Vacation Starting July 1, 2026: Vacation Pay and June Salary Calculation

Vacation from July 1, 2026: how to determine the calculation period, pay vacation pay, and account for June salary

If an employee's annual vacation begins on July 1, 2026, the calculation period according to the general rule is July 1, 2025 — June 30, 2026. June 2026 is included in the calculation regardless of when the employer pays the vacation pay. You cannot automatically exclude June simply because the timesheet has not yet been closed or the salary has not been accrued on the date of payment.

At the same time, legislation no longer requires paying vacation pay three calendar days before the start of the vacation. The general rule is to pay it before the start of the vacation, unless another period is provided for by the employment or collective agreement. Procedure No. 100 does not establish a separate safe mechanism for "preliminary" calculation with subsequent additional payment for all employees. Therefore, the employer should organize the calculation in such a way as to pay the full amount, taking June into account, by the established deadline.

Which calculation period to apply

The average wage for paying annual and other vacations, except for maternity leave, is calculated based on payments for the last 12 calendar months preceding the month the vacation begins.

The determining factor is exactly the start date of the vacation, not:

• the date the order was issued;

• the date the application was submitted;

• the date the calculation was made;

• the date the funds were transferred;

• the date the timesheet was closed;

• the date of salary accrual for the last month.

For a vacation starting on July 1, 2026:

Therefore, salary, bonuses, and other payments belonging to June 2026 and taken into account in accordance with Procedure No. 100 must be included in the calculation of the average salary.

When vacation pay must be paid

As a general rule, wages for the entire duration of the vacation are paid before the start of the vacation.

If the vacation starts on July 1, 2026, in the absence of another rule in the employment or collective agreement, vacation pay must be paid no later than June 30, 2026.

There is no legislative requirement to pay them exactly on June 26 or no later than three calendar days before the start of the vacation. Such a three-day requirement was excluded from the legislation in 2022.

A different payment term is allowed if it is directly stipulated by:

• a written employment contract with the employee;

• a collective agreement.

For example, the agreement may provide for the payment of vacation pay along with the nearest salary payment. In the absence of such a provision, the employer must pay vacation pay before the vacation begins. This is also confirmed by an official clarification from the State Labor Service.

What to do if the salary for June has not yet been accrued

The absence of finally accrued salary for June does not change the calculation period. June cannot be:

• automatically excluded;

• equated to an unworked month;

• replaced by May for an employee with hourly or monthly pay;

• used to calculate vacation pay for only 11 months;

• ignored because funds are paid before the month is closed.

The employer can apply one of the following organizational options.

1. Make the final calculation as close to the start of the vacation as possible

If the employment or collective agreement does not set a different deadline, for a vacation starting July 1, vacation pay can be paid on June 30.

By this date, the employer needs to:

• receive a properly executed timesheet;

• determine the actual time worked;

• accrue salary for June;

• distribute bonuses and other payments according to the rules of Procedure No. 100;

• calculate the average daily wage;

• pay vacation pay.

This is the safest option for employees with surcharges, allowances, night hours, weekend work, overtime hours, or other variable salary components.

2. Establish a different term in the employment or collective agreement

If it is objectively impossible for the enterprise to finally close the month before the start of the vacation, the parties can determine another payment term in writing.

The condition must be specific. For example:

Wages for the period of annual vacation are paid on the closest established salary payment day at the enterprise, unless a different term is agreed upon by the parties in writing.

The oral request of the employee or a memo from the accountant alone is not enough if the corresponding procedure is not enshrined in the employment or collective agreement.

3. Make a calculation based on available data with an immediate recalculation

Procedure No. 100 does not contain a general norm that would explicitly allow all employers to pay an approximate amount of vacation pay, and after closing the month, conduct a recalculation without any consequences.

If the enterprise still uses preliminary data, after the final salary calculation it is necessary to immediately:

1. re-determine the payments of the calculation period;

2. recalculate the average daily wage;

3. draw up an accounting calculation;

4. pay the employee the difference;

5. correctly reflect adjustments in payroll and tax accounting.

Important: subsequent additional payment does not guarantee that the initial payment will not be considered incomplete on the date when the employer had to settle with the employee.

If an overpayment occurs after the recalculation, the employer cannot automatically deduct it from the next salary. Deductions are possible only in cases and within the limits established by Articles 127–128 of the Labor Code. In particular, an order on the return of amounts overpaid as a result of a counting error can be issued no later than one month from the date of payment, provided the employee does not object to the grounds and amount of the deduction.

Special rule for piece-rate workers

For employees with piece-rate pay, Procedure No. 100 provides a separate exception.

If on the date of calculation there is no operational data on earnings for the last month of the calculation period, this month may be replaced by the month immediately preceding the calculation period.

For a vacation from July 1, 2026:

• the normal period — July 2025 — June 2026;

• if there is no operational data on piece-rate earnings for June 2026, June 2026 can be replaced by June 2025;

• in practice, payments for June 2025 — May 2026 will be used for the calculation.

This rule applies specifically to piece-rate pay. It cannot be extended to employees with a monthly salary or hourly pay.

Vacation pay calculation formula

General formula:

Vacation pay = average daily wage × number of calendar days of vacation.

The average daily wage is determined as follows:

Payments taken into account for the calculation period ÷ number of calendar days of the calculation period after legally provided exclusions.

The denominator does not include periods during which the employee did not work in accordance with the law and for whom:

• earnings were not preserved;

• earnings were partially preserved.

Periods for which there is no data on accrued wages due to hostilities can also be excluded.

The exclusion must have documentary evidence. The mere fact of the absence of accounting accrual for June on the calculation date is not a reason to exclude the entire month.

Whether to exclude holidays and non-working days

Under normal conditions, holidays and non-working days established by Article 73 of the Labor Code are excluded from the calculation period.

However, during the period of martial law, the provisions of Article 73 of the Labor Code do not apply. Therefore, holidays and non-working days that fall during the martial law period do not reduce the number of calendar days for calculating the average wage.

In the period from July 1, 2025, to June 30, 2026, there are 365 calendar days. If the employee does not have other periods subject to exclusion, the average wage should be divided by 365, and not by the number of days minus public holidays.

Which payments are taken into account

The calculation includes payments accrued to the employee in accordance with legislation, employment, and collective agreements, except for payments expressly excluded by paragraph 4 of Procedure No. 100.

In particular, the following are taken into account:

• basic salary;

• surcharges and allowances;

• payment for night and overtime hours;

• payment for work on weekends;

• production bonuses and rewards that do not have a one-time nature;

• salary indexation;

• payment for previous vacations;

• payments for periods when the employee retained average earnings;

• temporary disability benefits.

The salary is taken into account in the month for which it was accrued, and not only by the date the payment was actually made or reflected in the accounting program.

Bonuses and other incentive payments are distributed among months according to the special rules of paragraph 3 of Procedure No. 100. Therefore, they should not be mechanically included only in the month of actual accrual.

Which payments are not taken into account

Average earnings do not include, in particular:

• lump-sum payments for performing specific tasks that are not part of job duties;

• one-time financial assistance;

• compensation for unused vacation;

• severance pay;

• compensatory payments for business trips;

• reimbursement of travel, accommodation, and daily allowance costs;

• payments for anniversaries and memorable dates;

• the cost of workwear or personal protective equipment provided free of charge;

• income on shares, dividends, interest;

• other payments expressly listed in paragraph 4 of Procedure No. 100.

If a payment is called a "bonus", it does not mean that it is automatically taken into account. It is necessary to check its basis, regularity, connection with the work performed, and the bonus regulations.

The employee has worked for less than 12 months

If an employee has worked for less than a year, the calculation period is the actual period of work:

• from the first day of the month following employment;

• until the first day of the month in which the vacation begins.

If the employee was not hired on the first calendar day of the month, but this day was the first working day according to the enterprise's schedule, such a month is included in the calculation period as a full month.

For example, an employee was hired on Monday, November 3, 2025, and November 1 and 2 were weekends. If the vacation begins in July 2026, November 2025 can be included in the calculation period.

No earnings or calculation period

If the employee has no earnings in the calculation period or the calculation period itself is absent, the average wage is determined based on the tariff rate or official salary established for the employee.

If the salary is less than the minimum wage, the calculation is carried out based on the minimum wage established at the time of calculation.

In the case of part-time work, the calculated value is applied in proportion to the standard working hours established for the employee.

From January 1, 2026, the minimum wage is:

• 8,647 UAH per month;

• 52 UAH per hour.

Calculation example

An employee goes on annual vacation from July 1, 2026, for 14 calendar days.

Conditions:

• calculation period — July 1, 2025 — June 30, 2026;

• payments taken into account — 240,000 UAH;

• there are no periods to exclude;

• the number of calendar days in the calculation period — 365.

Average daily wage:

240,000 UAH ÷ 365 = 657.53 UAH.

Vacation pay:

657.53 UAH × 14 calendar days = 9,205.48 UAH.

This is the accrued amount before tax deductions.

According to general rates:

Special USC rates and legislative exceptions apply if there are appropriate grounds.

Documents the employer must issue

To confirm the lawfulness of granting and paying for vacation, it is advisable to have and retain:

1. Vacation schedule.
   The sequence of annual vacations is determined by a schedule approved by the employer and brought to the attention of the employees.

2. Written notification to the employee.
   The employee must be notified in writing of the start date of the annual vacation no later than two weeks in advance.

3. Employee's application — when necessary.
   An application is usually drawn up if the employee requests a vacation outside the schedule, a postponement, a division of the vacation, or a change in the agreed date. The law does not establish an application as a universal prerequisite for every scheduled vacation.

4. Order or directive on granting vacation.

5. Timesheet tracking working hours.

6. Calculation of average wage.
   It is advisable to specify the calculation period, payments for each month, excluded days, average daily wage, and total amount in the document.

7. Employee's payslip.

8. Payment document.
   This can be a bank statement, a payment instruction with confirmation of execution, or a cash expense document.

9. Adjustment documents.
   If a recalculation was made, a separate accounting calculation must be issued stating the reason and the amount of the additional payment or overpayment.

The employer is also obliged to keep records of vacations granted to employees.

Specifics during martial law

During martial law, the employer, by their own decision, may limit the employee's annual basic vacation for the current working year to 24 calendar days.

If the employee has the right to a longer duration, the unused days are transferred to the period after the termination or lifting of martial law, unless the employer grants them earlier.

For an employee involved in work at critical infrastructure facilities, production of defense-related goods, or fulfillment of a mobilization task, the employer may refuse to grant a vacation in cases provided for by law. Exceptions apply to maternity leave and parental leave for childcare until age three.

Martial law does not cancel the obligation to accrue and pay the amounts due to the employee. Exemption of the employer from liability is possible only when they prove that the violation of deadlines occurred as a result of hostilities or other force majeure circumstances. The debt itself is not terminated.

Consequences of late or incomplete payment

If vacation pay is not paid on time, the employee has the right to demand the postponement of the annual vacation to another period.

Financial sanctions under Article 265 of the Labor Code can be applied to the employer:

The specific qualification depends on the circumstances, the duration of the delay, the completeness of the payment, and the results of the inspection.

During martial law, fines under Article 265 of the Labor Code do not apply if the employer fully and within the established period executed the order to eliminate the violations identified during an unscheduled inspection. This does not exempt from the obligation to pay the employee the due amounts and does not cancel other types of liability.

In addition to financial sanctions for the enterprise, officials or individual entrepreneur employers can be brought to administrative liability under Article 41 of the Code of Administrative Offenses:

• from 510 to 1,700 UAH — for violating deadlines or incomplete payment;

• from 1,700 to 5,100 UAH — for a repeated violation within a year or a violation regarding protected categories of employees defined by law.
  If payment is delayed for one or more calendar months, the employee may also be entitled to compensation for the loss of a part of income due to inflation. It is calculated from the amount of unpaid income after tax deductions using inflation indices for the period of delay.

Checklist for the employer

Before paying vacation pay, you need to check:

• the start date of the vacation;

• the correctness of the 12-month calculation period;

• whether the employee has been working for less than a year;

• whether there are periods that need to be excluded;

• whether bonuses are properly accounted for;

• whether one-time and compensation payments are excluded;

• whether the last month's salary is taken into account;

• whether the special rule for piece-rate pay applies;

• whether a different payment deadline is established in the employment or collective agreement;

• whether the full amount was paid on time;

• whether PIT and military tax were properly withheld;

• whether USC was properly accrued;

• whether the order, timesheet, calculation, and payment confirmation are executed.

Official sources

1. Resolution of the Cabinet of Ministers of Ukraine dated February 8, 1995 No. 100 "On approval of the Procedure for calculating average wages" — paragraphs 2–4, 7: calculation period, payments, exclusions, and calculation formula.
   https://zakon.rada.gov.ua/laws/show/100-95-%D0%BF#Text

2. Law of Ukraine "On Vacations" dated November 15, 1996 No. 504/96-VR — Articles 10, 11, 21: schedule, notification, postponement, and vacation payment deadline.
   https://zakon.rada.gov.ua/laws/show/504/96-%D0%B2%D1%80#Text

3. Labor Code of Ukraine — Articles 115, 127, 128, 265: payment terms, deduction rules, and financial liability.
   https://zakon.rada.gov.ua/laws/show/322-08#Text

4. Law of Ukraine dated March 15, 2022 No. 2136-IX "On the organization of labor relations under martial law" — Articles 6, 10, 12, 16: holidays, payment deadlines, vacation limits, and inspections.
   https://zakon.rada.gov.ua/laws/show/2136-20#Text

5. Tax Code of Ukraine dated December 2, 2010 No. 2755-VI — Article 167, paragraph 168.1, paragraph 16-1 of subsection 10 of section XX: PIT and military tax.
   https://zakon.rada.gov.ua/laws/show/2755-17#Text

6. Law of Ukraine dated July 8, 2010 No. 2464-VI "On the collection and accounting of the unified contribution for compulsory state social insurance" — Articles 7–8: base and USC rates.
   https://zakon.rada.gov.ua/laws/show/2464-17#Text

7. Law of Ukraine "On the State Budget of Ukraine for 2026" No. 4695-IX — Article 8: size of the minimum wage.
   https://zakon.rada.gov.ua/laws/show/4695-20#Text

8. Code of Ukraine on Administrative Offenses — Article 41: liability of officials and sole proprietor employers for violating labor laws.
   https://zakon.rada.gov.ua/laws/show/80731-10#Text

9. Law of Ukraine dated October 19, 2000 No. 2050-III "On compensation to citizens for the loss of part of their income in connection with the violation of payment deadlines" — Articles 2–4.
   https://zakon.rada.gov.ua/laws/show/2050-14#Text

10. Resolution of the Cabinet of Ministers of Ukraine dated February 21, 2001 No. 159 "On approval of the Procedure for compensating citizens for the loss of part of cash income in connection with the violation of payment deadlines".
    https://zakon.rada.gov.ua/laws/show/159-2001-%D0%BF#Text