The Norwegian holiday leave and holiday pay ensures that employees have a statutory right to holiday leave every year regardless of what kind of arrangements the employer decides to provide the employees with. The system can however seem complicated. In this article we explain the fundamentals of the Norwegian holiday leave and pay system and clear up some common misunderstandings.
In Norway the right to holiday leave and the right to holiday pay are interconnected but also independent of each other.
Key Aspects of Holiday Leave in Norway
In Norway, employees are entitled to 25 working days of holiday leave annually, provided they commenced their role by September 30th of the calendar year. The Holiday Act, which regulates holiday leave and pay, defines all days as working days except Sundays and bank holidays. This effectively grants employees four weeks and one day of holiday each year.
Understanding Holiday Pay
While all employees are entitled to unpaid holiday leave, the right to income during this period is not automatic. An employee does not receive regular salary during holiday leave considering that no work is being performed while on holiday. In order to compensate for the income loss during holiday leave the Holiday Act operates with holiday pay. Holiday pay, amounting to 10.2% of the previous year's earnings, is accrued based on the remuneration received during that year. For instance, holiday pay received in 2024 reflects earnings from 2023.
Payment of Holiday Pay
According to Holiday Act, holiday pay should be disbursed at the time when the employee takes holiday leave. If the employee splits up the holiday leave throughout the year, then according to the Holiday Act also the payments must be paid out in instalments.
However, the most common practice in Norway involves paying the full accrued holiday pay in June, irrespective of when the holiday is actually taken. When employees receive their holiday pay in June, their regular salary is adjusted by deducting an amount equivalent to regular salary for a period corresponding to the employee's annual leave. This means that employees receive their holiday pay instead of their usual June salary, regardless of when they actually take their holiday. Subsequently, when employees go on holiday at any other time of the year, they receive their normal salary for that period.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.