Contract Termination
Use
When the employee terminates his or her contract with the company, the vacation allowance and leave days must be cleared. There are four possible situations that need to be cleared.
If the employee is leaving the company and some vacation allowance regarding these days has not been paid yet, the contract termination event requires that this amount be paid.
In this case, the employee has not taken all the leave days he or she is entitled to and they need to be compensated (paid) at contract terminates days must be valuated with rate defined for leave days, usually the same used for vacation allowance.
The employee accrued leave days (typically 22 days) in the beginning of the
current year, related to the time worked in the previous year. These are the "normal" leave days the employee is entitled to take in the current year.If the employee had worked until the end of the current year, he or she would be entitled to 22 vacation days. However, if the employee leaves the company earlier, he or she has accrued vacation days proportionally to the time worked. These accrued vacation days must be paid at contract termination, if they have not been paid yet, as described in point 1 above.
If the employee did not take the vacation days he or she accrued in the current year by the time the contract is terminated, the company must compensate for these days, similarly as in point 2.
It can happen that the company negotiates with the leaving employee a lump sum to be paid as compensation for the contract termination. In this case, the system do not need to reckon the vacation-related amounts.
Activities
Process Contract Termination