The PA Decree

Civil servants: changes to the rules on unused holiday entitlement – they may now be paid out

In fact, the employee will only lose their entitlement to payment in their pay packet if the public administration is able to prove that it formally invited the employee, in good time, to take the rest days to which they are entitled

Zangrillo: Con dl Pa uniformata norma su ferie non godute a normativa Ue

3' min read

Translated by AI
Versione italiana

3' min read

Translated by AI
Versione italiana

The rules on accrued holiday entitlement for civil servants. After more than ten years of bans and legal disputes, the ban preventing the payment of unused holiday entitlement has been lifted. This new provision is contained in Public Administration Decree No. 144 of 7 August 2026, which was finally approved by Parliament on 30 September.

Holiday entitlement can be converted into pay

Under the new regulations, accrued but unused days off at the time of termination of employment may be converted into a financial payment included in the payslip. This change brings Italia into line with the fundamental principles of European Union labour law.

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But what had happened in the past? During the era of public spending cuts, Decree-Law No. 95/2012 (Article 5, paragraph 8) had imposed an absolute ban: public sector staff were obliged to take their holidays, rest days and leave, and these could not be converted into cash.

Under no circumstances – not even upon retirement, resignation, dismissal or redundancy – could payment for unused holiday leave be included in the pay packet. However, this rule – introduced to contain public expenditure and discourage the build-up of outstanding leave – turned out to be a ‘trap’: many workers found weeks of leave they had never taken due to work commitments being cancelled, without any compensation.

The European Union’s intervention

Article 7 of Directive 2003/88/EC guarantees every worker at least four weeks’ paid annual leave and states that this entitlement may be replaced by a financial allowance only in the event of termination of employment.

The Court of Justice of the European Union (in its 2024 ‘Comune di Copertino’ judgement, C-218/22) subsequently reaffirmed this principle: the worker is the weaker party, and the loss of pay for outstanding annual leave cannot result from the mere voluntary termination of employment. Faced with the threat of infringement proceedings (the ARES case initiated by the European Commission in July 2024), Italia was forced to change the rules.

The new legislation (Article 1, paragraphs 1 and 2 of Decree-Law No. 144/2026) redefines responsibilities, placing the public employer at the centre.

In which cases is the allowance payable

Compensation in lieu of unused holiday entitlement upon termination of employment is payable as a matter of course, subject to one specific exception: the employee’s informed and deliberate choice. In fact, the employee will lose the right to receive this payment in their pay packet only if the Public Administration is able to prove that it formally and in good time invited the employee to take the holiday entitlement to which they were entitled; and has expressly informed them of the consequences (namely, that failure to take the leave would result in the loss of both the holiday entitlement and the financial compensation).

The employer’s obligations

The burden of proof lies entirely with the public administration. If the organisation fails to demonstrate that it urged the employee to take holiday and provided them with the means to do so, the final payslip must include the corresponding payment.

The regulation also specifies that the term ‘employer’ refers to the person (a manager or head of department, depending on the organisation’s structure) responsible for authorising or refusing leave. It is this person who must handle all communications in order to avoid disputes or claims for financial loss to the public purse.

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No retroactive effect

To protect public finances and avoid a flood of backlogged appeals, the new measure does not apply retrospectively.

The new rules apply exclusively to holiday entitlement accrued after the law converting the decree – which was approved on 30 September – came into force.

This does not apply to holiday entitlement accrued in previous years, for which the existing exceptions continue to apply (such as holiday not taken due to serious illness, accident, maternity leave or circumstances beyond the employee’s control).

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