Compensation for Unused Annual Leave – What Employers Need to Know?

An employee whose employment relationship ends and who has not used their annual leave is entitled to compensation for the unused days – regardless of the reason for termination of employment.

How is the compensation calculated?

The compensation is paid proportionally to the number of unused annual leave days, and the amount is calculated based on the average salary over the previous three months, including supplements for night work, overtime, and similar allowances.

The calculation includes:

• pension and health insurance contributions,
• personal income tax,
• submission of the JOPPD form with income code 0021.

It is particularly important to keep accurate records of the number of unused days and to clearly specify the relevant period in the JOPPD form (e.g. 01/01/2025 – 31/12/2025).

Are you interested in compensation payments, proportional annual leave, or correct payroll calculation?

Contact us for advice and payroll support: office@brandom.hr