Holiday Pay/Feriepenger

The topic of holiday and holiday pay is regulated by “Act relating to Holidays”. Let’s have a look at the rules in terms of taking vacation and holiday pay.

 

1. Everyone in Norway is entitled to 25 vacation days per calendar year. Vacation days are counted as “working days”. 

 

Example: You are working 5 days a week (Monday - Friday). You would like to book a vacation from Monday till next Monday included. It means that you are using 6 vacation days (not 8), as we are only counting “working days”.

 

2. There is an exception for the rule above, though. If you started working for your company BEFORE 30th of September, then you have the right to use 25 vacation days in that year. If you started working for your company AFTER 30th of September, you can only have a week of vacation.

 

3. Holiday in Norway is a leisure time WITHOUT pay. However, in order to compensate for the loss of income when you are on vacation, you receive holiday pay/feriepenger.

 

4. Holiday pay is the money your company “sets aside” for you so that you have money for your vacation.  How is holiday pay calculated?

 

It is calculated as 12% of your work remuneration from the last year. Please, note that it is NOT 12% of your total income during the last year. It is 12 % of your total work remuneration - any kind of payment for your work contribution.

 

Therefore, your holiday pay is 12% of your yearly salary + commissions (if any) + bonuses (if any). Because all of this is the payment for your work contribution.

 

Payments like travel expenses, holiday pay itself, dagpenger (unemployment benefits, in case you are furloughed, for example) cannot be included into calculation of holiday pay, because these payments are NOT connected to your work contribution.

 

Important information for those who have been furloughed/permittert in 2020. You do not earn holiday pay on “dagpenger”/unemployment benefits. Therefore, the holiday pay which you will receive in June 2021 will not be the same. If you only worked 3 months this year (January, February, March) and the rest of the year you have been furloughed/permittert, your holiday pay next year will be 12% of 3 months-salary.


5. Holiday pay is “earned” one year BEFORE you take the vacation. It is called “earning year”. For each month you work in the earning year, you get ca 2.08 vacation days to be used next year.

 

Example: If you worked the whole year in 2020 (earning year), you have “earned” 25 days vacation in 2021.

 

If you worked 3 months in 2020, you have “earned” 6 vacation days to be used in 2021. You can take more vacation days, but they will be unpaid and you will be deducted for those from your salary.

 

If you did not work at all in 2020, you don’t have paid vacation days to be used in 2021. You can still take holidays, but again they will be unpaid and you will be deducted for those.

 

6. How does it work with the deductions and what are the options:

 

  • Your company can deduct the whole vacation of 25 days from your salary in one go in June. As you can imagine, such deduction will “eat” all of your salary and you might not have any money in June. 
  • Your company can make deductions as you go. For example, if you have 3 days vacation in September, they deduct only for 3 days from your September salary. If you have 5 days in December, they deduct these 5 days then, and so on.

 

From my experience, this is something you can agree upon with your company. If you do not talk this through, there is a chance you will automatically end up with the first option.

 

7. Holiday pay is paid out in the year when the holiday is taken (holiday year). For many companies the usual practice is to pay this in June. The holiday pay is paid that month instead of salary.

 

8. It is important that employees take vacation. You are highly encouraged to take at least the number of days you “earned” the previous year. 

 

Example: if you worked 5 months in 2020, you “earned” 10 vacation days to be used in 2021. You are encouraged to use those. You can also take more vacation days, but you will be deducted from your salary for this. It is up to you whether you take more or not, because this leave is unpaid, it is your economy and your decision.

 

Your Company cannot encourage you to take UNPAID vacation (the only exception can be if it is your first year in a company, which always closes/stops operating in July, it is called “Sommerstengt”, but it is a different topic).

 

However, your Company may encourage you to use your “earned” vacation days in general. All Employers in Norway have a duty to make sure that employees have holidays. If the "earned" vacation days remain unused, they can be transferred towards the next year. However, there should be a very strong reason why you as employee could not take vacation - this could be a long-term sickness, for example.

 

9. You have the right to have 3 consequent weeks of vacation anytime between 1st of June and 30th September.

 

10. What are you entitled to receive when you are leaving the company?

 

Example: Maria’s last day at the company is 31st of May 2020. She should receive the following:

 

  • holiday pay “earned” in 2019 (12% of all salaries + commissions if any + bonuses if any in 2019)
  • holiday pay “earned” in 2020 (12% of her salaries, commissions, bonuses during Jan-May 2020). I would recommend that you talk to your company to see whether this particular holiday pay (for 2020) can be paid out in January 2021 - otherwise you will be taxed extra on this amount.

Any questions, please ask me here.