News Salary Administration / Social Security Insurances

Important Federal Supreme Court decision: No disbursement of vacation pay for full-time employment

A significant court ruling by the Federal Supreme Court has tightened legal rulings regarding the compensation of the vacation pay claims of hourly wage earners in full-time employment.

According to the Federal Supreme Court Ruling BGer 4A_357/2022 of 30 January 2023, compensation of a vacation pay claim based on monthly fluctuations can be ruled out if the employee is employed full-time by the same employer on an hourly wage basis.

Pursuant to Article 329d(2) of the Swiss Code of Obligations, the law expressly prohibits the payment of vacation pay during the term of the employment relation. Employees are entitled to their salary even during their vacation, providing them the necessary financial support.

The Federal Supreme Court recommends that the vacation allowance be calculated and shown in detail on every payslip. This vacation allowance should then be deducted again and credited to a separate vacation allowance account of the employee. The vacation allowance is only to be paid out when the vacation is actually taken.

The Federal Supreme Court ruling emphasises the importance of proper handling of vacation pay, clarifying that monthly payment of the vacation pay claim is not permitted for hourly wage earners in full-time employment. For hourly wage earners, on the other hand, there are clear guidelines to ensure that vacation pay is disbursed fairly in accordance with the law. Employers should pay close attention to these regulations in order to avoid legal consequences and to ensure employees' lawful claims.

For individual advice or further information, please contact Reto Leisibach, Head of Fiduciary Services and Partner, reto.leisibach@fineac.ch.

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Reto Leisibach, 14.06.2024

Keywords: Holiday pay, Vacation pay, Federal Court ruling, Federal Supreme Court, Salary administration, Full-time employment