As the end of the year approaches, reviewing employees’ remaining annual leave becomes an important task for every employer. Situations where an employee has not taken all of their annual leave should be reviewed and managed appropriately.
Romanian employment law sets out clear rules on how annual leave should be taken, carried forward and compensated.
Annual Leave Should Be Taken Every Year
Every employee is entitled to paid annual leave, with a statutory minimum of 20 working days. The actual entitlement is set out in the individual employment contract, in accordance with the law and, where applicable, the relevant collective bargaining agreement.
Annual leave should be taken each year based on a schedule established by the employer. Where leave is divided into several periods, the schedule must allow the employee to take at least 10 consecutive working days of annual leave during a calendar year.
Effective leave management also requires regular monitoring of employees’ leave balances. This allows employers to identify situations where a significant number of unused days is building up and address them in good time.
What Happens to Annual Leave Remaining on 31 December?
Unused annual leave does not automatically expire on 31 December.
Under Article 146(2) of the Romanian Labour Code, where an employee is unable, for justified reasons, to take all or part of their annual leave during the relevant year, the employer must grant the unused days within 18 months starting from the following year in which the employee’s entitlement arose.
For example, annual leave entitlement for 2026 that remains unused on 31 December 2026 should be reviewed and scheduled for use within the statutory carry-over period.
Carry-over should be managed as part of the employer’s overall leave process. Employers are responsible for organising annual leave and creating the conditions that allow employees to effectively exercise their right to take it.
Can Unused Annual Leave Be Paid Instead?
During the employment relationship, unused annual leave cannot be compensated in cash.
Financial compensation is allowed only when the individual employment contract ends. As a result, an unused annual leave balance at year-end does not automatically create a salary payment obligation.
The appropriate approach is to manage and schedule the outstanding leave in accordance with the applicable employment legislation.
What Did High Court Decision No. 40/2026 Clarify?
In 2026, the High Court of Cassation and Justice of Romania clarified an important aspect concerning financial compensation for unused annual leave when an employment relationship ends.
Through Decision No. 40/2026, the High Court established that the three-year limitation period for claiming financial compensation for unused annual leave starts to run from the date on which the employment relationship ends.
The decision is also relevant where unused annual leave has accumulated over a longer period. For any period exceeding the statutory 18-month carry-over period, the employee’s entitlement to financial compensation must also be assessed in light of the employer’s actions.
Where the employer did not effectively give the employee the opportunity to take their annual leave, the right to financial compensation may remain enforceable when the employment contract ends. The situation is different where the employee had a genuine opportunity to take the leave and chose not to do so.
For employers, maintaining an accurate leave balance should therefore go hand in hand with proper scheduling and management of annual leave.
A Practical Example
Let us assume that an employee is entitled to 25 days of annual leave in 2026 and has taken 17 days by 31 December. This leaves 8 unused days.
The employer should review why these days remain unused and how the employee’s opportunity to take the leave was managed.
If there were justified reasons preventing the employee from taking the leave, the remaining 8 days should be granted within the statutory carry-over period.
If the organisation of work prevented the employee from effectively taking their leave, the circumstances should be properly documented and managed, particularly in case the employment relationship subsequently ends.
What Should Employers Check Before Year-End?
A year-end review should cover at least:
- each employee’s remaining annual leave balance;
- leave already taken and leave already scheduled;
- any unused days and the reasons why they remain outstanding;
- how annual leave scheduling has been managed;
- when carried-over days will be taken;
- documentation showing that employees have been given a genuine opportunity to take their annual leave.
Effective annual leave management involves more than keeping the leave balance up to date in an HR system. Regular monitoring, realistic scheduling and proper documentation help employers meet their legal obligations and reduce the risks associated with unused annual leave.
Do you need help managing, checking, monitoring and keeping your colleagues’ leave up to date?
