Have your employees actually taken their holiday?

Autumn has arrived, marking the end of the prime time for taking a break from work. 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.

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The holiday year is coming to an end for companies applying Sweden's Annual Leave Act and all holiday must be taken before the last day of March. For companies using the calendar year as the holiday year, calculations are currently well underway for the holiday year that ended at the end of December. Regardless of which holiday agreement your company applies, as an employer, it is a good idea to check your employees' holiday days to ensure that they have been taken as planned.

Sometimes, things happen during an employee's holiday that affect the number of holiday days used. For example, an employee might fall ill during their holiday and decide not to take it as planned holiday. If your employees do not take their holiday days, or if you as an employer fail to comply with the Annual Leave Act or your collective agreements, you risk incurring penalties, which can prove costly.

Moreover, holiday owed comprises a major cost for you as an employer. It is primarily during the summer that you have the chance to actively work to reduce this, although it is possible that employees have not been able to take their holiday during the summer or choose to take it later in the year. Accordingly, it can be smart to look into holiday owed and outstanding holiday days well in advance of the end of the holiday year.

What does the Annual Leave Act say about leave?

Under to the Annual Leave Act, employees are entitled to twenty-five (25) days of leave, as well as the opportunity to take four consecutive weeks of holiday during the period 1 June to 31 August. Holiday planning should take place in consultation with your employees, although in the event of disagreement, the employer always has the right to decide. Read more about the Annual Leave Act and what you should know.

As an employer, you are obligated to ensure that your employees take at least twenty (20) days of holiday each year. If an employee still has holiday days left after taking these twenty days, they are entitled to save the remaining days for a later year. These days can be saved for a maximum of five years, after which they must be taken as pay instead.

This rules does, however, include a limit, namely that an employee is not allowed to save holiday days during a year in which they use previously saved holiday days, which means that the employee must take all of their paid holiday days for the year before they can use any saved days. Keep in mind that the requirement to take at least twenty holiday days applies to paid holiday days only and not unpaid or advance holiday days.

Can unused holiday days be paid as salary?

An issue that employers frequently encounter is the matter of whether they can pay unused holiday days as salary. There is often one or more employees who do not want or feel unable to take at least twenty holiday days during the year. Here, however, the law is very clear: holiday is for rest and recuperation and cannot be replaced by money.

This rule cannot be ignored even if the employee would prefer money over leave. There are, however, a few exceptions: if an employee has been sick the entire year and unable to take any holiday; if an employee terminates their employment and has outstanding or saved holiday days; and if an employee is on a fixed-term contract lasting less than three (3) months.

Terms and conditions, collective agreements and procedures

Although the Annual Leave Act provides the foundation for regulating leave, an employer may, to some extent, reach agreement on other terms and conditions with individual employees or sign a collective agreement with other rules. Keep in mind that this is always a case of offering better terms and conditions than the legislation – you cannot offer inferior terms and conditions.

Be sure to have procedures in place to support the regulations you follow as well as a procedure for checking outstanding holiday days after the main holiday period so further holiday can be planned for any employees with outstanding holiday days.

If you need support and advice in this area

Azets can help with your holiday procedures, calculations and remaining holiday days and is available should you encounter any other issues regarding holiday rules.

We are experts in payroll administration, HR and accounting and offer advice to companies that need help.

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