Employment Contracts Act

A reminder about preparing holiday schedules

Kaija Salu Kaija Salu

By the end of the first quarter – 31 March – all companies must draw up and communicate to employees a holiday schedule for the current year. But why is this even necessary in the first place?

On one hand, it is a requirement contained in the Employment Contracts Act – subsection 69 (2) – while on the other hand it helps to significantly simplify planning of the company’s work.

Section 55 of the Act requires every employee to be given 28 calendar days of basic holiday, of which at least one segment of the holiday must run 14 consecutive calendar days. If an employee was hired midway through the year, they have the right to receive basic holiday in proportion with the time worked. Besides basic holiday, employees are also entitled to various additional holidays: e.g. study leave, parental leave, paternity leave, leave for employees with partial or no work ability.

Thus, to avoid a situation where all employees want to go on holiday at the same time, it is a good idea to prepare a holiday schedule at the beginning of the year.

What should companies bear in mind when drawing up the holiday schedule?

The holiday schedule should be prepared in consideration of the employee’s preferences. The employer should bear in mind the employees who are entitled under subsection 69 (7) of the Employment Contracts Act to a holiday at a time of their choosing:

  1. women immediately before and after pregnancy and maternity leave or directly after parental leave;
  2. men immediately after parental leave or during a woman’s pregnancy and maternity leave;
  3. parents raising a child of up to seven years of age;
  4. parents raising a child of seven to ten years of age – during the child’s school holidays;
  5. minor children subject to compulsory school attendance – during school holidays.

The holiday schedule must list the holiday days to be taken by all employees during the current year (including by employees still in their probationary periods). Unused reminders of holidays from the previous year are also to be listed. In addition, it would be useful for employees to write down in the schedule the days on which they will take additional holiday.

Preparing a schedule gives the employer a way to make sure the holidays of employees performing the same work do not overlap.  The schedule also gives the employer enough time to assign a substitute employee for the holiday period. Employees are asked to sign, by 31 March, the holiday schedule approved by the management.

Changes to holiday schedule and taking holidays outside the schedule

Often, situations arise where employees cannot or do not wish (for personal reasons, for example) to go on holiday at the time specified in the schedule. Sometimes the opposite situation can come up – the employer cannot offer the employee the holiday at the required time (e.g., a major order has just come in and must be fulfilled by a deadline). In such situations, the holiday schedule can always be changed by agreement between employer and employee.

The holiday schedule may also be supplemented later. For instance, if a new employee is hired, their holiday requests can be added to the schedule. If the company does not wish to update the holiday schedule on a running basis to accommodate the new employees, the new employees are allowed to go on holiday on the basis of a request for holiday submitted at least 14 calendar days in advance.

The obligation to submit the request 14 days before the holiday also applies if the company has not drawn up a holiday schedule or if some holidays are not listed on the schedule.

However, the 14-calendar-day advance notice term does not apply in the first quarter, when the schedule is still being drawn up and has not been approved yet.  At this time, the employee (other than employees entitled to go on holiday at a time of their choosing) can go on holiday only with the consent of the employer.

The best time to go on holiday:  the company view

For an employer, it is undoubtedly useful for all employees to use their available days of holiday during the current year and spread out the holidays evenly over the year, avoiding the situation where fir example all employees are on holiday during three summer months.. This prevents a large carryover in reporting at the end of the year. Moreover, the company will have rested, fresh employees, which ensures higher quality work.

The best time to go on holiday: the employee view

For employees planning when to on holiday, the benefits fall into two categories:  benefits in terms of time and the financial benefits.

Employees who want to go on holiday as long as possible in a single stretch should plan their holidays into a period with some public holiday. As public holidays do not count as holiday days, the holiday time span is that much longer. Estonia has 12 official public holidays, most are not movable, but some of them are.

Employees aiming to maximize their holiday pay (valid only for those who receive a variable amount of remuneration – they receive various bonuses in addition to their basic salary or are paid by the hour) should plan their holiday in a period when the bonuses they have received are included in the calculation of holiday pay (this is because holiday pay is calculated on the basis of the average remuneration for the previous six months). Another financial advantage for employees who earn variable remuneration is to go on holiday for the entire week – Monday to Sunday – as the holiday pay is paid out for weekend days as well.

The last recommendation is to keep track of the number of work days in the month. The more work days in a month, the more advantageous it is to take the holiday, because then each work day contributes the smallest proportion of the value of the monthly pay. By going on holiday in that month, the employee maximizes their holiday pay.

To sum up, in 2018, it would be most beneficial for employees who earn a variable amount each month to go on holiday in October (23 work days) for at least 7 days in a row (so that the weekend days are included). This is provided that the employee has received bonuses during the April-September period.

As mentioned earlier, this applies to all employees who earn a variable amount each month. If an employee receives a fixed monthly salary, their holiday pay is proportional to the monthly salary – in other words, they receive the same amount of pay that they would have earned by working during the same period.