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If the last salary is higher, how should it be allocated across the months?
If the last salary is higher, how should it be allocated across the months?
When an employee’s leave period covers two months, calculations for that period must be carried out separately for each month and compared with the last salary. But how should the allocation across months be made if the last salary determined under Article 111 of the Labor Code is higher than the leave pay calculated under Article 140?
Economist expert Anar Bayramov explains with examples.
Example 1: An employee working a five-day workweek takes 14 calendar days of annual leave starting from January 23, 2026. If the leave pay for 14 calendar days is 1,000 AZN, while the amount calculated based on working days is 1,400 AZN, the employer will consider 1,400 AZN as the leave pay in accordance with Article 111.
The leave period covers two months:
— January: 9 calendar days
— February: 5 calendar days
— Total: 14 calendar days
Allocation is as follows:
1,400 ÷ 14 = 100 AZN (per calendar day)
January: 100 × 9 = 900 AZN
February: 100 × 5 = 500 AZN
Thus, 900 AZN is recognized in January income and 500 AZN in February income, and both are subject to mandatory contributions separately.
A common practical question is whether the new calculation method applies if the employee took leave before the amendments to the Labor Code came into force (January 16, 2026).
Example 2: An employee took 7 days of leave on January 7, 2026. Should the leave pay be compared with the last salary after the amendments? In our opinion, this is not necessary.
According to Article 87.2 of the Constitutional Law “On Normative Legal Acts,” provisions improving the legal position of individuals may apply retroactively.
However, while the comparison mechanism benefits the employee, it may worsen the employer’s position. Therefore, applying this rule retroactively is not considered appropriate. Still, employers may voluntarily apply it to leaves granted from January 1, 2026.
Example 3: An employee took 14 days of leave starting January 10, 2026. In this case, the employer should compare the leave pay with the last salary for the portion of leave falling after January 16, 2026. If the leave pay is lower, appropriate adjustments should be made.
When an employee’s leave period covers two months, calculations for that period must be carried out separately for each month and compared with the last salary. But how should the allocation across months be made if the last salary determined under Article 111 of the Labor Code is higher than the leave pay calculated under Article 140?
Economist expert Anar Bayramov explains with examples.
Example 1: An employee working a five-day workweek takes 14 calendar days of annual leave starting from January 23, 2026. If the leave pay for 14 calendar days is 1,000 AZN, while the amount calculated based on working days is 1,400 AZN, the employer will consider 1,400 AZN as the leave pay in accordance with Article 111.
The leave period covers two months:
— January: 9 calendar days
— February: 5 calendar days
— Total: 14 calendar days
Allocation is as follows:
1,400 ÷ 14 = 100 AZN (per calendar day)
January: 100 × 9 = 900 AZN
February: 100 × 5 = 500 AZN
Thus, 900 AZN is recognized in January income and 500 AZN in February income, and both are subject to mandatory contributions separately.
A common practical question is whether the new calculation method applies if the employee took leave before the amendments to the Labor Code came into force (January 16, 2026).
Example 2: An employee took 7 days of leave on January 7, 2026. Should the leave pay be compared with the last salary after the amendments? In our opinion, this is not necessary.
According to Article 87.2 of the Constitutional Law “On Normative Legal Acts,” provisions improving the legal position of individuals may apply retroactively.
However, while the comparison mechanism benefits the employee, it may worsen the employer’s position. Therefore, applying this rule retroactively is not considered appropriate. Still, employers may voluntarily apply it to leaves granted from January 1, 2026.
Example 3: An employee took 14 days of leave starting January 10, 2026. In this case, the employer should compare the leave pay with the last salary for the portion of leave falling after January 16, 2026. If the leave pay is lower, appropriate adjustments should be made.