Pursuant to the provisions of the Labor Code, if the
employment relationship is terminated or expires, the
employee is entitled to a cash equivalent in lieu of
accrued vacation leave or part thereof. The amount
of the equivalent may differ depending on the year in
which the right to vacation leave becomes vested in
the employee. The obligation to pay cash equivalent
in lieu of leave does not depend on the type of
employment contract, duration of employment, or
which party initiates the termination. The detailed
procedure for calculation of the cash equivalent in
lieu of accrued vacation leave is set forth under the
Regulation on Detailed Principles of Granting
Holiday Leave, Determination and Payment of
Remuneration for Time of Leave and of Cash
Equivalent in Lieu of Leave (Journal of Laws
1997.2.14). Pursuant to the Regulation, the
procedure for calculation of the equivalent in lieu of
leave payable to an employee is as follows:
- Firstly, the pay providing the basis for the
calculation, including both fixed and variable
components, needs to be determined. The fixed
components of pay represented by the fixed
monthly rate are applied for the purpose of the
calculation in the amount payable in the month
in which the right to the cash equivalent
becomes vested. The variable components of pay
for periods of up to one month (for example
overtime and nighttime pay) obtained by the
employee in the period of three months
immediately preceding the month in which the
right to the cash equivalent becomes vested, are
applied for the purpose of the calculation in the
mean amount for the period of three months. The
variable components of pay for periods of over one month (e.g. quarterly bonuses) paid to the
employee in the period of 12 months
immediately preceding the month in which the
right to the cash equivalent becomes vested, are
applied in the mean amount for the relevant
period. - Secondly, the special equivalent ratio needs to be
determined, reflecting the mean number of
working days in a month. The ratio is established
separately in each calendar month. It is
calculated by subtracting the total number of
Sundays and public holidays in the relevant year
based on the working time schedule in an
average five-day working week from the number
of days in the relevant calendar month and then
dividing the resulting figure by 12. The ratio is
calculated only for the calendar year in which
the equivalent becomes vested in the employee,
regardless of the years for which the employee is
entitled to the accrued leave. In 2012, in the case
of full-time employees for whom Saturday is a
day off with respect to an average five-day
working week, the ratio is 21. When calculating
the cash equivalent for an employee employed part-time, the monthly average number of
working days in a month is established in
proportion to the working time laid down under
the employment contract. - The next step is to establish the equivalent for 1
day of leave. This is calculated by dividing the
basis, being the sum of the various components
of monthly pay, by the equivalent ratio. - In order to calculate the equivalent for 1 hour of
leave, the sum arrived at needs to be divided by
8. - The last step is to calculate the equivalent in lieu
of accrued vacation leave to which the employee
is entitled. This is established as the product of
the equivalent for 1 hour of leave and the
number of hours of the employee’s accrued
leave.
The date on which an employee becomes vested with
the right to the equivalent in lieu of accrued leave is
the date on which the employment relationship
ceases as a result of expiry or termination. It is on
that date that the equivalent needs to be paid to the
employee. The amount of the equivalent is calculated
based on the employee’s pay from the period directly
preceding the month in which the employment
relationship ceases, even if the employee is entitled
to the equivalent in lieu of any leave accrued in the
previous years of employment.
MILLER, CANFIELD,
W. BABICKI, A. CHEŁCHOWSKI I WSPÓLNICY SP.K.
ul. Batorego 28-32
81-366 Gdynia
Tel. +48 58 782-0050
Fax +48 58 782-0060
gdynia@pl.millercanfield.com
ul. Nowogrodzka 11
00-513 Warszawa
Tel. +48 22 447-4300
Fax +48 22 447-4301
warszawa@pl.millercanfield.com
ul. Św. Mikołaja 7
50-125 Wrocław
Tel. +48 71 337-6700
Fax +48 71 337-6701
wroclaw@pl.millercanfield.com
Disclaimer: This publication has been prepared for clients and professional associates of Miller Canfield. It is intended to provide only a summary of certain recent legal
developments of selected areas of law. For this reason the information contained in this publication should not form the basis of any decision as to a particular course of
action; nor should it be relied on as legal advice or regarded as a substitute for detailed advice in individual cases. The services of a competent professional adviser
should be obtained in each instance so that the applicability of the relevant legislation or other legal development to the particular facts can be verified.