Annual Holiday Pay, Annual Holiday Compensation and Holiday Bonus

The employee is entitled to receive a salary for the duration of his/her annual holiday. If the employee’s pay is agreed for a week or longer, the employee is entitled to receive this pay during his/her annual holiday as well. During holidays, the employee is also entitled to the same fringe benefits he/she enjoys whilst at work. Such benefits are e.g. a company-paid telephone and company car. The annual holiday pay must be paid out to the employee before the start of the holiday.

The holiday pay of an employee who is not receiving weekly or monthly pay and who, in accordance with an agreement, works at least 14 days per calendar month is calculated by multiplying his/her average daily pay by a multiplier determined according to the number of days holiday. Such employees, who have been employed for less than 14 days a month, are entitled to an annual holiday pay representing 9 % of their last year’s pay. An employee whose employment relationship has, during the holiday determination year preceding the holiday season, continued for at least a year is entitled to a pay representing 11.5 % of his/her last year’s salary. The holiday pay is calculated in the same way for short term employment relationships.

Collective bargaining agreements for many business sectors provide for an additional compensation for the holiday period, i.e. a holiday bonus. The right to a holiday bonus is not regulated by legislation. Hence, if a collective bargaining agreement does not provide for such, the employer is not under an obligation to pay the employee a holiday bonus.

It is common that an employee has an accrued holiday entitlement at the end of the employment relationship. If the employee cannot take out his/her holiday before the end of the employment relationship, he/she is entitled to holiday compensation and a holiday bonus possibly agreed upon in the employment contract or the collective bargaining agreement. Collective bargaining agreements usually provide that the employee will lose his/her entitlement to a holiday bonus if he/she terminates the employment contract or the employment contract is terminated for a reason attributable to the employee. The holiday compensation is calculated in the same way as the annual holiday pay.

The employee’s entitlement to the annual holiday pay or the holiday compensation lapses if an action has not been brought within two years following the calendar year during which the holiday should have been held or the holiday compensation.