Payment of holiday pay together with salary

On 2 March 2023, the Federal Supreme Court of Switzerland published a ruling on holiday pay for full-time employees working for the same employer. This ruling supplements the law of 30 January 2023 and strengthens the rules governing holiday pay for irregular employment.

Until January 2023, it was possible to pay holiday pay together with the salary, provided that:

• the activity was irregular;
• the holiday pay was clearly stated in the employment contract (as a percentage of the salary or as a fixed amount);
• the holiday pay was clearly indicated on the pay slips.

With the ruling of 30 January 2023, irregular activity is no longer sufficient to allow holiday pay to be paid with the monthly salary. If the work is irregular, but is full time and for the same employer, then holiday pay must be paid when the holiday is taken and not together with the monthly salary. The reason behind this change is to put regular employees (who receive their monthly salary even during their holidays) and irregular employees (who receive no income during their absences/holidays) on an equal footing.

This specification of the law makes it necessary to determine whether or not the work is considered irregular activity. If the rate of activity fluctuates each month and cannot be equated with full-time work for the same employer, then the method for paying holiday pay can continue as before – in other words, by indicating the holiday entitlement on the monthly pay slip and paying it each month.

On the other hand, when it is not possible to justify irregular activity or when the employment rate is 100%, the employer has the following options:

•  Introduction of a system of advance payments whereby employees receive a regular payment to cover their monthly expenses. These payments would also be paid when the employee is on holiday. A final statement (advance payments versus hours actually worked) must then be drawn up at the end of the year.
• Introduction of a pool system whereby holiday pay is calculated each month on the basis of the hourly wages, but only paid out to the employee when the holiday is actually taken. At this point, the pool is then reset to zero.