Holiday allowance is calculated as at least 1% of the employee's holiday-entitled pay. The 1% is set by the Holiday Act, so the holiday allowance can never be less than 1%.
Who receives holiday allowance
All employees entitled to pay during holiday are entitled to be paid holiday allowance. Employees entitled to pay during holiday also earn 12.5% in holiday pay, which is only paid out proportionally, together with any remaining holiday, when the employee leaves.
When must holiday allowance be paid out
There are two ways to pay out holiday allowance:
- Holiday allowance is paid out at fixed times twice a year; in May and August. In May, the holiday allowance for the period 1 September – 31 May is paid out. In August, it is paid out for the period 1 June – 31 August.
- Holiday allowance can also be paid out when the employee takes holiday. In this case, you calculate the holiday allowance earned and pay out the share that corresponds to the employee's planned holiday.
What to do with holiday allowance if an employee leaves
If you pay out holiday allowance as you go
If you pay out holiday allowance when the employee takes holiday, the holiday allowance the employee is entitled to will already have been paid out. So there will be no need to pay out further holiday allowance when the employee leaves. But remember that the employee must still get 12.5% in holiday pay for holiday the employee hasn't taken.
If you pay out holiday allowance twice a year
If, on the other hand, you pay out holiday allowance twice a year, you need to pay particular attention if an employee leaves. If the employee leaves before the holiday allowance has been paid out in full, holiday allowance must be settled for the days of holiday the employee has taken since you last paid out holiday allowance. Example: An employee leaves and has taken 5 of 8 days of holiday earned. Here, the company must pay out holiday allowance for the 5 days the employee has already taken. No holiday allowance is settled for the 3 days of holiday earned, as these are settled with 12.5% in holiday pay when the employee leaves.
Zenegy has automated holiday allowance
In Zenegy, the system is set up to automatically calculate and pay out holiday allowance in May and August. If you want to pay out holiday allowance when the employee takes holiday, you need to switch on the function ‘Enable ongoing payment of holiday allowance when taking a holiday. Read here how to handle holiday allowance in Zenegy
