Payment of holiday pay
Basically, holiday is leisure time without pay. The objective of holiday pay is to compensate for the lack of pay when you take holidays.
You earn holiday pay entitlement the year prior to taking holiday, i.e. in the earning year. The calendar year you actually take holiday is called holiday year. If you have not worked in the earning year, you are nevertheless entitled to take holidays, however without holiday pay.
When is holiday pay paid?
- Holiday pay is paid in June, regardless of when the holiday is actually taken. For the exact payment date see the payroll schedule.
- Also holiday pay for hourly paid salary, honorarium and overtime is paid in June.
- When leaving UiO, holiday pay is paid on the ordinary payday following your last salary payment. If your new employer belongs to the state sector, accrued holiday pay is transferred to and paid by the new employer in the ordinary way.
How much holiday pay are you entitled to?
- Holiday pay is calculated as 12% of the accrual basis.
- The accrual basis includes all the amounts that have been disbursed to you as work remuneration (e.g. salary, sichness benefits) in the earning year. Disbursements concerning travel expenses, lodging and holiday pay are not included in this calculation.
- The accrual basis is stated on the annual income statement of the earning year. The accrued holiday pay from last year and the current year is also stated on the current year's payslips.
Holiday pay settlement in the June salary
- Holidays are leisure time without pay. This implies that employers who pay 12 monthly salaries shall deduct salary when you take holidays. However, this is not done every time you take holidays but for the year as a whole in June where your salary is deducted for the number of holiday days you are obliged to take.
- The entire holiday entitlement (25 work days for employees with a five-day work week) amounts to more than a calendar month (ca. 22 work days). Therefore, the holiday deduction normally is higher than the monthly salary.
- Holiday pay normally exceeds holiday deduction. The gross salary in June normally is larger than a monthly salary.
- No tax deductions are made on the holiday pay.
Calculation example for June salary
- It may be difficult to understand a June payslip as it differs quite a bit from an ordinary payslip. Here is an example of a typical June payslip with explanations (pdf).
- The amount to be deducted as salary for each vacation day is calculated as the annual salary divided by the number of work days per week times 52. The annual salary is calculated on the basis of the June salary. For employees in a full-time position with a 5 day work week the daily salary amounts to the annual salary divided by 260 (5 days x 52 weeks).
- Example: NN has a monthly salary of NOK 30,000 and accrued holiday pay equalling NOK 38,000. An amount to cover the full holiday period of 25 working days is deducted.
Gross monthly salary for June kr 30.000 Holiday pay (12 % of the accrual basis) kr 38.000 Deduction for 5 weeks' holiday
(monthly salary in June x 12 months x 25 days / 5 days x 52 weeks)
- kr 34.615 Gross salary in June kr 33.385
- See more calculation examples for June salary.
Rules concerning employees over 60
- As of the holiday year you turn 60 you are entitled to one extra week of holiday. You may demand to take these extra days off together, but not necessarily in connection with the rest of your holiday.
- In order to cover the salary deduction for 5 extra vacation days, you receive 2.3 % extra holiday pay, rising the total rate to 14.3 %. However, the calculation and payment of holiday pay for the extra week is subject to a monetary limit of 6 times the National Insurance Scheme’s basic amount (G). For some people, therefore, the holiday pay does not fully cover the salary which is lost for this week. If this applies to you, you may choose not to take all 5 extra days of holiday.
- Holiday pay relating to this extra week of holiday is subject to tax deduction.
- Lack of accrual
- All temporary and permanent employees who receive a monthly salary in June are basically subject to a deduction for the full (5-week) holiday. For this reason, the salary paid in June may be less than normal because salary may be deducted for more days than holiday pay is received for.
- If you wish to reduce your holiday period due to a lack of accrual, you must submit a notification of reduced holiday (odt) to your local personnel officer (Norwegian) by early May. The local administration forwards the notification to the Payroll Office. To ensure proper processing, the notification must reach the Payroll Office at the latest by 13 May.
- This also applies to you over 60 if your holiday pay does not cover the loss of salary for the 6th holiday week due to the holiday pay calculation basis limit of 6 times the National Insurance Scheme’s basic amount (G).
- Employees who join or leave UiO in June
- When leaving UiO, you must state whether you have any holiday left to take. If you leave in June, you must submit a notification of reduced holiday (odt) to your local personnel officer (Norwegian) by early May to ensure that the June salary will be correct.
- If you join UiO in June, you must always give notice of vacation days.
- If you join UiO after June, you must give notice if you are to take holiday during the year.
- If holidays are not taken
- Basically, holidays must be taken: The employer is obliged to see to it that holidays are taken and the employee is obliged to take holidays.
- All holiday entitlement that has not been taken in the course of the holiday year must be transferred to the following holiday year.
- Holiday entitlement must be taken as holidays and not as payment. It is legally not permitted to disburse holiday pay for holidays that have not been taken or transferred to the following holiday year. This applies also to transfer due to sickness or parental leave.
- No tax deductions in June
Note that it is the holiday pay that is not subject to tax deductions, not all payments in June. If the June salary consists of 3 weeks’ holiday pay and 2 weeks’ salary, advance tax is deducted from the 2 weeks’ salary.
- Part-time employees
If you are a part-time employee and, due to a lack of accrual, wish to take less holiday, you must submit a notification of reduced holiday (odt) to your local personnel officer (Norwegian) by early May to ensure that the June salary will be correct..