Vacation pay: how to calculate it and when to pay it

Length of leave and entitlement

• Minimum annual leave is 21 calendar days; public holidays falling within the leave are not counted towards its length (Articles 217, 221).
• For the first year of work, entitlement to leave arises after six months of continuous employment; earlier by agreement of the parties (Article 227).
• Leave may be split into parts by agreement, but at least one part must be no less than 14 calendar days (Article 231).
• An employee may be recalled from leave only with their consent (Article 232).

Calculation formula

• Average monthly pay = 1/12 of all income in the form of wages accrued for the 12 calendar months preceding the month of leave (Article 257).
• Average daily pay = average monthly pay ÷ 25.3 (the average monthly number of working days).
• If months were not fully worked, total accruals are divided by 25.3 × the number of full months plus the calendar days of incomplete months.
• Vacation pay = average daily pay × number of leave days excluding Sundays: Sundays are not counted when paying for leave (Article 233).

Example

An employee earning UZS 6,000,000 a month for all 12 months takes 21 calendar days of leave, which include three Sundays and no public holidays.

• Average monthly pay: 72,000,000 ÷ 12 = UZS 6,000,000.
• Average daily pay: 6,000,000 ÷ 25.3 ≈ UZS 237,154.
• Paid days: 21 − 3 Sundays = 18.
• Vacation pay: 237,154 × 18 ≈ UZS 4,268,775 before personal income tax is withheld.

Taxes on vacation pay

• Annual leave pay and compensation for unused leave are income in the form of wages (Article 374 of the Tax Code): the employer withholds 12% personal income tax (PIT) (Article 381).
• Social tax of 12% is charged on the employer's payroll costs (Articles 403, 405).

Compensation instead of leave

• On dismissal, compensation is paid for all unused annual leave (Article 234).
• During employment, at the employee's request, only the part of leave exceeding 21 days may be replaced by compensation.
• Instead of compensation on dismissal, leave followed by dismissal may be granted by agreement — the date of dismissal will then be the last day of leave (Article 235).