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Policies & Regulations Wage for Unused Annual Paid Leave Earned within Average Wage Calculation Period to be Included in Average Wage Calculation

According to Article 38 of the Labor Standards Act, if a worker has unused annual paid leave because of the termination of annual period or termination of contract, regardless of the reasons for the untaken leave, employers must pay wages to workers in accordance with the number of leave days remaining; if such wages were earned within the average wage calculation period, they shall be included in average wage calculations.

The Ministry of Labor explains that Article 2, Paragraph 4 of the Labor Standards Act stipulates that the "average wage” refers to the total wages for the six months preceding the day on which an event requiring that a computation be made occurs divided by the total number of days in that period. Meanwhile, "total wages" mentioned herein refers to the total amount of wages accrued in the six months preceding the day on a computation request took place. Therefore, whether wages shall be included in average wage calculations is based on whether the worker has exerted the right to claim wages.

Regarding the wages paid at the termination of annual period for the number of untaken annual paid leave days, because the wages are calculated for the whole year, the law does not definitely stipulate how much of these wages fall within the average wage calculation period. The calculation of average wages shall be jointly decided by employers and workers. In addition, when a worker still has unused annual paid leave because of the termination of contract, the wages the employer must pay for the unused leave is considered earned after contract termination and may therefore not be factored into average wage calculations.

Key words: Annual Paid Leave Wages, Average Wages

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