Holiday bonus and annual leave: how holiday pay and holiday bonus are calculated

Holiday accrual year and accrual of holiday days

Annual leave is earned during the leave-earning year, which runs 1.4.–31.3. For each full leave-earning month, two days accrue if the employment relationship has lasted less than a year by the end of the leave-earning year, i.e. by 31.3. If the employment relationship has lasted at least a year, leave accrues at two and a half days per month. Parts of a day are rounded up to a full day.

Holiday days are working days, so Saturdays also count towards the holiday. For someone who has been in work longer, a full accrual year gives 30 days of holiday, and in the first year at most 24 days.

The 14-day rule and the 35-hour rule

A full holiday-accrual month is calculated primarily under the 14-day rule. It applies to employees who, under their employment contract, work at least 14 days a month. Holiday accrues for each calendar month in which there are at least 14 working days or days equivalent to them.

If, according to the contract, the employee works fewer than 14 days a month, the 35-hour rule is used. Holiday then accrues for months in which there are at least 35 hours worked or hours treated as equivalent.

If neither limit is met, the employee is entitled to time off under the Annual Holidays Act. Time off accrues at two working days for each calendar month in which the employment is in force. No pay is paid for the time off; instead, holiday compensation is paid.

Calculating holiday pay

An employee paid monthly or weekly receives their usual agreed pay for the holiday period. Holiday pay is therefore not a separate extra, but payment of normal pay for the time of the holiday.

For an hourly or piece-rate employee working at least 14 days a month, holiday pay is calculated using the average daily pay and the coefficients in section 11 of the Annual Holidays Act.

Percentage-based holiday pay is used, among others, for those covered by the 35-hour rule. It is 9% of the pay paid for time worked during the holiday credit year if the employment has lasted less than a year, and 11.5% if the employment has lasted at least a year. A collective agreement may provide otherwise.

Example: an hourly-paid employee whose employment has lasted over a year has earned 20 000 euros for time worked during the holiday credit year. The percentage-based holiday pay is then 11,5 %, or 2 300 euros. In the first year of employment, 9 % of the same amount would be 1 800 euros.

Holiday pay must be paid before the holiday begins. For a holiday of up to six days it can be paid on the normal payday. The employer must provide a holiday pay statement showing the amount of pay and the basis of calculation.

Holiday compensation when employment ends

When employment ends, the employee receives holiday compensation for earned holiday days that have not been taken and for which holiday pay has not been paid. Holiday compensation is paid with the final pay.

Claims for holiday pay and holiday compensation expire two years after the end of the calendar year in which they should have been paid. In your final pay, check that all unused holiday days have been compensated.

The holiday bonus is based on a collective agreement

The holiday bonus, which in some sectors is called a return-from-holiday bonus, is not a benefit under the Annual Holidays Act. It is agreed in collective agreements. According to the occupational safety and health authorities, the holiday bonus can be, for example, 50 % of holiday pay, and it is usually paid in connection with the summer holiday.

The amount, payment date and conditions of the holiday bonus vary by sector. Collective agreements may also contain conditions for receiving the holiday bonus. If there is no collective agreement in your sector, the holiday bonus can be agreed in the employment contract. Check your own entitlement from your employment contract, your sector's collective agreement or your union.

The invoice example illustrates the principle: if the holiday bonus under the applicable collective agreement were 50 % of holiday pay and holiday pay were 2,000 euros, the holiday bonus would be 1,000 euros. Holiday bonus is pay, so tax is withheld from it in the same way as from other pay.

Time of holiday

The summer holiday is taken during the holiday season 2.5.–30.9. The employer decides the timing of the holiday but must hear the employee's wishes. The timing must be announced at the latest one month before the holiday begins or, if that is not possible, at the latest two weeks before.

Frequently asked questions

How much holiday accrues in a year?

Two working days a month during the first holiday credit year, and two and a half days a month when the employment relationship has lasted at least a year by 31 March.

Is holiday bonus statutory?

It is not. Holiday bonus is based on a collective agreement or the employment contract. The Annual Holidays Act covers only holiday, holiday pay and holiday compensation.

When is holiday pay paid?

Before the holiday starts. For a holiday of at most six days, holiday pay can be paid on the normal payday.

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Sources

The article is general information and does not replace the guidance of an authority, a lawyer or an adviser. Check up-to-date information from the sources.