How holiday pay is calculated and how much an employee must be paid.
The right to vacation
The employee's right to vacation is regulated in the Holidays Act (1977: 480). Section 4 of the Holidays Act states that the employee is entitled to 25 vacation days per year. The employer and the employee can agree on more holiday days than 25, but not less.
Holiday pay
According to the Holidays Act, an hourly employee is entitled to holiday pay which is calculated at 12% of the salary when the number of holiday days is 25 (Section 16 b of the Holidays Act). The compensation is usually paid every month in connection with the salary payment.
The employer can use the so-called percentage rule for hourly employees. In the percentage rule, the total salary during the year is added together. This constitutes all salary paid during the earning year, supplement, commission, overtime pay or travel allowance etc. The annual salary does not include holiday pay, redundancy pay or compensation for holiday-based absence. The total holiday pay thus consists of 12 percent of the total pay paid before tax during the earning year, both fixed and variable pay.
If holiday pay is to be paid in connection with the ordinary salary, the employer must clearly state what constitutes ordinary salary and what constitutes holiday pay. This is usually most easily reported in two separate items in the payslip. If the employer has not reported the items, the employee can request an account of how salary and holiday pay have been calculated.
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