Vacation Debt - Considerations Before the Vacation Year Shift

Lön & HR | 25.10.2023

by Katarzyna Kaniecka

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Autumn has arrived, marking the end of the summer period, the main season for employees to take their vacation. As the shift in the vacation year approaches for many companies, now is a great opportunity to ensure that employees have taken their vacation days as planned and to allow time for planning additional leave for those with remaining days to use.

If your employees aren't taking their vacation days or if, as an employer, you aren't following Sweden's Annual Leave Act or any collective agreements, you may eventually risk penalties, overworked staff, a tarnished reputation, and a deteriorating work environment.

Furthermore, vacation debt represents a significant cost for employers. Primarily, during the summer period, you have the chance to actively work to reduce this debt, but sometimes, events during the vacation may affect the number of days taken. For example, employees might fall ill during their time off and therefore not use the scheduled vacation, or they might take their vacation later in the year. Therefore, it's essential to review the vacation debt and current vacation balance well ahead of the vacation year's end.

We recommend checking which employees haven't been able to take their vacation during the summer and the reasons why, as well as planning for their leave for the rest of the current vacation year.


What does the Annual Leave Act say about leave?

According to Annual Leave Act, an employee has the right to 25 days of leave. The employee should have the opportunity to take these during four consecutive weeks between June 1 and August 31. Vacation planning should be done in consultation with your employees, but if you don't reach an agreement, the employer always has the final say.

The employer is obliged to ensure that employees take at least 20 vacation days per vacation year. If the employee still has vacation days left after taking out their 20 days, they have the right to carry over the remaining days to the following year. By law, vacation days can be carried over for up to five years. If certain criteria are met, they can be carried over for an additional year.

However, there's a limitation in the rule about saved vacation days: it's not allowed for an employee to save vacation days during a year when they take out saved vacation days. It means the employee needs to use all the year's paid vacation days before the saved days can be utilized. Remember that the requirement to take out at least 20 days only applies to paid days, not unpaid or advance vacation days.

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Can unused vacation days be paid out?

A not entirely uncommon question that employers encounter is whether they can pay out unused vacation days in cash. There are often one or more employees who do not want or feel able to take their 20 vacation days during the year. However, the law is very clear on this: vacation is for rest and recuperation and cannot be replaced with money.

This rule cannot be bypassed even if it's the employee who wants to have money instead of leave. However, there are some exceptions when vacation days can be taken out in cash:

  • If an employee has been sick throughout the year and hasn't been able to take their vacation
  • If an employee terminates their employment and has outstanding or saved vacation days
  • During a limited-term employment lasting less than 3 months.

Note that even saved vacation days are intended to be taken as leave.


Contractual terms, collective agreements, and procedures

Although the Annual Leave Act forms the basis for how vacation should be regulated, as an employer, you can in some respects negotiate other terms for individual employees or be part of a collective agreement with different arrangements. Remember that it's always about providing better conditions than the law allows; it's not possible to worsen what the law says.


Our recommendations

Ensure you have procedures that support the regulations you follow, and also have a routine for checking vacation balances after the main vacation period, so that a plan for withdrawals can be made for employees with any remaining vacation days.


Need support and advice on this?

Azets can help with your vacation routines, calculations, vacation balances, and are available if any other questions arise regarding vacation regulations.

Contact us

About Azets

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About Katarzyna Kaniecka

Katarzyna arbetar som Business Process Improvement Manager på Azets