
- Deducting Ferienentschädigung without the employee's explicit written agreement
- Delaying payment beyond the final payslip date without legal justification
- Ignoring GAV rules that may mandate different accrual or minimum carry-over limits
Frequently asked questions
- Do I have to pay Ferienentschädigung if an employee is fired for misconduct?
- Yes. Ferienentschädigung is not a discretionary benefit—it is earned wages. Misconduct does not erase accrued vacation. You must pay the equivalent in cash at termination. Only a court can rule that wages are forfeited in extreme circumstances, and that is rare.
- Can I ask an employee to take all vacation before they leave instead of paying?
- You can try to schedule it during the notice period, but you cannot force it. If they leave before taking all days, you must pay. Some cantons allow a short notice period (e.g., two weeks) to take remaining leave; check your canton. If time runs out, cash is due.
- How do I calculate the daily rate for Ferienentschädigung?
- Divide the annual salary by the number of working days per year (often 220–250, depending on the canton and company practice). For part-time employees at 80% Pensum, multiply the daily rate by 0.8. Use the gross salary including regular allowances, but exclude bonuses unless they are guaranteed.
General information for Swiss employers, not legal advice. Have a lawyer confirm anything with legal consequences.