Summer Vacation Season: What to Pay Attention to When Calculating Vacation Pay

Basic Principle: Retention of Average Earnings

During statutory leave, the employee retains their average earnings. The procedure for its calculation is regulated by a separate Government Resolution No. 496 dated June 21, 2017.

What Period is Used as the Basis?

For calculations, the so-called calculation period is used – the last three calendar months preceding the month in which the leave begins. For example, for a vacation in July, the calculation period will be April, May, and June. The average earnings are determined based on payments accrued for the time actually worked precisely in these months.

What is Included in the Calculation?

All types of income directly related to work activity are included:

• Salary (base pay) or tariff rate.
• Additional pay for night work, work on weekends and holidays, and overtime work.
• Allowances and supplements (for seniority, qualifications, work results).
• Bonuses and remunerations provided for by the wage system.

What is Not Included in the Calculation?

Payments of a social nature or those not related to the performance of job duties are excluded from the calculation:

• Payment for previous vacations.
• Sick leave benefits.
• Business trip allowances (per diems).
• Compensations (e.g., for non-competition).
• One-time holiday bonuses.

Practical Calculation Example (Daily Format)

Suppose an employee goes on vacation in June. Their calculation period is March-May. During these months, they received 6,000 euros, having worked 62 days. The average daily earnings will be: 6,000 euros / 62 days = 96.77 euros. For 10 days of vacation, they will receive: 96.77 euros * 10 = 967.70 euros.

If the Work Schedule is Non-Standard (Hourly Calculation)

For employees with a shift or non-fixed schedule, the calculation of the average hourly wage is applied. The formula is similar: earnings for the calculation period are divided by the number of hours actually worked. For example, with an income of 6,000 euros for 460 hours, the average hourly wage is 13.04 euros. With a norm of 40 hours per week, vacation pay for one week of rest will be: 13.04 euros * 40 hours = 521.60 euros.

Important Nuances and Exceptions

• Time when the employee did not actually work (sick leave, previous vacation, downtime) is excluded from the calculation period along with payments received for that time.
• If there was no worked time and earnings in the calculation period (e.g., after a long parental leave), the calculation is based on the salary specified in the employment contract.
• Vacation granted in calendar weeks (e.g., for a flexible schedule) is paid based on the established norm of working hours per week for the employee.
• If the work schedule changes (e.g., transitioning from part-time to full-time), vacation pay may be calculated proportionally to the time worked in different modes.
• The calculation period does not change, even if the vacation lasts several months or the payment is made later. It is always tied to the start date of the rest period.

Understanding these rules makes the process of receiving vacation pay more transparent and helps both parties to the employment relationship – both employees and employers – avoid errors and contentious situations.