The management of annual leave is changing, bringing with it new areas of responsibility for employers.

The new provisions are set out in Decree-Law No. 144 of 7 August 2026 (the “Public Administration Decree”), converted, with amendments, into Law No. 174 of 5 October 2026.

The legislation directly concerns public administration employees, but it also provides relevant guidance for HR departments and private-sector employers.

The underlying principle is straightforward: annual leave must not merely be recorded; employees must be effectively enabled to take it.

The new rules strengthen the employer’s role in putting in place the organisational measures necessary to ensure that employees actually take their annual leave.

It is therefore not sufficient to know how many days of leave remain outstanding in the company’s HR management system.

The key issue is being able to demonstrate that the employee was actually placed in a position to take their accrued leave.

The new framework provides for a formal invitation to take annual leave and gives particular relevance to the employee’s conduct where the failure to take leave is the result of a conscious decision on the employee’s part.

This is precisely what makes proper documentation and record-keeping so important.

For private-sector employers, the Public Administration Decree does not directly amend the rules governing annual leave, which continue to be regulated by general employment legislation and the applicable collective bargaining agreements.

Nevertheless, also in the private sector, it remains essential to monitor outstanding leave balances and to take timely action where significant accumulations arise.

For HR departments and personnel managers, this means planning annual leave, informing employees accordingly, and retaining relevant communications and records.

An informal approach, particularly where annual leave has accumulated over a long period, may make it more difficult to reconstruct the reasons why the leave was not taken.

Monitoring should therefore not be carried out only when the employment relationship comes to an end, but throughout the entire employment relationship.

For employers, the issue is not simply knowing how much annual leave an employee has accrued, but being able to demonstrate that the employee was effectively given the opportunity to take it.

The Public Administration Decree therefore also represents an opportunity for private-sector employers to review their internal procedures, monitoring systems and communication practices with employees.

The Law Firm remains available should you require any further clarification.