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

Obligation to take holiday before year-end

Under Section 5 (1) of the Norwegian Holiday Act, the employer must ensure that the employee is given 25 virkedager (weekdays, i.e. Monday to Saturday, excluding public holidays) of time off each holiday year, and the employee is obliged to take that time off. The holiday year follows the calendar year (Section 4). The purpose of these rules is to guarantee employees a minimum amount of annual time off.

Well before the holiday, the employer must discuss the scheduling of holiday and holiday lists with each employee or the employee’s union representative. If no agreement is reached, the employer determines when the holiday is to be taken, within the limits set out in Sections 7 to 9 (Section 6 (1)). The employer may therefore require an employee to take holiday even if the employee would prefer to work.

Holiday can still be imposed

Many employers discover only in the autumn that some employees still have a large number of holiday days remaining. It is not necessarily too late to impose holiday. The employer should promptly identify the remaining holiday, discuss it with the employees concerned and schedule holiday where operations permit.

Employees may require to be notified of the holiday schedule as early as possible and no later than two months before the holiday begins, unless special reasons prevent this (Section 6 (2)). The fact that little time remains of the holiday year may, depending on the circumstances, constitute such a special reason.

Employees serving a notice period require particular attention. Where the employer has given notice, the employer may not schedule holiday during the notice period without the employee’s consent, unless the notice period is three months or longer (Section 8 (1)). Where the notice period is three months or longer, holiday may be scheduled during the notice period in accordance with the ordinary rules.

Holiday not taken by year-end

Employees are not entitled to demand that holiday be carried over to the next holiday year. However, the parties may enter into a written agreement to carry over up to 12 virkedager of holiday to the following holiday year (Section 7 (3)).

The 12-day limit and the requirement for a written agreement apply to statutory holiday. For contractual or collectively agreed holiday in excess of the statutory minimum, typically the fifth week, the underlying agreement determines whether and how such holiday may be carried over.

Statutory holiday not taken due to illness, parental leave or similar circumstances, or because the employer has failed to comply with the Act, is carried over to the next holiday year (Section 7 (3), second paragraph, and Section 9). Such holiday is therefore not forfeited at year-end. The Act sets no express limit on how many years such holiday may be carried over, so it is important to keep track of each employee’s accrued holiday balance.

Financial claims from employees

As a general rule, holiday that has not been taken must be taken at a later date. Statutory holiday may not be replaced by financial compensation.

Failing to take statutory holiday by year-end without a valid written carry-over agreement constitutes a breach of the Holiday Act. Where the failure is attributable to the employer, the employee may, in addition to carry-over, claim damages (Sections 7 (3) and 14). However, the mere fact that holiday has not been taken does not automatically give rise to a claim for damages.

Holiday pay and salary deductions

Under the Holiday Act, accrued holiday pay is paid instead of salary while the employee is on holiday. In practice, most employers pay holiday pay in June while deducting salary for all holiday days in that holiday year. The employee’s salary is thus reduced for holiday days before they are taken. In practice, this evens out because the employee receives ordinary salary while on holiday, for example in July.

If an employee leaves before all holiday has been taken, the employee has in effect worked days without salary. The employer must then compensate the employee, either by scheduling the remaining holiday during the notice period, or by paying salary for the days worked without pay.

Our recommendations for employers

We recommend that employers take the following steps before year-end:

1. Obtain an overview of unused holiday and holiday carried over from previous years by establishing new systems or reviewing existing ones.
2. Agree with employees on taking unused holiday where operations permit, and schedule holiday where no agreement is reached.
3. Enter into written carry-over agreements with employees who will have unused holiday remaining at year-end.
4. Review the provisions on holiday in employment contracts, staff handbooks and on the intranet to determine whether the company has committed to more favourable terms than the statutory minimum. Amending or removing older provisions that have formed the basis for more favourable holiday arrangements may fall outside the employer’s managerial prerogative.