Bonus schemes that appear cost-effective at the time of implementation because holiday pay is “included” in the payout may, in reality, create a subsequent payment obligation the company has not accounted for.
As a general rule, bonuses must be included in the basis for calculating holiday pay, and holiday pay in Norway is paid the year after it is earned. A bonus paid in 2025 will therefore generally give rise to holiday pay in 2026.
Nevertheless, we often see bonus schemes that attempt to regulate this differently. For example, they may state that holiday pay is already “included” in the bonus payment and therefore should not be paid separately. In such cases, the question is whether the employee can still claim ordinary holiday pay the following year—effectively resulting in “double” holiday pay.
The Holiday Act is a protective statute that cannot be deviated from to the detriment of the employee. The purpose of the Act and the holiday pay scheme is to ensure that employees have the financial means to take leave. This is safeguarded by requiring holiday pay to be paid in advance of the holiday period. If holiday pay is disbursed at a different time than prescribed by the structure of the Act, it may undermine the employee’s real ability to take leave and will therefore be to the employee’s disadvantage.
If holiday pay is “included” in the bonus and paid at the same time, this will generally be contrary to the structure of the Holiday Act. In that case, the employee may still be entitled to holiday pay when taking vacation, and a situation resembling “double” holiday pay may arise: The employee receives holiday pay upon payment of the bonus, but can also demand that holiday pay be calculated on the bonus the following year. A scheme that includes holiday pay will therefore often not work as intended.
This is not absolute. An exception developed in case law applies where the employee attempts to exploit the arrangement to obtain an unwarranted double payment, the so-called “speculation exception.” Such speculation may result in the employee not being entitled to “double” holiday pay. However, this is a narrow exception and does not provide the company with a general safety net.
