AZE.US
Recent amendments to Azerbaijan’s Labor Code have created a practical question for employees: how should compensation for unused vacation days be calculated, and must that payment be no lower than the worker’s latest salary?
The issue concerns the difference between two types of payments: vacation pay when an employee actually goes on leave, and compensation paid for vacation days the employee did not use.
Independent auditor Altay Jafarov told Oxu24.com that under Article 111 of the Labor Code, an employee who goes on vacation keeps their job and receives average pay for the vacation period. Under the updated rule, that amount must not be lower than the employee’s most recent salary.
But compensation for unused vacation days is treated differently.
According to Jafarov, such compensation is calculated under Article 140 of the Labor Code. That article sets the calculation based on the employee’s average earnings over the previous 12 calendar months. If the employee has worked for less than 12 months, the calculation is based on the full calendar months actually worked.
The key point is that the “not lower than the latest salary” rule applies when the employee is on vacation. It does not automatically apply when the employee receives money for unused vacation days.
That means compensation may be lower than the worker’s most recent monthly salary if the average daily calculation produces a smaller amount.
Jafarov gave an example. If an employee takes vacation in February 2026 and the average vacation pay comes to 1,120 manats, while the February salary is 1,200 manats, the employee must receive 1,200 manats for the vacation period.
But if the same employee asks to receive compensation for 25 unused vacation days from previous years, the payment is calculated by the average daily amount. If one day is calculated at 40 manats, the compensation will be:
40 manats × 25 days = 1,000 manats.
Even though 1,000 manats is less than the latest monthly salary of 1,200 manats, the worker would still receive 1,000 manats as compensation for unused leave.
In other words, the Labor Code gives additional protection when a worker actually goes on vacation. But when vacation days are converted into a cash compensation, the payment is calculated by the average earnings formula and may be lower than the employee’s last salary.
AZE.US