Resigning with 5 days of unused annual leave — can the company “cash them out”? The 2019 Labor Code answers clearly: unused leave is paid out only upon resignation or job loss. While still employed, converting leave into cash is not permitted by law.
1. How many days of annual leave?
Under Article 113.1 of the 2019 Labor Code, employees who have worked a full 12 months for an employer are entitled to paid annual leave:
- 12 working days — normal working conditions;
- 14 working days — juvenile employees, disabled employees, or those in arduous, hazardous or dangerous jobs;
- 16 working days — especially arduous, hazardous or dangerous jobs.
Employees with less than 12 months receive leave pro-rata. Additionally, every 05 years of service with the same employer adds 01 extra day (Article 114).
2. When is unused leave paid in cash?
Article 113.3 provides only one scenario: “In case of resignation or job loss where annual leave has not been taken or not fully taken, the employer shall pay wages for the untaken days.”
Therefore:
- Paid out: employees who resign (contract expiry, mutual agreement, lawful unilateral termination…) or lose their jobs (Article 47) with leave remaining;
- Not paid out: employees still working who want to “sell” their leave; leave unused at year-end while employment continues — remaining days are not automatically converted to cash.
This is a major change from the 2012 Labor Code (which allowed payout for “other reasons”). Since 01/01/2021, the law narrows payout to resignation and job loss only.
3. How is the payout calculated?
Under Article 67.3 of the 2019 Labor Code, the salary basis for untaken leave is the contractual salary of the month immediately preceding the month of resignation or job loss.
Formula:
Leave payout = (Contractual salary of the preceding month / Normal working days of that month) x Untaken leave days
Example: contractual salary VND 12,000,000/month, 26 normal working days in the preceding month, 4 days of leave remaining: 12,000,000 / 26 x 4 = VND 1,846,154.
4. Practical notes
- Leave may be accumulated for up to 03 years at a time by agreement — but rights may be practically affected if leave goes untaken too long;
- The annual leave schedule is set by the employer after consulting employees and must be announced in advance — employees should register leave proactively rather than hoarding it;
- Employees are entitled to a salary advance when taking annual leave before payday (Article 101.3);
- Travel days exceeding 02 days (by road, rail or waterway) count as additional travel time beyond annual leave, applicable once per year.
5. Frequently asked questions
Q: Can a company force employees to use annual leave instead of paying stoppage wages?
A: No. Annual leave is the employee’s rest entitlement and cannot substitute the employer’s stoppage-wage obligation under Article 99.
Q: What if the company refuses to pay for remaining leave upon resignation?
A: This is a wage obligation. Employees may complain to the company, request a labor mediator, or sue in court; they may also report to the Inspectorate of the Department of Home Affairs.
Q: Can annual leave be carried to the next year?
A: The law does not prohibit agreements to accumulate leave (up to 03 years at a time), but there is no automatic carry-over — it depends on agreement and the employer’s leave schedule.
Need an accurate calculation of leave entitlements upon termination? Contact us for advice.
Prepared by the FLAW AI Legal Council. This content is pending QA Council review before submission for approval; it is for reference only and does not replace legal advice for your specific situation.