Glossary · 18 terms
The words behind paid leave, defined
Every term is defined to stand on its own, so you can send someone the link to one definition. Where a term has its own page, the definition links to it.
Most leave disputes start with two people using the same word for different things: a "day" that is a calendar day to one and a working day to the other, "carryover" that one country caps and another forbids, "PTO" that is a gift in Texas and a wage in California. These definitions pin the words down.
Annual leave
Paid time off from work that an employee is entitled to each year, separate from public holidays and sick leave. In the EU the statutory minimum is four weeks under the Working Time Directive; national law and contracts often give more. Called "holiday" in the UK and "vacation" or "PTO" in the US.
PTO (paid time off)
The US term for paid days away from work, usually pooling vacation, sick and personal days into one bank of hours. The US has no federal minimum; whether unused PTO is paid out when employment ends depends on the state and the employer’s written policy.
Statutory minimum
The smallest amount of paid leave the law requires an employer to give. Contracts and collective agreements may add to it but never reduce it; a clause granting less is void. Statutory minimums are best compared in working days on a five-day week because countries count them in different units.
Accrual
The way leave builds up over time rather than being granted in full on day one — typically a fixed number of days per month worked, or a number of hours per hour worked. Accrual determines how much leave a person has earned at any given date, which is what a payout is calculated on.
Pro rata
Scaling an entitlement in proportion to time worked or hours worked. A part-time employee on three days a week receives three fifths of a five-day-week entitlement; someone who joins with six months of the leave year left receives half the annual amount. The principle applies across the EU and UK.
Carryover
Leave not taken in one leave year that transfers into the next. Rules are national: some countries let statutory leave carry over indefinitely, some set an expiry date, some allow carryover only by agreement or for a capped number of days. EU case law protects leave that could not be taken because of sickness or parental leave.
Use it or lose it
A policy under which leave not taken by a deadline is forfeited. Permitted in many US states with a written policy communicated in advance, and banned outright in California, Colorado, Montana and Nebraska. Across the EU the statutory minimum cannot simply lapse if the employee was prevented from taking it.
Payment in lieu (payout)
Cash paid instead of leave being taken. Across the EU and Australia it is prohibited for the statutory minimum while employment continues and mandatory for the untaken balance when employment ends. In the US it depends on the state and the written policy. Calculated as remaining days or hours multiplied by the current rate of pay.
Public holiday
A day designated by law on which most employees are entitled to time off, such as a national or religious holiday. In nearly every country public holidays are additional to annual leave and follow the place of work. The United Kingdom is the notable exception, where employers may count them within the 5.6-week entitlement.
Working days, calendar days and Werktage
Three units in which leave is counted, and the main reason headline figures mislead. Working days exclude weekends. Calendar days include them (Spain’s 30 days). Werktage (Germany, Austria) and virkedager (Norway) count Monday to Saturday, so 24 Werktage is 20 working days on a five-day week. Compare in working days.
Leave year (reference period)
The twelve-month period over which leave accrues and is meant to be taken. Often the calendar year, but not always: France conventionally runs 1 June to 31 May, and UK employers may set any fixed start date. Carryover and expiry rules are counted from the end of the leave year.
Holiday pay and leave loading
Pay received while on leave, or an extra payment attached to it. Several countries fund leave through a separate holiday pay mechanism — Norway’s feriepenger at 10.2% or more of the previous year’s earnings, the Netherlands’ 8% holiday allowance — and many Australian awards add 17.5% leave loading on top of ordinary pay.
TOIL (time off in lieu) and overtime banking
Paid time off granted instead of overtime pay. Hours worked beyond contract are banked and later taken as leave. Where an hours balance is owed at separation, it is a liability just like untaken annual leave, which is why tracking tools show it alongside leave balances.
Employer of record (EOR)
A company that legally employs a worker in their country on behalf of another business, issuing the local contract and running payroll, social contributions and statutory leave, while the client directs the day-to-day work. The usual route for the first few hires in a country where a business has no entity.
Posted worker
An employee sent temporarily by their employer to work in another EU member state. Under the Posting of Workers Directive the host country’s core terms, including minimum paid annual leave, apply from day one, and nearly all host-country terms after twelve months. Social security normally stays in the home country for up to 24 months.
Habitual place of work
The country in which, or from which, an employee ordinarily carries out their work. Under the Rome I Regulation its mandatory employment rules — including minimum leave and payout — apply as a floor regardless of which law the contract chooses. It is decided by where the work is actually done, not where the employer is registered.
Collective agreement (CCT, CCN)
A contract negotiated between employers and trade unions setting terms for a sector or workforce, often granting more leave than the statutory minimum. In Switzerland a convention collective de travail (CCT), in France a convention collective nationale (CCN). Where one applies it usually overrides both the statute and the individual contract in the employee’s favour.
Audit trail
A tamper-evident record of who requested, approved or changed leave and balances, and when. It is the evidence that decides a payout dispute: not what the balance is now, but what was approved and what the balance was on a given date. Spreadsheets and chat threads do not provide one.
Definitions summarise the law in general terms and are not legal advice. National rules differ; the country pages and US state pages carry the specifics and their sources.