In practice, accountants and HR specialists regularly face situations where an employee terminates employment after a long break from work — maternity leave or parental leave. In such cases, a logical question arises: how to correctly calculate compensation for unused leave if the employee had no income in the last months.
The situation becomes more complex for IT companies and businesses where salaries are set in foreign currency but paid in Moldovan lei. Errors in such calculations may lead not only to financial losses but also to risks during inspections by the Labour Inspectorate and tax authorities.
In this article, we will focus not on theory, but on a practical algorithm for calculating compensation for unused leave in Moldova:
- what to do if there was no income during the last 3 months;
- which months should be included in the calculation;
- whether maternity or parental leave affects the calculation;
- how to account for salaries linked to foreign currency;
- and when the compensation must be paid.
This material will be useful for accountants, business owners, and HR specialists who want to calculate correctly and without risks, rather than simply “formally according to the law”.
In which cases compensation for unused leave is paid
Compensation for unused annual paid leave is paid at the moment of termination of employment, regardless of the reason for dismissal or the employee’s current status.
In practice, this means that the employer is required to calculate and pay compensation if the employment contract is terminated:
- at the employee’s initiative (resignation);
- by mutual agreement of the parties;
- upon expiration of a fixed-term employment contract;
- upon dismissal after maternity leave;
- upon dismissal after parental leave;
- after a prolonged absence of actual work, if the employment contract was not formally terminated.
It is important to understand that the mere fact of being on maternity or parental leave does not cancel the right to compensation. These periods affect only the methodology for calculating average earnings, not the employee’s right to receive compensation itself.
Special attention should be paid to situations where, before dismissal:
- salary was not accrued;
- there were no actually worked days;
- payments were made irregularly or partially.
In all such cases, compensation for unused leave must be calculated and paid, and the accountant must correctly determine the calculation period and the average daily earnings.
Does the absence of income before dismissal affect the right to compensation
In practice, there is a widespread misconception that if an employee did not receive salary in the last months before dismissal, compensation for unused leave is not paid or is calculated at a minimum level. This is incorrect.
The absence of income in the last 1–3 months before dismissal may be due to objective reasons:
- being on maternity leave;
- parental leave;
- temporary suspension of activity;
- absence of actually worked days while the employment contract remains in force.
In all these cases, the right to compensation is fully preserved. Legislation does not link the right to compensation to the presence of income specifically in the period immediately preceding dismissal.
What actually changes when there is no income
If there are no accruals in the standard calculation period, the approach to determining average earnings changes:
- months with no income are not used;
- earlier months in which the employee actually worked and received salary are included in the calculation;
- priority is given to real earnings, not the formal salary stated in the contract.
Thus, the absence of income does not reduce or cancel compensation, but requires the accountant to correctly select the calculation period and carefully analyze the payment history.
It is precisely at this stage that errors most often occur, leading to understated compensation and risks of labour disputes.
Salary in USD or EUR: what is important when calculating compensation
In IT companies and international projects, it is common for the salary in the employment contract to be set in foreign currency (most often USD or EUR), while the actual payment is made in Moldovan lei at the exchange rate of the National Bank of Moldova.
It is important to note: the contract currency itself does not participate directly in the calculation of compensation for unused leave.
What is taken into account in practice
When determining average earnings, the accountant considers:
- amounts accrued and paid in MDL;
- actual income for the selected calculation period;
- accounting records and payroll statements.
Even if the contract specifies a salary in USD or EUR, the compensation calculation uses the MDL equivalent applied by the employer in the respective month.
Why the exchange rate does not change the methodology
The exchange rate affects only the amount of income accrued in a particular month, but:
- it does not change the formula for calculating average earnings;
- it does not justify recalculating previous months using a different exchange rate;
- it does not allow the accountant to “adjust” compensation based on the exchange rate on the dismissal date.
A common mistake is attempting to recalculate compensation using the exchange rate on the last working day or on the dismissal date. Such an approach does not comply with the established practice of calculating average earnings and may be deemed incorrect during an inspection.
How to determine the calculation period if the last 3 months had no income
The standard calculation of average earnings assumes the use of the last 3 calendar months preceding the payment event. However, in practice, situations often arise where no accruals exist during this period.
This is typical in cases of:
- maternity leave;
- parental leave;
- a prolonged absence of actually worked days;
- temporary suspension of activity while the employment contract remains valid.
The core principle for selecting the calculation period
If there is no earnings in the standard calculation period, the accountant must:
- exclude months with no income;
- identify the most recent months with actually worked days and accrued salary;
- use these months to calculate average earnings.
The key factor is not calendar proximity to the dismissal date, but the existence of real income and worked days.
How to proceed in practice
The algorithm for selecting the calculation period is as follows:
- Check whether income exists for the last 3 calendar months.
- If income is completely absent — analyze earlier months.
- Include in the calculation the last 3 months out of the preceding 12 in which:
- there were actually worked days;
- salary was accrued.
- Months with zero income are not included in the calculation.
Partially worked month
If, in a particular month, the employee:
- worked only part of the month;
- started maternity leave not from the first day of the month;
- had only a few actually worked days,
such a month may be included in the calculation, provided that:
- salary accruals exist;
- the worked days are properly documented.
This is especially important for IT companies, where dismissal after maternity leave often occurs long after the last actual working day.
Step-by-step algorithm for calculating compensation for unused leave
To avoid errors and potential claims from employees or inspection authorities, it is important for accountants to follow a unified calculation algorithm, regardless of the company’s specifics or the employee’s position.
Step 1. Determine the number of unused leave days
First, it is necessary to establish:
- how many days of annual paid leave the employee has not used as of the termination date;
- for which working years this entitlement was accrued.
The number of days is determined based on:
- HR documentation;
- orders granting annual leave;
- records of leave days actually taken.
Step 2. Determine the correct calculation period
Next, the accountant determines the calculation period:
- as a standard rule — the last 3 calendar months preceding dismissal;
- in the absence of income — the most recent months with actually worked days and accrued earnings.
Months with no income are excluded from the calculation.
Step 3. Determine the amount of income for the calculation period
The calculation includes:
- salary amounts accrued in MDL;
- payments included in the payroll fund.
The following are not included:
- social benefits;
- payments that are not related to remuneration for work.
Step 4. Determine the number of days used for calculation
For a correct calculation of average earnings, it is necessary to:
- determine the number of actually worked days;
- take into account the employee’s work schedule;
- exclude official public holidays from the number of calendar days.
Step 5. Calculate average daily earnings
Average daily earnings are determined:
- based on total income;
- taking into account actually worked days;
- by applying, where necessary, the coefficient reflecting the ratio between working and calendar days.
This is the stage where arithmetic and methodological errors occur most frequently.
Step 6. Calculate the amount of compensation
The final amount of compensation is determined by:
- multiplying the average daily earnings;
- by the number of unused leave days.
The resulting amount must be accrued and paid to the employee.
Practical calculation example: dismissal after maternity and parental leave
Let us consider a situation typical for IT companies, which accountants often encounter in practice.
Initial data (conditional example):
- employee hired — April 2023;
- from August 2025 — maternity leave;
- from November 2025 — parental leave;
- December 2025 — resignation at the employee’s initiative;
- number of unused annual leave days — 15;
- in the last months before dismissal, salary was not accrued.
Determining the calculation period
Since there was no income in September, October, and November 2025, the standard calculation period cannot be applied. The accountant analyzes earlier months and selects the most recent months in which the employee actually worked and received salary.
Depending on the maternity leave start date, two scenarios are possible:
- if there were no worked days in August 2025 — the calculation may include, for example, May, June, and July 2025;
- if there were worked days in August 2025 — August may also be included in the calculation.
Determining average daily earnings
Based on the selected calculation period:
- income for the included months is summed;
- the number of days participating in the calculation is determined;
- average earnings per one calendar day are calculated.
It is important to emphasize that social benefits and allowances are not included in the calculation, even if they were paid during the maternity leave period.
Compensation calculation
After determining the average daily earnings, the compensation amount is calculated using the standard formula:
-
average earnings per calendar day × number of unused leave days.
Thus, even in the case of a complete absence of income in the last months before dismissal, compensation is calculated based on real earnings received earlier, rather than on a conditional or minimum value.
Which days are excluded from the calculation and why this matters
When calculating average earnings for unused leave compensation, the accountant works not with “pure” calendar months, but with calendar days adjusted in accordance with labour legislation.
Why all calendar days cannot be taken consecutively
If all calendar days are included in the calculation without exclusions:
- average daily earnings are artificially reduced;
- the compensation amount is calculated at a lower level;
- the risk of claims from employees and inspection authorities increases.
Therefore, legislation provides for the exclusion of certain days from the calculation.
Which days are not included in the calculation
The following are excluded from the number of calendar days in the calculation period:
- official public holidays established by law;
- other days that are not considered working days and are not subject to payment under the law.
For this reason, calculations apply a coefficient reflecting the ratio between working and calendar days, allowing for the correct determination of average earnings per calendar day.
What accountants should pay attention to
When excluding days, it is important to:
- use the official public holiday calendar for the relevant year;
- take into account regional holidays (for example, the local patron saint’s day);
- avoid excluding days arbitrarily or “out of habit”.
Even a minor error at this stage can lead to a significant distortion of the final compensation amount, especially when a large number of unused leave days is involved.
When and within what timeframe compensation for unused leave is paid
One of the key aspects when terminating an employee is compliance with final settlement deadlines. Compensation for unused leave is a mandatory payment that the employer must make on the date the employment relationship ends.
General payment rule
On the dismissal date, the employer is required to:
- accrue compensation for all unused days of annual paid leave;
- include this amount in the final settlement with the employee;
- ensure the actual payment of funds.
This rule applies regardless of the reason for dismissal and the employee’s status at the time the contract is terminated.
Why payment cannot be postponed
In practice, situations sometimes arise where the employer:
- postpones the payment to the next payroll period;
- plans to pay it “with the next salary”;
- justifies the delay by the absence of the employee’s income in recent months.
All such actions constitute violations of labour legislation and may result in:
- financial penalties;
- administrative liability;
- labour disputes and complaints.
What accountants and employers should take into account
To avoid risks:
- the compensation calculation should be prepared in advance, before the dismissal date;
- all disputable issues related to the calculation period should be resolved prior to dismissal;
- the payment must be properly documented.
Timely payment of compensation is not only a legal requirement, but also an element of proper and fair labour relations.
Common mistakes made by accountants and employers when calculating compensation
Even experienced accountants and employers often make mistakes when calculating compensation for unused leave. Such errors may lead to underpayment, employee claims, and risks during inspections.
Mistake 1. Including months with no income in the calculation
One of the most common mistakes is including in the calculation:
- months in which no salary accruals were made;
- periods of maternity or parental leave with no income.
This results in a distorted average earnings figure and an incorrect outcome.
Mistake 2. “Zeroing” compensation due to lack of income
Sometimes employers mistakenly assume that if no salary was accrued in the last months, compensation is not due. This approach contradicts labour legislation and its practical application.
Mistake 3. Recalculating compensation using the exchange rate on the dismissal date
When salaries are linked to foreign currency, there is sometimes an attempt to recalculate compensation:
- using the exchange rate on the last working day;
- using the exchange rate on the dismissal date.
This is methodologically incorrect, since the calculation must be based on amounts actually accrued in MDL for specific months.
Mistake 4. Incorrect exclusion of calendar days
Arbitrary exclusion of days, or conversely, inclusion of public holidays, distorts the coefficient and the average daily earnings.
Mistake 5. Failure to meet payment deadlines
Delaying the payment of compensation — even when the calculation itself is correct — constitutes a violation and may result in liability for the employer.
When to consult an accountant and final conclusions
Calculating compensation for unused leave may seem like a formal procedure; however, in practice, this is precisely where errors most often occur — especially in cases involving no income, maternity leave, or salaries linked to foreign currency.
When independent calculation is risky
It is recommended to engage a professional accountant if:
- the last months before dismissal involved no income;
- the employee is dismissed after maternity or parental leave;
- the salary is set in a foreign currency;
- there are partially worked months;
- a calculation must be prepared for an inspection or a labour dispute.
In such cases, it is important not only to apply a formula, but also to correctly select the calculation period and substantiate the calculation with documentation.
Conclusions
In summary, several key points can be highlighted:
- the absence of income before dismissal does not cancel the right to compensation;
- only months with actually accrued income are included in the calculation;
- the contract currency does not affect the calculation methodology;
- compensation must be paid strictly on the dismissal date;
- calculation errors may lead to financial and legal risks.
A correct calculation of compensation for unused leave is an indicator of a professional approach to accounting and HR management, especially in IT companies and businesses with non-standard remuneration structures.
