Most employees like to take their annual vacations, but sometimes, for various reasons, vacations need to be postponed. Paragraph one of Section 149 of the Labor Law sets out the right of every employee to annual paid vacation. Such vacations may not be less than four calendar weeks, not counting public holidays. In accordance with the Labor Law, by agreement between employer and employee, an annual paid vacation in the current year may be granted in parts. The law imposes certain restrictions, providing that one part of the vacation in the current year may not be less than two uninterrupted calendar weeks.
Where the granting of the full annual paid vacation to an employee may adversely affect the normal course of activities in the undertaking, it is permitted to postpone part of the vacation. Transfer of the annual paid vacation to the subsequent year is possible only with the written consent of the employee, and the vacation dates are to be taken within the next year.
The content of the Labor Law does not provide for the option that an employee does not utilize his or her annual paid vacation in the current calendar year at all. Accordingly, although the Labor Law provides that an annual paid vacation is the right of the employee, granting of a vacation is an employer's duty that follows from the duty of the employer to ensure fair, safe and healthy working conditions.
Section 31 of the Labor Law provides that all claims arising from the employment relationship are subject to a limitation period of two years, including claims for granting annual vacations. Thus, the employee has the right to use only accumulated annual paid vacation that has not accrued for more than two years. If the employee does not exercise his or her rights, he or she shall forfeit the rights irreversibly.
Paragraph five of Section 149 of the Labor Law provides that it is not permitted to compensate annual paid vacation with money, except where the employment relationship is terminated and the employee has not utilized his or her annual paid vacation.
If the employer has properly kept track of annual vacation time taken, in the event of termination of the employee, there should be no dispute as to the amount of unused accrued vacation and respective compensation due. In practice, however, it is sometimes the case that unused accrued vacation is outstanding for periods exceeding two years, and the employee, on termination, seeks compensation accordingly.
Unfortunately, there is no uniform accounting practice on whether the accrued unused vacation prior to two years' time is compensable or not and the issue has not been judicially considered in any meaningful way. Therefore, if the employer does not enforce taking of annual paid vacations, he assumes the risk in case of termination that if an employee makes a claim, a court may obligate the employer to pay compensation for all accrued unpaid vacation, regardless of whether it has been accrued within the past two years or some period of time before then.
Annija Melko is an associate with Kronbergs & Cukste. Kronbergs & Cukste is a founding member of Baltic Legal Solutions providing quality legal services in the Baltics together with Jurevicius, Balciunas & Bartkus of Lithuania and Glikman & Partnerid in Estonia. Baltic Legal Solutions is a member of the Pinsent Masons Luther Group, an international grouping of business law firms.