Keep track of the company’s holiday pay liability – make sure to take annual leave!
Holiday pay liability. Many employees do not take out their annual leave, because they do not want or feel that they have the time to take time off. But if the company lets its employees save vacation days for too long, the debt builds up and it becomes more expensive when the holiday pay is finally paid out. Do you recognize your company in this?
In Sweden, all employees are entitled to 25 days of vacation per year, this does not mean that it is necessarily paid as paid leave first must be earned. As an employer, you have an obligation to ensure that your employees take at least 20 vacation days each year. In this way, you can also influence the company's holiday pay debt at the end of the year.
Holiday pay liability
The holiday pay liability is the total accrued holiday pay the employees have earned. The holiday pay liability must be recorded on an ongoing basis by companies with employees. For each new day the employee has earned, the holiday pay liability increases. It decreases for each paid holiday the employee has taken.
If the company allows its employees to save vacation days for too long, the cost of the holiday pay increases. For most employees, the salaries increase over time and as the holiday pay is calculated on the basis of the current salary, the debt is increasing and it becomes more expensive when the holiday pay is finally paid out.
Take annual leave
The summer months are the time of year when most people in Sweden take out most of their annual leave. But it is of course possible to take out holiday at other times, like at Christmas and in the winter. To ensure that the holiday pay liability is as accurate as possible at the end of the year. You should, in good time before the holiday year ends, which is usually in March, check that the employees have actually taken their leave or plan to do so..
If an employee has not taken at least 20 days annual leave
Should the holiday debt list show that an employee has not taken out at least 20 days holidays, check with the employee to see if the person has planned holiday leave at another time. If the person does not have any holidays planned, establish a plan to ensure that the vacation days are used before the end of the vacation year.
If the employee has failed to report vacation days use, it is important to correct this immediately in order for the Holiday pay liability to be correct.
It is important that both employees and their managers know what applies. With clear rules in the staff handbook or in the policy, any ambiguities regarding taking and reporting of annual leave are avoided.
Accountor works with payroll management in most Swedish payroll systems and has extensive experience in this area. Feel free to contact us if you need help!