It is possible to monetise the remaining holidays at the end of the employment relationship. Here’s what the new law provides, when the administration must pay and what employees who have accumulated days in arrears can do
Holidays that cannot be used will no longer be lost without compensation. The rules change for public employees: after fourteen years, the monetization of unused holidays becomes possible, i.e. the payment in money of unused days when the employment relationship ends. This is provided for by law 174 of 5 October 2026, which converted the PA decree and has been in force since 7 October. The new mechanism concerns holidays accrued after that date, but even those who have days in arrears can assert their reasons.
Unused holidays in the public sector: goodbye to the ban on monetising them
The stop dates back to 2012, when a law designed to cut state spending prohibited paying for unused holidays, in any case: pension, resignation, dismissal or change of administration. Those who were unable to be absent due to service requirements thus lost the accumulated days, without fault and without reimbursement. It was Europe that pushed for change. A 2003 directive provides for monetary compensation for holidays not taken when the employment relationship ends and in 2024 the Court of Justice of the European Union, with a ruling on the case of the Municipality of Copertino, judged absolute payment bans to be incompatible with those rules.
When is payment for remaining holidays due?
The basic rule is simple: when the employment relationship ends, for any reason (retirement, resignation, unfitness for service or other), unused holidays must be paid. However, there is an exception: if the administration proves that the lack of rest was a choice of the employee, and not the consequence of an organizational obstacle, the compensation may not be due. In any case, the payment only arrives once the relationship is concluded, not before.
Holidays not taken: it is up to the administration to demonstrate that it has done its part
It doesn’t have to be the employee who explains why he didn’t take vacation: the proof lies with the administration, which is the employer. He must demonstrate three things: that he officially invited the employee to use the days, that he warned him of the risk of losing holidays and compensation and that he actually allowed him to be absent. If the service does not allow it, for example due to lack of staff, having sent an invitation is not enough: the compensation is still due. The principle is especially important in healthcare, where the lack of staff often makes it difficult to take days off.
Holidays in arrears: what changes for those who have already left the service
The new rules apply to holidays accrued after 7 October 2026, so an automatic payment is not triggered for past years. However, the door is not closed for those with days in arrears: the new law can give more force to requests and appeals. What to do in practice:
- count how many days of vacation are left unused;
- note why it was not possible to use them (shifts, lack of staff, rejected requests);
- check whether the organization has ever sent written invitations or notices;
- ask the administration for useful documents and, in doubtful cases, contact a union or a lawyer.
