Holiday pay is accumulated the year before you take your holiday, and this is called the accumulation year. If you did not work the previous year, you are still entitled to holiday leave. But you will not be entitled to holiday pay.
Holiday pay
What is holiday pay?
Holiday is essentially time off without pay. The purpose of holiday pay is to replace the pay while the employee is on holiday, and the holiday pay is calculated based on last year’s income.
This means holiday pay is not an additional payment you receive from your employer in addition to your regular pay the month you are on holiday leave.
If you did not work last year, it means you have not accumulated any holiday pay. But you are still entitled to holiday leave.
Your holiday pay counts as part of your income and is taxed like normal.
What normally happens is that a little bit more tax is withheld from your regular pay the rest of the year, so that no tax is actually withheld from your holiday pay when it is paid out to you.
For more information on taxation rules, please contact the Norwegian Tax Administration.
How much holiday pay am I entitled to?
The holiday pay is minimum 10.2 percent of the basis for holiday pay calculations. Employees over 60 are entitled to a minimum of 12.5 percent. Collective agreement normally require 12 percent.
How is holiday pay calculated?
Your holiday pay is calculated on the basis of what you have earned as remuneration for work (salary, etc.) during the accumulation year.
Holiday pay is calculated on the basis of bonuses and commission-based pay when this remuneration is paid in recognition of the employee’s personal work effort.
Not all payments are included in the calculation basis. For example, the calculation basis does not include payments relating to travel costs and accommodation costs, holiday pay paid during the accumulation year, or a share of net proceeds.
The calculation basis should be specified in the annual summary of remuneration and benefits issued by your employer.
When is the holiday pay paid?
Normally, holiday pay should be paid on the last regular pay day before your holiday leave. The most common arrangement, however, is for the employer to pay the holiday in a specific month, e.g. June. The rules concerning payment of holiday pay can be set aside by a collective agreement.
Holiday pay cannot be included in the regular pay unless this directly follows from a collective agreement.
Accumulation of holiday pay during sick leave and other types of leave, etc.
The employer calculate holiday pay on sick pay paid during the employer liability period (up to 16 calendar days of a sick leave period). The same applies to care benefit paid for a period of up to ten days by the employer in connection with a child’s or child minder’s illness.
NAV will calculate holiday pay on sickness benefit for up to 48 days each accumulation year. NAV will also calculate holiday pay on parental benefit in connection with birth or adoption for a limited period. Holiday pay from NAV is paid in the last half of May the following year.
Many employers advance payment of parental benefit and sickness benefit to employees and get reimbursement from NAV. This arrangement does not, in itself, make the employer liable for paying holiday pay based on the entire amount. In order to have holiday pay calculated based on the entire amount paid, there must be a specific agreement to that effect, e.g. through a collective agreement.
Holiday pay on unemployment benefit is regulated by the National Insurance Act. This applies to both job seekers and employees who have been laid off. Please contact NAV for more information.
What if I don’t take holiday?
The employer has a duty to ensure holiday is implemented, and the employee has a duty to take holiday.
All statutory holiday that has not been used by the end of the holiday year must be transferred to the following holiday year. This also applies if the employee has been on extended sick leave for multiple years and has a lot of unused holiday.
It is prohibited to receive holiday pay for holiday that has not been used or transferred to the next holiday year. This also applies if the holiday has been transferred due to inability to work or parental leave.
The only way to receive holiday pay for unused holiday is if the employment relationship is terminated. See Section 11 (3) of the Holiday Act.
What if I quit my job?
You are entitled to holiday pay for unused holiday
Holiday pay accumulated from your previous employer, where you did not use your holiday, is intended to compensate for the pay you do not receive when you go on holiday with your new employer.
If you have not used all of the holiday you are entitled to when you quit a job, you need to make sure you receive the holiday pay you have accumulated. See Section 11 (3) of the Holiday Act.
You are entitled to the pay your employer held back in anticipation of holiday
If your employer has a fixed month when holiday pay is paid, you need to make sure you are reimbursed for the pay that was held back the month you received your holiday pay.
Many people believe they receive an extra payment for unused holiday. That is not the case. What you do receive is the pay you earned, but did not receive, for the month your employer paid holiday pay instead.
What do I do if I don’t receive my holiday pay?
The procedure for what to do if you do not receive your holiday pay will depend on whether your employer is unwilling or unable to pay it.
See how to proceed to claim your holiday pay
Special rules if you are entitled to a fifth week of holiday pay
If your employer is bound by a collective agreement entitling you to five weeks of holiday leave, the ordinary rate is 12 percent.
For employees over 60, the rate is 14.3 percent.
The fifth week of holiday leave and the higher rate is part of the settlement between the parties and not part of the Holiday Act.
Many will find that a deduction is made from their holiday pay for the additional week. This happens when the employer pays holiday pay in a specific month, and then pays the normal salary whenever the employee goes on holiday leave.
For example, if you receive your holiday pay in June, it will not be enough for your employer to hold back your pay for the month of June. The employer must hold back an amount equivalent to five weeks’ pay, so that you can receive your normal pay in all five weeks of your holiday leave.
Given that five weeks don’t fit in a single month, the remaining deduction is made from the holiday pay. That is why the holiday pay rate is higher – to compensate for the lack of earnings from the additional holiday leave.
You should check the following:
Check your employment contract for whether you are entitled to holiday leave and holiday pay beyond the minimum required by the Holiday Act.
If you have been on sick leave or out on other types of leave for an extended period, it is especially important that you check whether you have received everything you’re entitled to in terms of pay, sick pay/sickness benefit, holiday pay, etc.
Holiday pay cannot be included in the regular pay unless this directly follows from a collective agreement.
Not sure? Ask for a review
If you are not sure how holiday pay is set aside and paid, and if it is being done correctly, you must contact HR or your employee representative. Ask for an overview that makes it possible for you to verify that your payments are correct.
The Labour Inspection Authority cannot comment on whether the calculations are correct.
Legislative framework
Chapter 3 of the Holiday Act: Calculation and payment of holiday pay