Guide to paying untaken leave: cash compensation only on termination (art. 144, 146 Codul muncii), the formula based on the average of the last 3 months and the 18-month carry-over.
Translated from Romanian. This article covers Romanian labour and tax law; the Romanian version is canonical and is updated first.
An employee who leaves the company with untaken leave days is entitled to be paid for them. But note: compensation in money is allowed only when the contract ends, not during it. Here is the rule and the calculation formula, which is easy to get wrong.
The Labour Code (Codul muncii) starts from the idea that the right to annual leave cannot be replaced with money for as long as the employment relationship exists. Leave serves the purpose of rest, not of a bonus. For that reason, “I’ll pay you for your days so that you come to work” is not lawful during the contract.
The only exception is termination of the contract: on leaving, the leave days left untaken are compensated in money (art. 144 and 146 of the Codul muncii). The compensation applies regardless of the reason for termination — resignation, dismissal, agreement of the parties or termination by operation of law.
The legal minimum leave is 20 working days per year. When the employee does not manage to take the leave in that year, it can be carried over, and the legislation provides a deadline (as a rule 18 months) within which the carried-over days must be granted. Carry-over does not cancel the right, but neither does it automatically turn it into money — payment remains conditional on the contract ending.
The amount to be compensated is calculated as follows:
outstanding days × the average daily leave pay.
The average daily leave pay is determined on the basis of the average of the salary entitlements over the last 3 months before the moment of payment. That base includes:
Occasional items are not included in the base: one-off bonuses, irregular premiums, meal vouchers. Confusing “what is permanent” with “what is occasional” is the most frequent source of miscalculation — and of litigation.
If public holidays would have fallen during the leave period, they are not deducted from the leave days: they are non-working days paid separately anyway. The employee does not “lose” leave days because a holiday fell within the period.
Compensation for untaken leave is a right, not a favour. If the employer refuses, the employee can turn to ITM (the labour inspectorate) and, ultimately, to the courts. The limitation period for salary rights of this kind is, as a rule, 3 years. A refusal may also attract penalties for the employer.
An employee with 8 untaken leave days resigns. The average of the entitlements over the last 3 months (base salary plus permanent bonuses) gives an average daily amount; this is multiplied by the 8 days and produces the sum to be compensated, which is added to the final payslip. The reason for leaving (resignation) does not change the right.
The time tracking and leave module in Workly keeps the balance of days up to date for each employee and flags the 18-month carry-over, so that days are not lost. On termination of the contract you therefore have the exact number of uncompensated days, from the records, not from a file reconstructed after the fact — which is precisely the part where litigation starts.
Calculating the amount to be compensated — the 3-month average with permanent bonuses included and occasional items excluded — is for now handled as an adjustment on the final payslip; automating it is in progress. You can check any case with the untaken leave calculator on this site.
Informational article, accurate at the date of publication. Not legal advice. The way leave pay is calculated and the carry-over rules depend on the specific situation and may change — always check the framework in force at the official source (Codul muncii, Monitorul Oficial) or consult a specialist before taking a decision.
Unpaid leave: the legal basis, the employer's right to refuse, the duration set by internal rules, and the effects on length of service, contribution history and insured status.
Days off for marriage, birth or bereavement: what art. 152 of the Codul Muncii provides, why in the private sector the number of days is set by the internal rules, and how to grant them.
How to keep track of remaining leave days: calculating the balance, pro-rata entitlements, the 18-month carry-over, the classic Excel errors and how to eliminate them.
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