ANNUAL LEAVE IN LABOR CODE 2025
Topic 29:
ANNUAL LEAVE IN LABOR CODE
MSc. Lường Minh Sơn
CASE SUMMARY
[The labor regulations of T Co., Ltd., issued on December 21, 2021.]
The labor regulations of a company outline annual leave (paid leave) arrangements for employees, including the following specifics:
Article 10. Annual Leave Provisions for Employees with 12 Months of Service at the Company:
- Employees working under normal conditions are entitled to 12 days of annual leave per year. Employees working under heavy or hazardous conditions are entitled to 14 days of annual leave per year.
- Employers agree with employees on the principle that annual leave for each year must be used within that year. The annual leave schedule is arranged as follows:
– Planned annual leave: Half of the annual leave days are scheduled for employees during occasions such as holidays, festivals, inventory checks, and emergencies depending on specific production circumstances. The company will arrange leave at different times during the year and will notify employees in advance at the beginning of the year.
– Self-selected annual leave: In addition to the annual leave days scheduled by the company, employees may arrange their leave from January to December based on their needs. Employees must fill out a leave request form and provide at least one day’s prior notice. The minimum leave period is one working hour.
– Unused annual leave: If unused due to the employee’s own fault, the company will not reimburse unused leave for any reason. Employees must ensure rest periods. In cases where the labor contract expires or employees resign before the scheduled leave is used, the company will reimburse unused leave days. If the leave exceeds the statutory allowance, employees must repay the excess leave days to the company.
- Approval Process:
– For leave requests ranging from 1 to 3 days: Approval by the unit manager.
– For leave requests exceeding 3 days: In addition to approval by the unit manager, approval from a higher department authority is required.
COMMENTARY
I. Introduction
Rest periods are a benefit granted to employees to ensure their ability to regenerate their labor capacity. Annual leave (commonly referred to as paid leave) is the time allotted for employees to take leave during one year of service. Similar to other rest periods, annual leave fulfills this purpose.
Currently, according to legal provisions, employers determine specific annual leave arrangements in the labor regulations of their units. This serves as a basis for employers to manage labor in compliance with legal regulations. However, the provisions within labor regulations differ significantly across organizations. Specifically, stipulations regarding rest periods, leave timings, the authority approving leave schedules, and procedures for notifying the employer about leave are freely determined by each organization based on its characteristics and circumstances to ensure smooth and efficient production and business activities.
II. Legal Issues
- Annual Leave Duration
Under Articles 113 and 114 of the 2019 Labor Code, the annual leave entitlement of employees during a work year is determined by the employer depending on the nature of the employee’s job. However, the duration must meet the minimum standards prescribed by law. Specifically:
– For regular jobs, employees are entitled to a minimum of 12 days of annual leave.
– For heavy, hazardous, or dangerous jobs, or for employees who are minors or persons with disabilities, the minimum is 14 days.
– For exceptionally heavy, hazardous, or dangerous jobs, the minimum is 16 days.
Thus, Clause 1 of Article 10 of the above labor regulations—“Employees working under normal conditions are entitled to 12 days of annual leave per year. Employees working under heavy or hazardous conditions are entitled to 14 days of annual leave per year”—is consistent with the current labor laws. Furthermore, these provisions suggest the company categorizes its employees into only two groups: those performing regular jobs and those performing heavy or hazardous jobs. No employees are identified as performing exceptionally heavy or hazardous jobs.
It is essential to note that the above entitlements of 12 or 14 days apply only to employees with 12 months of service for an employer. For employees who have not completed 12 months but wish to take annual leave, the leave entitlement is proportional to the actual months worked for the employer. This principle is provided under Article 66 of Decree No. 145/2020/NĐ-CP, which states that the annual leave entitlement for employees working less than a full year is calculated by adding the statutory annual leave entitlement and additional leave based on seniority (if applicable), dividing the total by 12 months, and multiplying the result by the actual months worked.
A notable difference between Decree No. 145/2020/NĐ-CP and the earlier Decree No. 45/2013/NĐ-CP is the absence of rounding rules. Previously, the calculated leave was rounded up to the nearest whole number if the decimal was 0.5 or higher.
The above labor regulations also introduce an appealing provision for “self-selected annual leave,” which states: “The minimum leave period is one working hour.” This provision further illustrates that while rest is an employee’s right, the timing and manner of leave are determined by the employer. The author considers this provision entirely appropriate. As mentioned earlier, current laws only mandate the minimum duration of annual leave, allowing leave to be taken in hourly increments as long as the employee’s total annual rest time is ensured.
- Timing of Annual Leave
Like other rest periods, annual leave is an employee’s right to regenerate labor capacity. However, the timing and manner of leave depend on the employer’s production and business operations. Therefore, annual leave schedules may vary significantly across different organizations, shaped by the employer’s specific needs and operational circumstances.
In the labor regulations under review, the timing of annual leave is categorized into two types: (i) Planned annual leave and (ii) Self-selected annual leave.
For planned annual leave, it is mandatory as prescribed by the employer. Employers allocate half of the annual leave days for employees during occasions such as holidays, festivals, inventory periods, or emergencies based on production circumstances. The company schedules these leave days at various times throughout the year and notifies employees at the beginning of the new year.
For self-selected annual leave, employees independently arrange their leave from January to December based on personal needs. For this type of leave, employees have flexibility but must adhere to the employer’s notification and procedural requirements.
- Payment in lieu of annual leave
Article 113 of the 2019 Labor Code also permits employers to compensate employees with monetary payments in lieu of ensuring annual leave entitlements. Specifically, Clause 3 of Article 113 states: “In cases where employment ends or employees lose their jobs and have not taken annual leave or have not used up the full annual leave entitlement, employers must compensate the employees for the unused leave days with payment equivalent to their wages.”
The labor regulations mentioned in the scenario also specify: “In cases where employment contracts expire and employees resign before the end of their term without using up their annual leave, the company will pay for the remaining unused leave days. If the leave days exceed the statutory allowance, employees must reimburse the company.” This provision is fully consistent with legal requirements. Clause 3 of Article 113 of the 2019 Labor Code makes it clear that monetary payments for unused annual leave days are only applicable in cases where employment relations are terminated, such as resignation or dismissal, and the employee has not utilized their leave entitlement.
Regarding compensation for unused annual leave days, detailed guidance is provided in Clause 3 of Article 67 of Decree No. 145/2020/NĐ-CP. It specifies that the salary used as the basis for compensating employees for unused annual leave days under Clause 3 of Article 113 of the 2019 Labor Code is the salary stipulated in the labor contract for the month immediately preceding the month in which the employee’s employment ends or they lose their job. This regulation ensures clarity and comprehensiveness, facilitating employers in complying with payment obligations and minimizing potential disputes.
Previously, Article 114 of the 2012 Labor Code allowed compensation for unused annual leave days for “other reasons” besides employment termination or dismissal. However, the interpretation of “other reasons” was neither clear nor consistent. Some argued that this could include any reason, such as employees choosing not to take leave and preferring to work for extra pay.
The author personally disagrees with this interpretation, as “other reasons” should involve objective or subjective factors that prevent employees from exercising their right to annual leave. If employees voluntarily forgo their entitlement and demand payment instead, this contradicts the purpose of annual leave, which is to ensure rest and labor capacity regeneration. Accordingly, Clause 3 of Article 10 of the labor regulations above stipulates: “Unused annual leave due to the employee’s fault will not be compensated under any circumstances, as employers must ensure employees take rest periods.” This provision aligns with current labor laws.
In practice, disputes have arisen concerning payment in lieu of annual leave in performance-based employment contracts. For instance, in the case between Mr. Lê and Company P [Judgment No. 01/2016/LĐ-ST dated April 12, 2016, issued by the People’s Court of Tuy Hòa City, Phú Yên Province], Mr. Lê worked for Company P under a performance-based contract. When a dispute occurred, Mr. Lê demanded payment for unused annual leave days. However, both Company P and the court rejected the claim, asserting that “under the company’s sales policy, salary expenses, sales-related costs, customer care costs, and annual leave entitlements are accounted for as part of the product pricing, which complies with Article 90 of the 2012 Labor Code. Therefore, there is no basis to accept this claim.”
This case illustrates that employers may negotiate in their agreements or policies to replace annual leave with monetary compensation. Such arrangements are lawful as they ensure employees’ rights. However, employers must also consider employees’ health, and where employees request rest periods, they should accommodate such requests to safeguard employees’ well-being.
Additionally, advancements in the 2019 Labor Code regarding salary advances for annual leave:
Clause 5 of Article 113 of the 2019 Labor Code introduces a new regulation, allowing employees to receive salary advances when taking annual leave before the salary payment cycle. Specifically, the clause states: “When taking annual leave before the salary payment period, employees are entitled to an advance payment as prescribed in Clause 3, Article 101 of this Code.” This new provision aims to support employees in maintaining their livelihood and is a significant improvement in labor legislation.
- Entities and procedures for resolving annual leave requests
Current labor laws do not specify which entity holds the authority to approve annual leave for employees. However, employers have the autonomy to manage and utilize labor as they see fit. This implies that employers are permitted to delegate and assign responsibilities for handling annual leave requests within their labor regulations.
In the labor regulations under review, the responsible entity depends on the number of days the employee requests to take off. Specifically:
– For leave requests from 1 to 3 days: Approval is handled by the unit manager.
– For leave requests exceeding 3 days: Approval is required from both the unit manager and a higher departmental authority.
Thus, the procedures for granting annual leave and determining leave schedules currently vary between organizations, depending on each employer’s specific policies.
III. Conclusion
The annual leave schedule within a workplace is determined by the employer based on the unique characteristics of the organization. Current labor laws only establish the minimum duration of annual leave that employees are entitled to. Other aspects, such as the timing of leave, procedures, and decision-making authority regarding annual leave policies, must be explicitly detailed within the labor regulations. Employees are obligated to adhere to the arrangements and schedules established by the employer.
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“The article’s content refers to the regulations that were applicable at the time of its creation and is intended solely for reference purposes. To obtain accurate information, it is advisable to seek the guidance of a consulting lawyer.”
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