What happens with your unused holidays at the end of the year in Norway?

Mandatory Holiday Scheduling Before Year-End

According to the Holiday Act § 5 (1), the employees are entitled and obligated to utilize their full vacation entitlement within the calendar year. The employer must ensure that all statutory holidays are used each calendar year. The primary aim of this regulation is to guarantee that employees receive a minimum amount of annual leisure time. The employer is required to discuss holiday timing and schedules with the employees or their representatives in advance. If consensus is not reached, the employer has the authority, within certain limits, to decide the holiday dates. It is crucial for both parties to collaborate to ensure that holidays are taken, as failing to do so without an agreed-upon transfer of holidays constitutes a violation of the Holiday Act.

Handling of Unused Holiday at Year-End

Employees cannot unilaterally transfer unused holiday to the next calendar year. However, with mutual agreement between the employer and employee, a formal arrangement can be made to transfer a maximum of 12 working days to the subsequent holiday year as per Holiday Act § 7 (3). This limit applies only to statutory holidays, allowing flexibility for additional days to be transferred if agreed upon by both parties. Any statutory vacation not used due to illness, leave of absence, or similar circumstances will be transferred to the next year regardless of these conditions.

Financial Implications for Employees

The Holiday Act mandates that accrued holiday pay be disbursed instead of regular salary during vacation periods. Typically, employers pay last year’s accrued holiday pay in June while deducting the equivalent from the annual salary for the current calendar year. This practice can result in employees not receiving their regular salary in June despite working. To rectify this, employees are paid their usual salary when they take their holiday, usually in July. If an employee leaves the company before using all their holidays, they must either take the remaining vacation during their notice period or receive compensation for the days worked without salary.

Hjort’s recommendations for Employers

We recommend that employers take the following steps to ensure compliance:

1. Holiday Tracking: Establish or verify systems to monitor unused and accrued holidays from previous years.
2. Holiday Scheduling: Coordinate with employees to schedule unused holidays, provided it aligns with business operations.
3. Holiday Transfers: Formulate agreements for transferring unused holidays for employees with remaining days at year-end.
4. Contractual Review: Examine the language used in employment contracts, employee handbooks, and intranet resources to ensure they do not promise more than the statutory minimum requirements. Adjusting or removing outdated provisions may be necessary to align with current regulations.

By adhering to these guidelines, employers can navigate the complexities of holiday scheduling and ensure both legal compliance and employee satisfaction.