Holiday pay in Norway (feriepenger): how to calculate what you get

Holiday pay (feriepenger) is not a bonus your employer gives you. It is pay you have already earned, set aside so that you have money to live on when you take holiday and don't get your regular salary. That is why it is calculated from what you earned last year, not from what you earn now. It is the one thing people most often misunderstand.

This guide shows you how to calculate your holiday pay yourself, with concrete examples. You only need your holiday pay basis and your rate.

This is general information, not legal advice. The binding rules are in the Holiday Act (ferieloven), and your own employment contract or collective agreement may give you more than the law. Check them if something is unclear.

What holiday pay actually is

When you take holiday, you generally don't get regular pay for those days. Holiday pay is what you live on instead. It is earned the year before, and is typically paid out as the holiday approaches.

That means two things. In the first year of a new job you have little or no holiday pay, because you didn't earn anything with that employer the year before. And second: even if you leave, you are entitled to the holiday pay you have earned, because it is already yours.

The two rates: 10.2 and 12 percent

How much you get depends on the percentage rate. In practice there are two levels.

10.2 percent is the minimum under the Holiday Act. It applies if you have holiday under the law, that is, four weeks and one day (25 working days).

12 percent is the usual rate if you have five weeks of holiday. Most people don't get five weeks from the law, but through a collective agreement or an employment contract. Then the higher holiday pay rate usually comes with it.

The number isn't random: the extra percentage covers the fifth week of holiday. If you have five weeks off, you need more money to live on than someone who has four.

Which rate applies to you? It is in your employment contract or collective agreement, not in the law. If you are unsure, check the contract or ask the payroll department. Don't guess.

The holiday pay basis: the figure everything hangs on

The rate is only half the calculation. The other half is the holiday pay basis (feriepengegrunnlag), that is, the sum the percentage is calculated from.

The holiday pay basis is your remuneration from the earning year, that is, the year before the holiday year. It is pay and other compensation for work that was paid out that year. Bonus and commission count when they are tied to your own effort.

Some things do not count:

• Last year's holiday pay (it is already holiday pay, not new pay).
• Reimbursement of travel expenses, food and lodging.
• Dividends or a share of profits.

That is why the holiday pay basis is usually slightly lower than your total annual pay. You find the figure on the annual pay and tax statement (lønns- og trekkoppgave) you receive at the turn of the year, or on your last payslip in December. That is the figure to use, not a rough estimate of your annual pay.

How to calculate your holiday pay

The formula is simple:

Holiday pay = (holiday pay basis × rate) / 100

Example 1: An ordinary annual salary, 10.2 percent

Say your holiday pay basis from last year was 500,000 kroner, and you have holiday under the law (10.2 percent).

(500,000 × 10.2) / 100 = 51,000 kroner

That is what you are paid in holiday pay.

Example 2: The same pay, 12 percent

If you have five weeks of holiday and 12 percent through an agreement, with the same basis:

(500,000 × 12) / 100 = 60,000 kroner

The difference between the two rates here is 9,000 kroner. It is worth knowing which rate you actually have.

If you started in the middle of the year

If you worked only part of the earning year, the basis is correspondingly lower, because it is built on what you actually received. If you earned 200,000 kroner last year because you started in August, your holiday pay is 20,400 kroner at 10.2 percent. A smaller basis gives less holiday pay, completely mechanically.

Extra holiday pay from the year you turn 60

From the year you turn 60, you are entitled to an extra week of holiday and 2.3 percentage points extra in holiday pay. That means your statutory rate becomes at least 12.5 percent (10.2 + 2.3). If you already have five weeks of holiday at 12 percent through an agreement, the rate is correspondingly higher.

There is one important limitation: the extra part applies only to the portion of the holiday pay basis up to six times the National Insurance basic amount (6G, "grunnbeløpet"). If you earn more than that, pay above 6G doesn't give extra holiday pay for the additional week. The basic amount is adjusted every year, so check the current figure if you want to calculate exactly.

When do you get the money, and what about tax?

Two questions come up every year. Let's take them one at a time.

Payout

The main rule in the Holiday Act is that holiday pay should be paid on the last regular payday before the holiday. In practice most employers make it simpler: they pay out all the holiday pay in one particular month, often June, and at the same time hold back regular pay for the holiday weeks you are going to take. That is why the "June pay" often looks different from other months.

Tax

Many people think holiday pay is tax-free. It isn't. Holiday pay is taxable income, just like regular pay.

The reason tax is usually not deducted when holiday pay is paid out is that your tax card is adjusted. A little more tax is deducted from your regular pay during the rest of the year, so the holiday pay itself can be paid out without deduction. The tax is paid, just at another time.

There is one exception you should know about: if you get the holiday pay in the same year you earned it, for example in a final settlement when you change jobs, tax is deducted from it. The tax card isn't adjusted for that payout, so the deduction comes straight away.

Holiday pay when you leave

If you leave the job, you are entitled to the holiday pay you have earned, both from last year and so far this year. It should be paid out, usually on the last payday or as part of the final settlement.

As mentioned, tax is normally deducted from this, because it is paid out in the earning year. The amount is meant to cover the pay you lose when you later take holiday with a new employer, where you haven't yet had time to earn holiday pay.

If you are changing jobs and negotiating terms, it is good to have this clear. See also the guide on salary negotiation for how to bring up pay and terms, and pay in your first job if you are early in your career.

If something doesn't add up

If you don't get holiday pay you believe you are entitled to, or the basis looks wrong, start by comparing your payslips with your employment contract. If it still doesn't add up, raise it with your employer or union representative (tillitsvalgt). The binding rules are in the Holiday Act, and the Norwegian Labour Inspection Authority (Arbeidstilsynet) has more information about your rights. Your own contract can give you more than the law, but never less.

In short

Holiday pay is deferred pay from last year, not an extra gift. You calculate it by multiplying the holiday pay basis by your rate, 10.2 percent by law or usually 12 percent with five weeks of holiday. The basis is on your annual pay statement, the rate is in your contract. If you are over 60, 2.3 percentage points come on top, limited to 6G. And the money is taxable, even though the deduction is usually arranged in advance.

When you know what you are entitled to, you stand stronger, both in the job you have and in the next. If you are moving on, see vacancies and check the terms before you say yes.