Andmark Decision On Annual Paid Leave: Prior-Period Seniority Affects Leave Entitlement

Annual paid leave is the concrete expression of the employee’s right to rest and is regulated in Labour Law as a right that cannot be waived. In practice, it has been disputed whether prior periods of employment should be taken into account in calculating leave entitlement in a new period, particularly for employees who work intermittently at workplaces belonging to the same employer, who continue working at the same workplace after their employment contract ends upon retirement, or who are re-hired after their prior-period receivables have been settled. The decision of the 9th Civil Chamber of the Court of Cassation dated 31 March 2026 (Docket No. 2026/572, Decision No. 2026/2864) expressly confirms that the fact that leave for the prior period was used, or that leave pay was paid, does not prevent that seniority from being taken into account in determining the leave entitlement in the subsequent period. In this information note prepared by our team, the content of the decision, how it differs from the severance pay regime and the compliance steps to which employers should pay attention are addressed.

1. The Legal Nature of Annual Paid Leave

Article 50 of the Constitution provides that rest is a right of workers and that rights to annual paid leave shall be regulated by law. Under Article 53 of Labour Law No. 4857, an employee who has worked for at least one year from the date of commencing work at the workplace, including the probationary period, is granted annual paid leave, and this right cannot be waived. Leave duration is determined according to the employee’s length of service: no less than fourteen days for service of one to five years (five years inclusive), twenty days for service of more than five and less than fifteen years, and twenty-six days for service of fifteen years (inclusive) or more. Leave granted to employees aged eighteen or younger and to those aged fifty or older may not be less than twenty days.

2. Length of Service in Determining Leave Entitlement

Article 54 of Labour Law expressly provides that, in calculating the right to annual paid leave and its duration, the periods during which the employee worked at one or more workplaces of the same employer are aggregated. The provision draws no distinction according to whether the prior period of employment has been settled. Article 55 of Labour Law, in turn, lists certain periods — such as days of absence due to accident or illness, periods during which a female employee is not employed before and after childbirth, and statutory duties other than military service — among those deemed worked for the purpose of calculating annual leave entitlement.

3. The Subject of the Dispute

In the case subject to the decision, the claimant employee worked for the same employer in two separate periods: first between 9 April 2015 and 31 December 2018, and then between 1 January 2019 and 10 September 2021. The claimant sought the aggregation of the employment periods and the joint and several collection of severance and notice pay, annual leave pay and overtime pay from the principal employer and the subcontractor. The employer argued that it had settled the first period by paying the related receivables and that leave entitlement in the second period should therefore be calculated as if for a newly hired employee.

4. The Court of Cassation’s Assessment

The 9th Civil Chamber of the Court of Cassation held that the employee’s use of annual leave in the first period, or the payment to them of the pay for unused leave, does not prevent the seniority accrued in the first period from being taken into account in determining the number of leave days earned in the second period. On this basis, the Chamber stated that annual paid leave for the second period of employment should be determined according to the calculation option that also takes the first period of service into account. Accordingly, the monetary settlement of the prior period does not reset the seniority the employee has accumulated for leave purposes.

5. Distinction from the Severance Pay Regime

One of the most important aspects of the decision is that it highlights the difference between the rules on aggregating service periods for annual leave and for severance pay. For severance pay, where severance pay for the prior period has been paid in full, that period is not taken into account in the severance calculation, as severance cannot be paid twice for the same period. For annual leave, by contrast, settlement of the prior period only extinguishes the leave receivable for that period; it does not prevent the prior service from being used as the seniority element that determines the number of leave days earned in the subsequent period. Consequently, for the same employee, a period disregarded in the severance calculation may nevertheless be taken into account in determining leave entitlement.

6. Employees Continuing to Work After Retirement

The decision is of particular importance for employees whose employment contract ends upon retirement and who continue working at the same workplace after receiving severance pay and pay for unused leave. The annual leave entitlement of such employees in the new period will be determined not on the basis of fourteen days, as for a newly hired employee, but on the basis of their total length of service with the same employer. For example, an employee who worked six years in the first period will, upon completing one year in the second period, be entitled to at least twenty days, since their total service exceeds five years; an employee whose total service reaches fifteen years will be entitled to at least twenty-six days. That said, it should not be overlooked that the one-year service condition must be separately satisfied for the second period in order to earn leave in that period.

7. The Same-Employer Requirement, Transfer of Workplace and Subcontracting

As a rule, for service periods to be aggregated, the work must have been performed at one or more workplaces of the same employer. In the event of the transfer of a workplace or part of it, the transferee employer is obliged under Article 6 of Labour Law to take into account the employee’s length of service up to the date of transfer. Where there is a principal employer–subcontractor relationship, as in the case subject to the decision, the principal employer is jointly and severally liable with the subcontractor for the obligations arising under Labour Law towards the subcontractor’s employees. For transfers between group companies, whether service periods should be aggregated must be assessed according to the specific circumstances of the case, having regard to the identity of the employers and the relationship between them.

8. Granting of Leave, Records and Proof

Under Article 56 of Labour Law, annual paid leave may not be divided by the employer; however, by agreement of the parties, it may be divided into up to three parts, provided that one part is not less than ten days. Under Article 57 of Labour Law, leave pay is paid in advance or as an advance payment before the leave begins. The burden of proving that annual leave was granted lies with the employer and is discharged through leave records kept under the Regulation on Annual Paid Leave and bearing the employee’s signature. Where the employment contract ends for any reason, pay for unused leave is paid under Article 59 of Labour Law on the basis of the salary on the date of termination, and the limitation period for this receivable begins to run from that date.

9. Practical Implications of the Decision

The decision shows that the practice of “resetting” leave seniority in human resources systems may lead to unlawful outcomes in situations such as re-hiring, retired employees continuing to work, transfers between workplaces and within groups, and changes of subcontractor. Leave entitlements calculated short without regard to prior-period seniority may turn into a receivable for underpaid leave pay upon termination of the employment contract, creating a retrospective financial risk for the employer. In addition, the risk of administrative fines may also arise in connection with leave not being granted or being granted short.

10. Assessment and Compliance Steps for Employers

This decision of the Court of Cassation strongly confirms that the right to annual paid leave is linked to the employee’s total length of service with the same employer and cannot be extinguished by settlement. Employers are advised to identify the prior service of re-hired employees and employees continuing to work after retirement and update their leave seniority accordingly; to review the leave calculation parameters in payroll and human resources systems in this light; to document service periods in workplace transfers, intra-group moves and changes of subcontractor; to keep leave records regularly with the employee’s signature; and to carry out a risk assessment of leave entitlements that may have been calculated short in past periods. These steps will significantly reduce leave-pay receivables that may arise in the future and the related risk of disputes.