Employer and Employees
Holiday Pay: Calculation, Rates, and Payout
See how holiday pay is calculated, which rates apply, when it is paid out, and what employers need to check.
2 min read · Translated from Norwegian. Read the original
Holiday pay (Feriepenger) is intended to compensate for the salary lost when an employee takes holiday. It is not a bonus in addition to ordinary salary, and is normally accrued the year before the holiday is taken.
How is holiday pay calculated?
Holiday pay is calculated based on the holiday pay basis (feriepengegrunnlaget) in the accrual year. Remuneration for work, such as salary, and normally bonuses or commission linked to personal work performance, can be included. Expense reimbursements, holiday pay already paid out, and certain other benefits are not included.
The minimum rate according to the Norwegian Holiday Act (Ferieloven) is 10.2 per cent. A collective agreement (tariffavtale) with five weeks of holiday usually provides 12 per cent. Employees over 60 years of age have a higher minimum rate. Always check the current agreement and regulations.
When is holiday pay paid out?
The general rule is on the last regular payday before the holiday. Many businesses make a combined holiday settlement (ferieoppgjør) in June and pay out regular salary when the holiday is actually taken. In such cases, the salary deduction for holiday must be calculated correctly.
Holiday pay and tax
Holiday pay is taxable income. The fact that an employer often does not make an advance tax deduction (forskuddstrekk) during a standard holiday pay payout does not mean the amount is tax-free. The deduction is normally spread across other salary payments.
When the employment relationship ends
Accrued holiday pay must be settled according to the rules of the Holiday Act (Ferieloven). The employer must also check whether salary deductions for holiday that has not been taken have already been made.
On Proffi
Proffi can help businesses find payroll agencies, accountants (regnskapsførere), and HR providers. Personal holiday and payroll data should never be displayed on public company profiles.
Source
Frequently asked questions
- Is holiday pay tax-free?
- No. Holiday pay is taxable income.
- Is the rate always 12 per cent?
- No. The minimum rate under the Holiday Act (Ferieloven) is 10.2 per cent, while five weeks of holiday normally gives 12 per cent by agreement.
- Can you take holiday without accrued holiday pay?
- You can have the right and obligation to take holiday even if you did not accrue holiday pay the year before.