COVID-19: temporary unemployment and holiday entitlements - equalisation and employer compensation

Since the publication of the Royal Decree of 22 December 2020, all periods of temporary unemployment due to force majeure resulting from the COVID-19 pandemic between 1 February 2020 and 31 December 2020 are equalised with days worked for the legislation on annual leave. In addition, employers  who had to introduce a system of temporary unemployment due to force majeure resulting from the COVID-19 pandemic for their white-collar workers can receive a partial compensation for the cost this equalisation entails.

Problem and consequences 

For more information on the general principles with respect to the impact of periods of temporary unemployment due to force majeure resulting from the COVID-19 pandemic on employees’ holiday entitlements, we refer to our earlier newsletter on this topic. To recap: periods of temporary unemployment due to force majeure are, in principle, not equalised with days of activity for the application of the legislation on annual leave. As a result, days of temporary unemployment due to force majeure in 2020 would have an impact on employees’ holiday entitlements in 2021, as the these holiday entitlements are determined on the basis of the number of days worked (or days of inactivity that are equalised with working days) in the previous year.

Solution: equalisation of days of inactivity 

In order to make sure that employees who have been put on temporary unemployment due to force majeure resulting from the COVID-19 pandemic in 2020 retain their full holiday entitlements in 2021, these days of temporary unemployment must be equalised with days worked for the application of the legislation on annual leave. In this respect, the Royal Decree of 22 December 2020 provides the required equalisation for days of temporary unemployment due to force majeure resulting from the COVID-19 pandemic for the period from 1 September 2020 up until and including 31 December 2020. This Royal Decree follows similar Royal Decrees of June and September 2020, which already introduced an equalisation for the period from 1 February 2020 up until and including 31 August 2020 and the combination of all 3 Royal Decrees makes sure that employees who found themselves in temporary unemployment due to force majeure resulting from the COVID-19 pandemic in 2020 will still retain their full holiday entitlements in 2021.

Partial compensation for cost of equalisation

Note, however, that there is a cost related to the above equalisation in the form of the part of the employees’ holiday pay that would not have been due without the equalisation; at the expense of the holiday funds for the blue-collar workers and at the expense of the employers for white-collar workers. The government decided to introduce a compensation for this cost: the National Office for Annual Leave will receive a budget of EUR 93,582,741 to cover the cost of the equalisation for blue collar workers and a global budget of equal amount will be made available to employers as a partial compensation for the cost of equalisation for white-collar workers.

Employers who had to resort to a certain degree of temporary unemployment due to force majeure resulting from the COVID-19 pandemic for their white-collar workers in 2020 will receive a compensation, the amount of which will - among other factors - depend on the number of days of temporary unemployment due to force majeure resulting from the COVID-19 pandemic declared to the National Social Security Office (NSSO). The NSSO will automatically calculate and pay out the compensation due in the second quarter of this year which means that employers do not have to take any actions themselves.

If you have any questions in this respect, do not hesitate to contact us.