Can part of annual leave be swapped for cash? Latvia's labour inspectorate explains

A reader named Aina wrote to the Latvian news outlet LA.LV explaining that unexpected expenses this year have led her to consider taking only two weeks of her paid annual leave, while receiving cash compensation for the remaining two weeks. She said her employer did not object to the idea, but neither of them was sure whether it was legally permissible.

LA.LV asked the State Labour Inspectorate to clarify the rules. The inspectorate explained that under the Labour Law, paid annual leave is a mandatory part of the employment relationship, intended to guarantee employees regular rest during the working year. It is described as both a right and an obligation for the employee — as a general rule, leave must be granted and used in full each year.

When an exception applies

According to the inspectorate, the law allows an exception only when granting the full annual leave in the current year would negatively affect the normal course of work at the company. In that case, with the employee's written consent, part of the leave — up to two weeks — may be carried over to the following year, and only for one year ahead. Wanting to use less leave simply because of unforeseen personal expenses does not meet this exception.

The inspectorate stressed that the law does not allow employees to regularly skip using their leave and build up an accumulated balance of unused days over several years, as this would violate the Labour Law. The leave schedule agreed between employer and employee, or set out in a leave plan, is binding on both sides: the employer must grant leave, and the employee must use it. A prolonged failure to use leave, resulting in an accumulated balance, is therefore not permitted.