Workers are under the Holiday Allowance Act no. 30/1987 entitled to a holiday allowance (paid holiday) consistent with holiday rights accrued during the past holiday allowance year. The minimum holiday allowance added to wages is 10.17% of total wages. In addition collective agreements provide for the payment by employers of a fixed Holiday bonus payable from 1 May to 15 August. Those who work part-time or only a part of the year receive these premiums proportionally.
The Act recognises various methods according to which the right to holiday allowance is protected.
Accrued holiday allowance
The basic rule of the Act requires the employer to withhold the added vacation pay for each pay period until the worker goes on vacation in the next vacation year. The holiday allowance for each wage period (usually one month) is calculated in daytime working hours and stated specifically on the pay slip at the time of each wage payment, both the total of accrued holiday allowance from the beginning of the year and holiday allowance for the period in question.
The calculation is done by dividing the vacation pay (i.e. 10,17% of total wages for each wage period) by the workers regular hourly pay for day time work; thus calculating how many day-work hours the vacation pay amounts to. The employee accumulates such hours throughout the vacation year. When the worker goes on vacation in the following vacation year, the total number of these hours are multiplied by the day-work hourly pay in effect at that time. The amount thus found is paid the worker less taxes and other charges.
Holiday allowance account
Trade unions may agree with employers to have the holiday allowance (minus tax and other charges) deposited regularly into a special holiday allowance account in the name of the worker at a bank. Under such an agreement, it must be ensured that the party undertaking to safeguard the holiday allowance will pay the accrued holiday allowance to the worker in question, i.e. the principal along with interest, at the beginning of his holiday. The worker may withdraw his/her balance for the past vacation year after 15 May every year.
Workers earning a monthly salary
Workers employed on an open ended basis and earning fixed monthly wages for day work maintain their pay when they go on vacation. If they earn additional payments for over-time work, bonus payments or other extra payments, holiday allowance is calculated specifically on those payments and deposited into a holiday allowance account.
Employment termination and holidays
If an employment contract is terminated, the employer is required, at the end of the employment relationship to pay the worker all his accrued but unpaid holiday allowance.