Our German Desk
Christmas bonuses, annual bonuses, or quarterly bonuses that are paid shortly before Christmas may all have an impact on holiday payments.
Generally speaking, if the payment is made under an employee’s employment agreement, it forms part of gross earnings for the purposes of annual holiday calculations and for the purpose of any public holidays, sick leave or bereavement leave if the statutory gross earnings formula is used. Truly discretionary bonus payments, where there is no reference in an employee’s employment agreement, will not form part of holiday calculations.
This can be a difficult area, as there are two methods for calculating annual holiday entitlements and two methods for calculating relevant daily pay for public holidays, sick leave and bereavement leave. In addition, while a bonus may be described as non-contractual or discretionary, a number of ‘discretionary’ schemes have been held to be included in holiday pay by the Courts because they were found to be contractual and not discretionary. If in doubt, please call us to check.
