Calculation of holiday pay

According to the Swedish Annual Leave Act, everyone who works is entitled to vacation regardless of their employment type. It doesn't matter whether your employees are substitutes, hourly employees, or permanent employees. However, there are some exceptions, for example, for those who work temporarily during the summer.

Swedish law states that the holiday entitlement is 25 days, but what determines the number of days of paid holiday the employee is entitled to is how much they have worked during the qualifying year. Someone who has worked the entire year is entitled to 25 days of paid holiday.

Holiday year and qualifying year

The holiday year typically extends from April 1st to March 31st. The qualifying year is the previous year. So, it's how much the employee worked between April 1st and March 31st in year 1 that determines how much paid holiday they are entitled to in year 2.

Another common option for the holiday period is from January 1st to December 31st. In that case, the qualifying year can also be the current year, which means employees accrue their holiday pay in the same year they take it and thus receive a portion of the holiday in advance throughout the year.

There are two ways to calculate the holiday allowance: according to the same salary rule or the percentage rule.

Holiday deductions for employees with a monthly salary

If the employee has a monthly salary and takes holiday calculated according to the percentage rule, a holiday deduction corresponding to 4.6 percent of the monthly salary must also be made per day of holiday.

Holiday compensation

Holiday compensation means that instead of days of holiday leave, employees receive an allowance calculated as a percentage of their salary. It is common to pay holiday pay to seasonal or extra employees and can be applied to both employees with monthly salary and hourly wages. Holiday pay can be paid as a lump sum once a year or with each pay run. According to the Swedish Annual Leave Act., the allowance must correspond to 12 percent of the holiday accruing pay.

Check with your collective agreement which percentage applies to the calculation of daily holiday pay. The minimum rate is 12 percent, as stated in the Swedish Annual Leave Act.

Glossary for holiday pay

Holiday year	According to the Swedish Annual Leave Act, the holiday year runs from 1 April 1 to 31 March. Other periods for the holiday year, such as following the calendar year, can be agreed at the workplace.
Holiday deduction	A deduction equivalent to 4.6 percent of the monthly salary for each day of holiday taken. You make a deduction from your monthly salary and provide holiday pay for the day instead.
Holiday allowance	A supplement of at least 0.43 percent of the monthly salary per day of holiday. The supplement can be paid as a lump sum or in connection with the taking of holiday according to the same salary rule. However, some collective agreements have a higher holiday allowance than what is specified by law. Therefore, check what applies in the company's collective agreement.
Qualifying year	The qualifying year is the time period during which the employee accrues their holiday pay. According to the Swedish Annual Leave Act, the qualifying year is the year before the year in which the holiday is taken. However, it can be agreed in a collective agreement that the qualifying year should be the same as the holiday year. The number of employment days in the qualifying year determines how many paid days the employee earns.
Wage basis for holiday pay	Salary and other allowances paid to the employee during the qualifying year.
Holiday compensation	A compensation for holiday in the form of time off for seasonal or extra employees. It can also be an amount paid in a lump sum for remaining holiday if an employee leaves.
Holiday pay	The salary the employee receives when taking a day of holiday.
Holiday entitlement	The holiday entitlement, as per the Swedish Annual Leave Act (1977:480), is 25 days. Companies can negotiate for a greater number of holiday days with their employees, but not fewer.
Same salary rule	Most commonly used to calculate holiday compensation when your employees work regular hours and have a fixed monthly salary.
Percentage rule	Most commonly used to calculate holiday pay when your employees have an hourly wage and work varying hours per month or for employees with a monthly salary when the qualifying year is the year before the year in which the vacation is taken.

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