Court Of Cassation: Requirements For A Lawful Salary Reduction During Holidays

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The Court of Cassation has ruled on the permissible limits of salary reductions during employee annual leave periods. While remuneration during holidays should generally maintain comparable income levels to normal working periods, the court established that certain allowances may be lawfully excluded, provided the pay difference is minimal enough to avoid deterring employees from exercising their right to take annual leave.

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The Court of Cassation, Labor Section, with order No. 18529 of 8 June 2026 stated that the remuneration payable during annual leave may, within certain limits, lawfully exclude certain allowances that are normally paid.

This is without prejudice to the fact that the remuneration due during the holiday period should, as a general rule, ensure that the employee receives a level of income that is substantially comparable to that received during normal working periods.

However, according to the Court’s reasoning, particularly in the light of Article 7 of Directive 2003/88/EC and the European Court of Justice’s interpretation thereof, a reduction in pay during annual leave is lawful only to the extent that the difference in pay between the holiday period and the non-holiday period is so small as to preclude any deterrent effect on the right to take that annual leave.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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