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Subtle points in calculating the average salary during leave
Subtle points in calculating the average salary during leave
Starting from 2026, significant amendments have been made to the Labour Code. One of these changes concerns the calculation of the average salary during annual leave. The issue is commented on by Altay Jafarov.
Various explanations regarding this matter have been provided in the media. However, there is an important nuance related to the calculation and payment of the average salary during annual leave. Article 111.1 of the Labour Code states that during the period of leave, an employee’s workplace, position (profession), and—where stipulated by this Code—the average salary, not lower than the employee’s last salary, shall be preserved. Furthermore, termination of the employment contract at the employer’s initiative and holding the employee disciplinarily liable during this period are not allowed. This period is included in the employee’s total length of service as well as professional seniority.
It is clear from the article that during leave the employee’s average salary is preserved; in simple terms, the employee is paid an average salary for the leave period. If the calculated leave payment is lower than the employee’s last salary, then the leave payment must be made in the amount of the last salary.
As is known, the calculation and payment of the average salary during leave are regulated by Article 140 of the Labour Code. According to paragraph 5 of this article, the average salary for the leave period must be paid to the employee no later than three days before the start of the leave. Employment contracts or collective agreements may establish other deadlines for the payment of the average salary for the leave period, provided that it is paid no later than the day the next salary payment (advance or remaining portion) is made.
In this case, the following question arises: if the leave payment must be made no later than three days before going on leave, then under the requirements of Article 111, which month’s last salary should be taken as the basis and how should it be applied?
To fully clarify this issue, let us consider an example.
Example: The salary of an employee of “AA” LLC was 1,000 manats for January and 1,200 manats for February. The employee was on leave for 36 days, from January 5 to February 10. Based on the requirements of Article 140 of the Code, the employee’s average daily salary was calculated as 29 manats. Accordingly, the leave payment for 36 days amounted to 1,044 manats: 29 × 36 = 1,044 manats.
The company calculated and paid the leave payment to the employee three days in advance.
The question then arises: is the calculated leave payment of 1,044 manats less than or greater than the employee’s last salary under the requirements of Article 140 of the Labour Code?
At first glance, the leave payment of 1,044 manats appears to be higher than the employee’s January salary of 1,000 manats. However, the leave payment calculated for 31 days amounts to 899 manats: 31 × 29 = 899 manats.
This is lower than the January salary. In other words, while the total leave payment for 36 days exceeds the last month’s salary, the average monthly leave payment (for 31 days), amounting to 899 manats, is lower than the January salary.
The important point here is that the leave payment is calculated and paid in advance, and after the employee returns from leave, recalculations are carried out. Thus, in the above example, since the leave period covers January 5 to February 10, the leave payment calculated for January 5–31 is added to the January salary, and the leave payment calculated for February 1–10 is added to the February salary, after which the relevant deductions are made.
Therefore, let us first examine the January calculations. It should be noted that the company operates on a five-day working schedule, January has 19 working days, and due to public holidays, the first working day is January 5. Since the employee went on leave on January 5, they were effectively on leave for the entire month of January, and no salary is actually calculated for that month.
Now let us look at the leave payment calculated for the period January 5–31. This period includes 27 calendar days, and with a daily average salary of 29 manats, the leave payment for January amounts to 783 manats: 29 × 27 = 783 manats.
For the period February 1–10 (as the leave is extended by one day due to January 20 being the National Day of Mourning), the leave payment amounts to 261 manats: 9 × 29 = 261 manats.
From February 11 to February 28, there are 13 working days. Therefore, the salary calculated for February amounts to 780 manats: 1,200 / 20 (working days) = 60 manats; 60 × 13 = 780 manats.
The calculations show that although the last monthly salary in January was 1,000 manats, the leave payment calculated for January was 783 manats, and in February the calculated salary was 780 manats with a leave payment of 261 manats, resulting in a total monthly income of 1,041 manats (780 + 261). Moreover, the leave payment was calculated not for 30 or 31 days, but for 36 days. Therefore, it is not possible to apply the amount of the last monthly salary directly in these calculations.
So, should the last salary referred to in Article 111 of the Labour Code be considered as the January salary of 1,000 manats? If the last salary is 1,000 manats, should it be applied for 30 days or for 36 days? In some cases, leave periods may be combined, and the number of leave days may be not 30, but 45 or more. In such cases, for how many days should the last salary be taken into account?
As can be seen, applying the last monthly salary of 1,000 manats for January to such cases is not possible. Therefore, we should once again carefully examine the wording of Article 111 of the Labour Code. The article states: “... the average salary is preserved, provided that it is not lower than the last salary ...”. Let us look at the explanation of the term “last salary.” Article 154, paragraph 1 of the Labour Code defines salary as the daily or monthly amount paid by the employer in cash or in kind for the work performed (services rendered) by the employee during the relevant working time, as well as the total of additional payments, bonuses, and other remunerations.
This provision clearly shows that salary includes not only monthly payments but also daily payments. In other words, salary may be monthly or daily. Therefore, since Article 111 refers to the “last salary,” the calculations should be based not on the monthly salary, but on the daily salary. Likewise, during leave, the average salary is calculated on a daily basis and multiplied by the number of leave days.
Accordingly, when calculating leave payments, the employee’s last daily salary should be compared with the daily average salary calculated for the leave period. Continuing our example, January is taken as the last month before the leave, and the daily salary for January must be calculated. Since annual leave is calculated and paid based on calendar days, calendar days must also be taken into account when determining the daily salary. Given that January has 31 calendar days, the daily salary amounts to 32.26 manats (1,000 / 31). However, the daily salary calculated for the leave payment was 29 manats. Therefore, the leave payment should be calculated not on the basis of 29 manats, but on the basis of 32.26 manats. As a result, the average salary for the leave period will amount to 1,161.36 manats: 32.26 × 36 days = 1,161.36 manats.
Starting from 2026, significant amendments have been made to the Labour Code. One of these changes concerns the calculation of the average salary during annual leave. The issue is commented on by Altay Jafarov.
Various explanations regarding this matter have been provided in the media. However, there is an important nuance related to the calculation and payment of the average salary during annual leave. Article 111.1 of the Labour Code states that during the period of leave, an employee’s workplace, position (profession), and—where stipulated by this Code—the average salary, not lower than the employee’s last salary, shall be preserved. Furthermore, termination of the employment contract at the employer’s initiative and holding the employee disciplinarily liable during this period are not allowed. This period is included in the employee’s total length of service as well as professional seniority.
It is clear from the article that during leave the employee’s average salary is preserved; in simple terms, the employee is paid an average salary for the leave period. If the calculated leave payment is lower than the employee’s last salary, then the leave payment must be made in the amount of the last salary.
As is known, the calculation and payment of the average salary during leave are regulated by Article 140 of the Labour Code. According to paragraph 5 of this article, the average salary for the leave period must be paid to the employee no later than three days before the start of the leave. Employment contracts or collective agreements may establish other deadlines for the payment of the average salary for the leave period, provided that it is paid no later than the day the next salary payment (advance or remaining portion) is made.
In this case, the following question arises: if the leave payment must be made no later than three days before going on leave, then under the requirements of Article 111, which month’s last salary should be taken as the basis and how should it be applied?
To fully clarify this issue, let us consider an example.
Example: The salary of an employee of “AA” LLC was 1,000 manats for January and 1,200 manats for February. The employee was on leave for 36 days, from January 5 to February 10. Based on the requirements of Article 140 of the Code, the employee’s average daily salary was calculated as 29 manats. Accordingly, the leave payment for 36 days amounted to 1,044 manats: 29 × 36 = 1,044 manats.
The company calculated and paid the leave payment to the employee three days in advance.
The question then arises: is the calculated leave payment of 1,044 manats less than or greater than the employee’s last salary under the requirements of Article 140 of the Labour Code?
At first glance, the leave payment of 1,044 manats appears to be higher than the employee’s January salary of 1,000 manats. However, the leave payment calculated for 31 days amounts to 899 manats: 31 × 29 = 899 manats.
This is lower than the January salary. In other words, while the total leave payment for 36 days exceeds the last month’s salary, the average monthly leave payment (for 31 days), amounting to 899 manats, is lower than the January salary.
The important point here is that the leave payment is calculated and paid in advance, and after the employee returns from leave, recalculations are carried out. Thus, in the above example, since the leave period covers January 5 to February 10, the leave payment calculated for January 5–31 is added to the January salary, and the leave payment calculated for February 1–10 is added to the February salary, after which the relevant deductions are made.
Therefore, let us first examine the January calculations. It should be noted that the company operates on a five-day working schedule, January has 19 working days, and due to public holidays, the first working day is January 5. Since the employee went on leave on January 5, they were effectively on leave for the entire month of January, and no salary is actually calculated for that month.
Now let us look at the leave payment calculated for the period January 5–31. This period includes 27 calendar days, and with a daily average salary of 29 manats, the leave payment for January amounts to 783 manats: 29 × 27 = 783 manats.
For the period February 1–10 (as the leave is extended by one day due to January 20 being the National Day of Mourning), the leave payment amounts to 261 manats: 9 × 29 = 261 manats.
From February 11 to February 28, there are 13 working days. Therefore, the salary calculated for February amounts to 780 manats: 1,200 / 20 (working days) = 60 manats; 60 × 13 = 780 manats.
The calculations show that although the last monthly salary in January was 1,000 manats, the leave payment calculated for January was 783 manats, and in February the calculated salary was 780 manats with a leave payment of 261 manats, resulting in a total monthly income of 1,041 manats (780 + 261). Moreover, the leave payment was calculated not for 30 or 31 days, but for 36 days. Therefore, it is not possible to apply the amount of the last monthly salary directly in these calculations.
So, should the last salary referred to in Article 111 of the Labour Code be considered as the January salary of 1,000 manats? If the last salary is 1,000 manats, should it be applied for 30 days or for 36 days? In some cases, leave periods may be combined, and the number of leave days may be not 30, but 45 or more. In such cases, for how many days should the last salary be taken into account?
As can be seen, applying the last monthly salary of 1,000 manats for January to such cases is not possible. Therefore, we should once again carefully examine the wording of Article 111 of the Labour Code. The article states: “... the average salary is preserved, provided that it is not lower than the last salary ...”. Let us look at the explanation of the term “last salary.” Article 154, paragraph 1 of the Labour Code defines salary as the daily or monthly amount paid by the employer in cash or in kind for the work performed (services rendered) by the employee during the relevant working time, as well as the total of additional payments, bonuses, and other remunerations.
This provision clearly shows that salary includes not only monthly payments but also daily payments. In other words, salary may be monthly or daily. Therefore, since Article 111 refers to the “last salary,” the calculations should be based not on the monthly salary, but on the daily salary. Likewise, during leave, the average salary is calculated on a daily basis and multiplied by the number of leave days.
Accordingly, when calculating leave payments, the employee’s last daily salary should be compared with the daily average salary calculated for the leave period. Continuing our example, January is taken as the last month before the leave, and the daily salary for January must be calculated. Since annual leave is calculated and paid based on calendar days, calendar days must also be taken into account when determining the daily salary. Given that January has 31 calendar days, the daily salary amounts to 32.26 manats (1,000 / 31). However, the daily salary calculated for the leave payment was 29 manats. Therefore, the leave payment should be calculated not on the basis of 29 manats, but on the basis of 32.26 manats. As a result, the average salary for the leave period will amount to 1,161.36 manats: 32.26 × 36 days = 1,161.36 manats.