Guides / Remote & multi-country teams
US Company Hiring in Europe: What Changes for Paid Leave
Everything a US employer can leave to policy is set by law in Europe: at least four weeks of paid leave, public holidays on top, mandatory payout of unused days at exit, and no cashing out while employed. What to expect country by country, and how to structure a policy that works on both sides.
Everything you can leave to policy in the US is fixed by law in Europe. Every EU employee gets at least four weeks of paid annual leave, public holidays come on top, unused leave must be paid out when they leave, and you cannot buy it back while they are employed. The country the person works from — not your head office — decides the exact numbers.
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The gap in one table
| United States | European Union | |
|---|---|---|
| Paid annual leave required by law | None at federal level | At least 4 weeks (20 working days); several countries more |
| Public holidays | Often counted inside PTO | Separate, on top of annual leave (UK is the exception) |
| Payout of unused leave at exit | Depends on the state; in most, on your written policy | Required everywhere |
| Cashing out leave while employed | Common in policies | Not permitted for the statutory minimum |
| “Use it or lose it” | Allowed in most states with a written policy | Restricted; leave prevented by sickness or parental leave is protected |
| Who decides the rules | Mostly the employer | Mostly the law of the country where the person works |
The habit that causes the most trouble for US employers is the first row. Because nothing is required at home, US policies are written as gifts. In Europe the same benefit is a legal entitlement with a floor, a payout obligation and a set of rules about how it must be used.
The numbers to expect
The Working Time Directive sets the floor at four weeks. National law sets the actual minimum, converted here to working days on a five-day week so the figures are comparable:
- Luxembourg — 26
- Austria, Denmark, France, Sweden — 25
- Portugal, Spain — 22
- Germany, Netherlands, Ireland, Italy, Belgium, Switzerland — 20
- United Kingdom — 28, but employers may count public holidays within it
Two things to read alongside the numbers: contracts and collective agreements commonly exceed them (German contracts at 25–30 days are the norm despite a 20-day statute), and every one of these countries requires payout of the untaken balance when employment ends.
The “unlimited PTO” trap
An unlimited or “flexible” policy assumes leave is a discretionary perk with no balance. In Europe the statutory minimum is a right that must be genuinely available, must be taken as rest, and — in every EU country — must be paid out if untaken at exit. A policy with no accrued balance has nothing to pay out and no way to prove the minimum was honoured. Companies running “unlimited” for European staff generally keep a formal accrued entitlement underneath it and treat the flexibility as extra.
Sick leave is separate, and mostly statutory too
US policies often fold sickness into a single PTO bucket. European systems keep them apart: sick leave is its own right, usually with statutory sick pay whose rate and duration are set nationally, and sickness during annual leave typically converts those days back into leave to be taken later. Budget for it separately and track it separately.
Payroll, contributions, notice and data
Hiring in Europe brings more than leave: payroll and social contributions in the country of work, statutory notice periods and dismissal protection that are far stronger than US at-will employment, and the GDPR on employee data. The mechanics of setting all that up — entity versus employer of record — are covered in Hiring your first employee in another country.
How to structure a policy that works on both sides
- Set a global floor at or above your highest European statutory minimum — 25 or 26 days is common — so nobody in Europe is at the legal edge and the US team gets a real improvement.
- Attach each person to their location’s public-holiday calendar. Holidays are per workplace, not per company.
- Encode carryover, expiry and payout per country, not company-wide. The rules differ in ways a single formula cannot express.
- Keep an accrued balance for everyone, including under any “flexible” framing, so payout at exit is a number, not an argument.
- Track sick leave separately.
- For US staff, apply the state rule, not the head-office rule — twelve jurisdictions treat accrued PTO as wages.
Common questions
Can we apply our US PTO policy to European employees?
Only where it is at least as generous as the local statutory minimum on every point — days, public holidays, carryover and payout — and it almost never is, because US policies are built on the assumption that none of those are legally required. The local floor applies regardless of what the policy says.
Does 'unlimited PTO' work in Europe?
Not cleanly. In the EU the statutory minimum must be genuinely available and taken as rest, and the untaken balance is paid out at exit — which means you need a quantifiable accrued entitlement underneath any 'unlimited' framing. Most companies keep a formal accrual and treat the flexibility as an addition to it.
Is sick leave part of the annual leave allowance in Europe?
No. Sick leave is separate and in most European countries is itself a statutory right with statutory pay, governed by national rules. Sickness during annual leave typically converts those days back to leave to be taken later.
Which country's rules apply to a European working for our US company remotely?
The country where they habitually work. The Rome I Regulation lets the contract choose a governing law, but the mandatory protections of the work country — including minimum paid leave and payout — apply as a floor whatever the clause says.
Related guides
Managing Annual Leave Across Multiple Countries
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Hiring Your First Employee Abroad: Leave, Holidays & Payroll
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Which Country's Leave Law Applies to a Remote Employee?
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Sources
- Directive 2003/88/EC (Working Time Directive), Article 7 — at least four weeks' paid annual leave
- Regulation (EC) No 593/2008 (Rome I), Article 8 — law applicable to individual employment contracts
- Your Europe — Leave and flexible working in the EU
- Leave Atlas — US PTO payout laws by state, each sourced to its labor agency
General information, not legal advice. Rules change and national implementations differ — confirm against the current text or a local employment lawyer before acting. See our methodology.