Unused vacation in Italy: deadlines, contributions and payouts
When vacation must be taken in Italy, what happens to a backlog, when INPS contributions fall due and when unused vacation can be paid out.
Published 3 min read
At year end many companies find employees with weeks of unused vacation. It is not just a planning problem: in Italy unused vacation has strict deadlines, triggers contributions and can lead to fines. Here are the rules and how to avoid building up a backlog.
When vacation must be taken
Legislative Decree 66/2003, art. 10, guarantees at least four weeks of paid vacation a year and sets two deadlines:
- at least two weeks in the year they accrue, consecutively if the employee asks;
- the other two weeks within 18 months after the end of the year they accrued.
Example: for vacation accrued in 2026, at least two weeks must be taken by 31 December 2026, and the rest by 30 June 2028. The collective agreement (CCNL) can set different deadlines for vacation above the legal minimum.
The employer sets when vacation is taken, balancing the company’s needs and the employee’s interests (Civil Code, art. 2109). So it is up to the company to make sure vacation actually gets taken.
Can it be paid instead of taken?
For the four-week legal minimum, no: it cannot be replaced with a payment while employment continues. Vacation is meant for rest and recovery, and the right cannot be waived (art. 36 of the Italian Constitution).
There are two exceptions:
- when employment ends, accrued unused vacation is paid with an allowance in lieu;
- vacation above the legal minimum granted by the collective agreement can be paid out if the agreement allows it.
Under European and Italian case law, an employee loses unused vacation only if the company proves it formally invited them to take it, warning that it would otherwise be lost.
Contributions on unused vacation
If vacation is not taken by the 18-month deadline, the company must pay INPS the contributions on the corresponding pay, even though it does not pay that amount to the employee yet. When the vacation is later taken, the contributions already paid are recovered.
In practice, a vacation backlog means contributions paid in advance and extra admin for the payroll consultant.
Fines
Breaking the vacation rules is punished with an administrative fine for each employee involved, which rises if more than 5 or more than 10 employees are affected, or if the breach repeats over several years (Legislative Decree 66/2003, art. 18-bis). Unused vacation is one of the items labour inspectors check most often.
How to avoid a backlog
- Plan vacation at the start of the year, with a shared plan per department.
- Keep balances up to date every month, visible to employees too.
- Flag in time anyone nearing the 18-month deadline, and invite them in writing to schedule their vacation.
- Check the carryover from last year: that is where backlogs hide.
To work out an employee’s accrued and remaining vacation, use our free accrued vacation calculator.
How Chrono Desk does it
With Chrono Desk every employee sees accrued, taken and remaining vacation in real time, including the carryover from last year. Requests are made from the app and the manager approves them with one click, while the absence calendar shows who is away and when. So backlogs show up before they become a problem.
To see it with your company’s data, request a demo.
This guide is for information only and does not replace advice from your payroll consultant or the rules of the applicable collective agreement.