Should I reschedule my annual leave? – Or what changes are made to absence pay?

Calculation of absence pay enacted on 1 January made it difficult for many people to schedule their annual summer leave. Employees can now “relax for the summer” thanks to the recent amendment to the Labour Code. Starting from 1 August, they no longer have to fear that they would earn less during the periods of rest.

Regulation of the absence pay, enforced starting January 2013, raised many questions and interpretation problems both for employees and employers. Indeed, according to the current rules, the absence pay per hour for the period of annual leave must be determined based on the monthly average number of hours i.e. 174. This multiplier did not take into account the actual number of hours in the given month, thus the employee’s wages for periods of absence or annual leave could differ depending on the actual month of the annual leave.

According to the above regulation, it may happen that employees become entitled to less earnings than the monthly wage specified in their contracts.

Thanks to the amendments in force from 1 August, there will be no differences in the future in the graded wages based on whether or not the employee is on leave.  According to the legal amendment, instead of the multiplier 174, absence pay must be determined based on the basic wage per hour according to the general working schedule applicable for that month and the number of hours to be worked. This means that similarly to the practices of the previous years, only the number of working days of a given month must be determined.

The new regulation allows the employer to pay the absence pay by settling the monthly wage or hourly wage and lump-sum allowance for the period of absence. Thus, the wage for the period of absence does not have to be calculated, it is acceptable for the employer to simply pay the monthly basic wage and statutory allowances. This alternative solution simplified administrative burdens of taking the annual leave for both parties.

The basic wage, performance-based wage and statutory allowances continue to be “elements” of the absence pay, and must be taken into account in calculation. However, there is a change compared to previous practices in that the Sunday allowance and lump-sum allowance must also be taken into account in calculation starting from 1 August.

According to the Labour Code currently in force, many people are confused about the determination of allowances for the periods of absence. Employees are entitled to all the statutory allowances during the period of absence which they would be entitled to during actual work based on their scheduled shifts. If the employee did not have any scheduled shifts, only the specified allowances had to be taken into account in calculation, which caused many interpretation and calculation problems in practice.

According to the amendment adopted now, starting from August the lump-sum allowance in addition to the basic wage will also be considered part of the absence pay. It will not matter whether or not the employee had any shifts scheduled for the period of absence. During the reference period (generally the last 6 months), Sunday allowance, night-shift allowance and shift allowance, duty and stand-by allowance must be taken into account in calculation of the absence pay, if the conditions stipulated by the law are satisfied e.g. if the employee worked 1/3 of Sundays during the reference period in scheduled shifts.

If the employer and the employee agree on a lump sum as remuneration for extraordinary work, the amendments in force starting from August stipulate that this lump sum will be part of the absence pay too.

The legal amendment does not affect the payments which the employers must calculate taking into account the absence pay, such as severance pay, remuneration for exemption periods, payment for leave not taken, etc.

Another important change brought by the amendment is that the law limits the number of leave days that can be carried over to the year following the year when they are due. According to the provisions in force until now, one third of the basic leave and age-based supplementary leave could be carried over to the next year, based on the parties’ agreement on a case by case basis.  Starting from 1 January 2014, only the age-based supplementary leave can be carried over to the next year, thus the employees must spend at least twenty working days by resting during the given year.

Thanks to the amendments in force from 1 August, the employees no longer have to worry about the month in which they should take their annual leave, as they will not earn less even if they take their leave in a month which has less than 22 working days.

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