Annual leave (urlop wypoczynkowy) is one of the basic rights of every employee working under an employment contract. However, the situation becomes much more complicated when the employment relationship is being terminated. Many questions arise, especially about whether leave can be granted during the notice period and how it is settled.
Annual leave during the notice period raises many doubts among both employers and employees. Can the employer decide unilaterally to send an employee on leave? How is proportional leave calculated? What happens to unused leave after the employment ends?
Under Article 167¹ of the Labour Code (Kodeks pracy), during the notice period the employee is obliged to use the leave due to them if the employer grants it during that time. This means that the employer has the right to decide unilaterally to send the employee on annual leave
The basic right to annual leave
Every employee working under an employment contract has a guaranteed right to annual, uninterrupted, paid leave. This fundamental right follows directly from the Labour Code and is an essential element of the employment relationship.
Annual leave is a special period during which the employee is released from the obligation to work while keeping the right to remuneration. Pay for the leave period should be the same as if the employee had been working during that time. This means that the employer cannot reduce remuneration because the employee is on leave.
Example: An employee, Jan Kowalski, receives a basic salary of PLN 4,000 and a seniority allowance of PLN 300. In the previous three months he received bonuses of PLN 500, PLN 800 and PLN 400. His holiday pay will be PLN 4,000 + PLN 300 + PLN 566.67 (average bonus) = PLN 4,866.67.
For employees whose pay consists of a fixed and a variable part, calculating holiday pay requires particular care. It is necessary to take into account not only the basic salary, but also the average of the variable allowances received in previous months.
Holiday pay should match the amount the employee would have received for working during that period. For variable components of pay, an average from the period before the leave is calculated
The right to leave is personal and cannot be transferred to another person. At the same time, the employer must allow the employee to take the leave due in kind, and where the leave is not used because the employment relationship is terminated or expires - pay an appropriate cash equivalent (Article 171 § 1 of the Labour Code).
The employer's unilateral decision to grant leave
The notice period comes with special rules on annual leave. The most important of them is that the employer can unilaterally send the employee on leave, without the employee's consent or request.
The employer can send the employee on annual leave during the notice period regardless of which party initiated the termination. The length of the notice period does not matter either - the rule applies both to a two-week and to a three-month notice period.
The employee can submit a leave request during the notice period as well, and leave on demand (up to 4 days a year, Article 167² of the Labour Code) is available to them on the usual terms. However, leave under Article 167¹ is decided by the employer, and the employee cannot refuse to use it if the employer makes that decision
The employer's unilateral decision can cover both outstanding leave and current leave. Outstanding leave is due to the employee in full, while current leave is due in proportion to the period worked in the given calendar year (Article 167¹, second sentence, in conjunction with Article 155¹ of the Labour Code).
A practical solution is to include the information about sending the employee on leave directly in the notice of termination. This approach ensures transparency and reduces possible misunderstandings about the dates and scope of the leave.
It is worth stressing that the employer is not obliged to grant leave during the notice period. This decision remains at its discretion and may be driven by various considerations - from organisational to financial.
How proportional leave is calculated
Calculating proportional leave in the year in which employment ends requires precise mathematical rules set out in the Labour Code. This process is particularly important for settling the employee's entitlements correctly.
Under Article 155¹ § 1 point 1 of the Labour Code, in the calendar year in which the employment relationship ends, the employee is entitled to leave in proportion to the period worked in that year. The exception is where the employee had already used leave in the amount due or a higher amount before the employment ended.
The procedure for calculating proportional leave consists of several stages:
- Determining the annual leave entitlement due in the year in which employment ends
- Dividing the annual leave entitlement by 12 months
- Multiplying the result by the number of months worked in the given year
- Rounding the result up to full days (except in the first year of work)
When calculating proportional leave, all periods that count towards length of service under the law should be included. These include, among others, periods of sickness, maternity leave and military service
Practical example: An employee, Anna Nowak, was hired on 1 March 2024. Her employment contract was terminated on 31 December 2024. She worked for 10 months and is entitled to 20 days of leave a year. Calculation of proportional leave: 20 days ÷ 12 months × 10 months = 16.67 days, which rounded up gives 17 days of leave.
Pay particular attention to the rounding rules. For employees starting their first job, fractional parts of leave days are not rounded up. For other employees, the rule is to round up to full days.
| Length of service | Annual leave entitlement | Period of employment | Proportional leave |
|---|---|---|---|
| Under 10 years | 20 days | 6 months | 10 days |
| Under 10 years | 20 days | 9 months | 15 days |
| At least 10 years | 26 days | 6 months | 13 days |
| At least 10 years | 26 days | 9 months | 20 days |
Leave during notice amending terms of employment
Notice amending the terms of an employment contract (wypowiedzenie zmieniające) has specific consequences for annual leave. The rules for granting leave in this case differ from those for standard notice terminating the contract.
While notice amending terms is running, when the employer proposes new terms of work or pay under Article 42 of the Labour Code, the employer cannot unilaterally send the employee on annual leave. This changes only when the employee refuses to accept the proposed terms.
Notice amending terms turns into notice terminating the contract only after the employee refuses to accept the new terms of work. From that moment, the employer can send the employee on outstanding and current annual leave
The employee has the right to refuse the new terms before half of the notice period has elapsed. If they use this right, the notice amending terms automatically turns into notice terminating the contract when the full notice period ends.
Example: On 30 April, the employer gives an employee notice amending their pay terms with a three-month notice period, proposing a pay cut of PLN 500. The employee has until 15 June to refuse the new terms. If he refuses on 10 June, the contract will terminate on 31 July, and the employer will be able to send him on leave from 11 June until the end of the employment.
This solution protects the interests of both parties - the employer can propose new terms, and the employee keeps the right to reject them while retaining their leave entitlements.
How sickness affects leave during the notice period
A situation in which an employee sent on annual leave during the notice period falls ill requires particular attention from the employer. Sickness directly affects the course of the leave and the related financial settlements.
Under the applicable rules, sickness interrupts annual leave. This means that sick days are not counted as leave days, and the employee keeps the right to use them at a later date or to receive a cash equivalent.
In practice, for the period of certified incapacity for work the employee should receive sick pay or sickness benefit (zasiłek chorobowy), depending on how long the illness lasts and the applicable rules. At the same time, the employer will be obliged to pay a cash equivalent for the unused leave days.
Sickness during annual leave in the notice period creates additional costs for the employer. In addition to sick pay (sickness benefit is financed from the Social Insurance Fund), the employer must also pay a cash equivalent for the unused leave days
Consequences of sickness during leave in the notice period:
- Interruption of annual leave
- Payment of sick pay/sickness benefit
- Payment of a cash equivalent for unused leave days
- Higher costs for the employer
- Need for additional documentation
Employers should take this risk into account when planning the budget for terminating employment contracts.
Documenting the leave decision
Properly documenting the decision to send an employee on leave during the notice period is key to protecting the employer's interests. A lack of proper documentation can lead to disputes and legal complications.
The safest solution is to include the information about the leave directly in the notice of termination. This approach ensures clarity and reduces doubts about the scope and dates of the leave.
The documentation should contain the following elements:
- Precise leave dates (start and end dates)
- The amount of outstanding and current leave
- The legal basis for the decision (Article 167¹ of the Labour Code)
- Information on payment of holiday pay
- Any information on the cash equivalent for the remaining days
The law does not require any particular form for granting leave, but for evidence purposes it is best to put the decision in writing and deliver it to the employee in a way that allows receipt to be confirmed. Traditional registered mail or personal delivery against confirmation can be used for this purpose
An alternative is to issue a separate letter sending the employee on leave if this decision was not included in the notice of termination. Such a letter should contain all the necessary information and be delivered to the employee in good time.
Working-time records also help: the employer must keep them anyway (Article 149 § 1 of the Labour Code), and they record, among other things, the leave granted – this allows the use of leave by individual employees to be monitored on an ongoing basis. Such records make it easier to take decisions on leave during the notice period and minimise the risk of errors.
Settling the cash equivalent for unused leave
The cash equivalent for unused annual leave (ekwiwalent) is one of the most important payments due to the employee after the employment relationship ends. Calculating and paying it correctly is the employer's obligation, and the employee cannot waive the right to leave (Article 152 § 2 of the Labour Code). The exception is where the parties decide that the leave will be used under a further employment contract concluded with the same employer immediately after the previous one (Article 171 § 3). When the equivalent falls due is explained in our article on the deadline for paying the unused leave equivalent.
The cash equivalent is due for all leave days that the employee could not use before the employment ended. This covers both outstanding leave from previous years and proportional leave for the year in which the employment relationship ends.
The amount of the cash equivalent corresponds to the pay the employee would have received for working during the period of unused leave. This means that all components of pay must be taken into account, including fixed allowances and the average of variable components.
The cash equivalent for leave is calculated on the basis of the pay the employee would have received for working during the leave period. All components of pay are included: fixed monthly components in the amount due in the month in which the right to the cash equivalent arises, variable components for periods not longer than a month – as an average of the 3 months preceding that month, and components for periods longer than a month – as an average of 12 months (§ 15–17 of the Regulation of the Minister of Labour and Social Policy of 8 January 1997)
| Pay component | How it is calculated for the cash equivalent |
|---|---|
| Basic salary | Full amount |
| Fixed allowances | Full amount |
| Regular bonuses | Average of 3 months (quarterly and annual bonuses – of 12 months) |
| Overtime | Average of 3 months |
| Variable allowances | Average of 3 months |
Since 27 January 2026, the deadline for paying the cash equivalent has been set by Article 171 § 4 and 5 of the Labour Code. The cash equivalent is paid on the pay date set in accordance with Article 85, and if that date falls before the day the employment relationship is terminated or expires – within 10 days of that day (if the date set in this way falls on a day off work – on the preceding day).
In practice, calculating the cash equivalent requires taking into account:
- Basic salary
- Fixed allowances (e.g. seniority allowance, function allowance)
- The average of variable allowances (e.g. bonuses, overtime)
- Any other components of pay
Example calculation of the cash equivalent: A full-time employee has 15 days of leave left, and the right to the cash equivalent arises in 2026. His basic salary is PLN 5,000, seniority allowance PLN 400, and the average monthly bonus over 3 months PLN 600. Coefficient for 2026: (365 − 52 Sundays − 10 public holidays not falling on Sundays − 52 Saturdays) ÷ 12 = 20.92 (§ 19 of the Regulation). Cash equivalent for 1 day of leave: (5,000 + 400 + 600) ÷ 20.92 = PLN 286.81, for 1 hour: 286.81 ÷ 8 = PLN 35.85. Cash equivalent for 15 days (120 hours): 35.85 × 120 = PLN 4,302.00.
Remember that the cash equivalent for leave is subject to the same tax and social security charges as regular pay for work.
Special situations when settling leave
Settling leave during the notice period may involve various special situations that require an individual approach and knowledge of the detailed rules of labour law.
One such situation is part-time employment. In this case, proportional leave is calculated taking into account the working-time fraction, and leave days are converted into hours according to the individual work schedule.
Another special situation is where the employment contract is terminated during the calendar year after the employee has used more leave than the proportional amount. In such a case, the employer cannot deduct pay for the excess leave from the final pay – there is no such item in the closed list of deductions in Article 87 § 1 of the Labour Code, and Article 155¹ § 1 point 1 only provides that no further leave is due to the employee from that employer.
If the employee has used more leave than is proportional to the period worked, the employer cannot deduct the excess from the final pay. The consequence is different: with the next employer in the same year, the employee is entitled to correspondingly less leave (Article 155¹ § 2 of the Labour Code)
Special rules also apply to seasonal workers or those employed for a fixed term shorter than a year. In such situations, proportional leave is calculated taking into account the actual period of employment.
Categories of employees requiring a special approach:
- Part-time employees
- Seasonal workers
- Employees retiring or moving to a disability pension
- Employees covered by collective redundancies
- Fixed-term employees
Employees retiring or moving to a disability pension are a separate category. In their case, all leave days must be settled before the employment ends, and the employer must allow them to use the leave in kind or pay the cash equivalent.
It is also worth paying attention to employees covered by collective redundancies. In such cases, planning leave during the notice period requires particular coordination and compliance with the rules on collective redundancies.
Rights and obligations of the parties
The notice period comes with a specific balance of rights and obligations between the employer and the employee as regards annual leave. Knowing these rights and obligations is key to settling the employment relationship correctly.
The employer has the right to unilaterally send the employee on annual leave during the notice period. This right does not require the employee's consent or request. At the same time, the employer must pay holiday pay for the leave period and the cash equivalent for unused days. How to settle pay when a contract ends mid-month is described in our article on terminating employment mid-month.
On the employee's side, there is an obligation to use the leave if the employer grants it. The employee cannot refuse to go on leave during the notice period, even if they would prefer to work and receive a cash equivalent for all leave days.
The employee has the right to receive holiday pay and the cash equivalent for unused leave days. At the same time, they must use the leave granted by the employer during the notice period
| Party | Rights | Obligations |
|---|---|---|
| Employer | Unilateral decision on leave | Payment of holiday pay |
| Employer | Granting outstanding and proportional leave | Payment of the cash equivalent |
| Employee | Holiday pay | Using the leave granted |
| Employee | Cash equivalent for unused days | Cannot refuse the leave |
An important right of the employee is to receive proper holiday pay, calculated in accordance with labour law. This pay may not be lower than what they would have received for working during that period.
The employer must also properly document the leave decision and deliver the relevant information to the employee. A lack of proper documentation can lead to disputes and legal complications.
If the employee falls ill during the leave, the employer must pay sick pay and the cash equivalent for unused leave days. The employee has the right to have the leave interrupted because of sickness and to receive the appropriate benefits.
Practical tips for employers
Managing leave effectively during the notice period requires employers to apply proven practices and procedures. The right approach can make terminating employment contracts much easier and minimise the risk of disputes.
The first step should be keeping up-to-date leave records for all employees. These records should contain information on outstanding, current, used and remaining leave. Updating this data regularly makes it easier to take decisions on leave during the notice period.
It is also worth developing standard procedures for leave during the notice period. These procedures should set out:
- How decisions on granting leave are made
- Rules for documenting decisions
- Deadlines and methods for delivering information to employees
- Rules for calculating holiday pay and the cash equivalent
- What to do if the employee falls ill
Developing standard procedures for leave during the notice period helps ensure that all employees are treated consistently and minimises the risk of errors and legal disputes
Employers should also take into account the financial aspects of leave during the notice period. It is necessary to set aside sufficient funds to pay holiday pay and cash equivalents.
Communication with employees plays a key role in managing leave. Clear and transparent information about leave decisions helps avoid misunderstandings and builds trust between the parties.
Regular labour law training for managers, including the rules on leave, is an investment that pays off in fewer errors and disputes. We settle holiday pay and leave equivalents in the payroll of clients using our HR and payroll services.
