Distribution of Holiday Funds: Recipients and Non-Recipients Identified
Vacation Pay in Germany: A Comprehensive Overview
Vacation pay, or holiday money as it is also known, is an additional financial benefit given to employees in Germany to cover vacation costs. This benefit is not a legal requirement beyond the basic paid leave, but it plays a significant role in the remuneration system of many German companies.
According to recent statistics, about half of employees in Germany receive vacation pay. However, the chances of receiving this benefit vary significantly depending on several factors.
Legal Entitlement and Collective Agreements
All employees in Germany are entitled to at least 20 days of paid vacation per year based on a five-day workweek, as regulated by the Federal Holiday Act (Bundesurlaubsgesetz). The chances of receiving vacation pay increase with the presence of collective agreements in a company. In western Germany, about 48% of employees receive vacation pay, compared to 34% in eastern Germany due to the lower rate of collective agreements in the latter.
Company Policies and Sector Influences
Vacation pay or additional vacation-related bonuses may be stipulated in collective bargaining agreements or individual employment contracts. In companies bound by a collective agreement, about three quarters of employees receive vacation money, while only 36% do in companies without a collective agreement.
The rate of collective agreement holiday pay varies according to the specific regulations in the collective agreements, ranging from 186 euros for employees in agriculture in Mecklenburg-Vorpommern to 2686 euros in the wood and plastic processing industry.
Vacation Purchase/Sale Schemes
Some employers offer schemes where employees can buy additional vacation days by accepting a proportional deduction in salary or sell unused vacation days for extra pay. These payments are considered salary adjustments and taxed accordingly.
Taxation and Seasonal Changes
Vacation pay is considered taxable income along with Christmas bonuses and is calculated differently than regular salary. The tax office spreads the vacation pay tax over twelve months, even though it is only paid once a year.
Interestingly, holiday pay in the retail sector, particularly in North Rhine-Westphalia, has seen an increase of 5.3%, and in the clothing and textile industry, there was even an increase of over 8% compared to the previous year.
Job Advertisements and Recognition
Vacation money not only serves as an incentive for employees but also as recognition of their work, enabling them to relax and recharge during their vacation, which benefits the long-term productivity and satisfaction of the company. However, vacation pay plays hardly any role in job advertisements, with only 5.79% of job postings mentioning it as a benefit. On the other hand, Christmas pay is mentioned much more frequently, with 8.93% of all job postings referring to it.
Established Practice and Legal Claims
There is no legal claim to holiday pay, but it can result from collective agreements, employment contracts, company-wide promises, or established practice. A claim to holiday pay based on established practice could arise if an employer has paid holiday pay for three consecutive years without being contractually obliged to do so.
In the event of insolvency, previously approved vacation and continued payment of wages during vacation typically remain in place.
In conclusion, whether and how much vacation money is received depends primarily on statutory minimum leave entitlements, applicable collective bargaining agreements or contracts, company-specific vacation schemes, and the employee's salary structure. Vacation payment is often part of negotiated benefits rather than a strict legal requirement beyond the basic paid leave.
One-way to potentially increase personal-finance during vacation time in Germany is by participating in vacation purchase/sale schemes offered by employers, where employees can buy additional vacation days or sell unused ones.
Collective agreements in German companies significantly increase the chances of receiving vacation pay, with about 75% of employees in companies bound by a collective agreement receiving vacation money compared to only 36% in companies without one.
