Summer vacation coming up? Find out how your vacation pay is calculated

Topics

• Employment contract
• Labour law
• Legal assistance

You are entitled to pay during your vacation, but the amount depends on factors such as your pay structure, working hours, and the length of your employment. See the frequently asked questions about holiday pay and holiday bonuses.

Under the Annual Leave Act, you are entitled to receive at least your regular or average pay during your vacation. The exact method of calculating holiday pay and the amount depend, among other things, on the pay structure and working hours in your employment relationship.

You may also be entitled to a holiday bonus. The holiday bonus is typically 50% of the holiday pay and is paid in addition to the holiday pay. However, the holiday bonus is not based on law; rather, its payment is usually based on a collective bargaining agreement. The payment of the holiday bonus may also have been agreed upon in your employment contract or may be a practice followed by your employer.

How is holiday pay calculated?

The method for calculating holiday pay is generally determined by the type of pay system in place in your employment relationship at the end of the holiday determination year. The holiday determination year is the period from 1.4. – 31.3. 

Holiday pay can be calculated, for example, based on weekly or monthly pay, average daily pay, or a percentage-based method.

Monthly or weekly pay

If you are paid a monthly or weekly salary, you will generally receive your normal pay during your vacation. This means that your holiday pay is usually the same amount as your regular pay. Holiday pay also includes salary components and bonuses that are not temporary situation-based allowances.

Hourly or contract pay

If you are paid hourly or on a contract basis, how your vacation pay is calculated depends on how much you work.

If you work regularly for at least 14 days a month, your holiday pay is generally determined based on your average daily wage. The average daily wage is calculated by dividing the wages paid during the holiday determining year by the number of working days. The resulting figure is multiplied by a coefficient specified in the Annual Leave Act, which corresponds to the number of vacation days.

If, on the other hand, you work fewer than 14 days a month but at least 35 hours a month, your holiday pay is usually calculated on a percentage basis. Your annual holiday pay is 9% or 11.5% of the wages paid or due for the time worked during the previous holiday determination year (overtime premiums are not included). The 11.5% rate applies when your employment has lasted at least one year by the end of the holiday determination year.

What if you don’t have time to accrue vacation days?

If you work fewer than 35 hours per month, you do not accrue annual leave. Even if you do not accrue actual vacation days, you may still be entitled to time off. Holiday pay is usually paid for the days you take off. The amount of holiday pay is 9% or 11.5% of the wages paid or due for the time worked during the holiday determination year (overtime premiums are not included).

When is holiday pay paid?

If your vacation lasts more than six business days, your employer must pay your holiday pay before your vacation begins.

If your vacation lasts six business days or fewer, your holiday pay may be paid on your regular payday.

Always check your holiday pay statement

Your employer must provide you with a statement of your annual holiday pay or holiday compensation. The statement is provided when the holiday pay or holiday compensation is paid.

Check the statement to ensure that your holiday pay or holiday compensation has been calculated correctly. If you have any concerns about the accuracy of your holiday pay, as a member of YTK Worklife, you can ask the Legal Assistance for help.

Collective agreements may contain different terms and conditions

Collective agreements may include terms and conditions that supplement or clarify the Annual Leave Act, such as provisions regarding how holiday pay is calculated, holiday bonuses, and the timing of payments. Therefore, you should always check whether a collective agreement applies to your employment relationship and what it says about annual leave, holiday pay, and holiday bonuses.