How to set the leave balance to zero before ending a contract?

When an employment contract comes to an end, it is important to ensure that all remaining leave days are properly handled. The leave balance is displayed on each payslip, allowing employers and employees to track unused vacation days throughout the employment period.

To reset this balance to zero before the end of the contract, you have two options:

The employee takes their remaining leave days before the contract end date.

The employee can take their remaining leave days before their last day of work. This requires:
Planning the leave period in advance with the employer
Ensuring all leave days are used before the contract end date
Documenting the leave taken in the company's leave management system


Unused leave days are paid out as compensatory allowance

If the employee cannot or chooses not to take their remaining leave days, these must be paid out. This involves:
Calculating the monetary value of unused leave days
Including this payment in the final salary
Clearly indicating the leave payout on the final payslip

Please find here the full procedure on how to pay out unused leave to your employee.

When handling leave at contract termination:

Check the exact leave balance on the most recent payslip
Ensure compliance with Luxembourg labor law regarding vacation rights
Document the chosen method (used or paid out) for record-keeping
Process any leave payout through the regular payroll system

Please note that the leave balance only appears on the employee's payslip.

Updated on: 06/06/2025