Calculate vacation pay for hourly employees – percentage rule
You must use the percentage rule for employees who do not have a fixed weekly or monthly salary, such as those earning an hourly wage. According to the percentage rule, vacation pay is 12 percent of the employee's total pay during the qualifying year, when the number of annual leave days is 25 (see example calculation below).
The total pay for the year is all the pay the employee received during the qualifying year, including, for example, piece-work pay, commission, compensation for unsocial working hours, shift allowance, overtime compensation, travel time compensation and the like.
However, the annual pay does not include:
- vacation pay
- pay received in respect of a layoff connected with the vacation closure of the business
- compensation for absence credited for the purposes of vacation pay
For each day of absence credited for the purposes of vacation pay, you must instead increase the pay base by the employee's normal daily income. An example of absence credited for the purposes of vacation pay is when an employee is absent from work due to illness (max. 180 days per qualifying year).
More than 25 days of annual leave
Vacation pay is 12 percent by law and is based on an annual leave entitlement of 25 days.
Therefore, if the employee is entitled to more than 25 days of annual leave, you must increase the vacation pay by 0.48 percent for each extra annual leave day. By increasing the vacation pay by 0.48 percent (12% / 25), the extra annual leave days will be worth the same as those paid by law.
Example calculation using the percentage rule
25 days of annual leave
An employee has 25 days of annual leave and SEK 220,000 in vacation pay-qualifying income during the qualifying year.
Each annual leave day is worth (220,000 x 0.12 [12%] / 25 = SEK 1,056.
30 days of annual leave
Another employee has 30 days of annual leave and SEK 220,000 in vacation pay-qualifying income during the qualifying year.
Each annual leave day is worth (220,000 x 0.144 [14.4%] / 30 = SEK 1,056.
30 days is 5 days more than the 25 days on which the 12% is based. 5 (days) x 0.48% = 2.4%.
12% (for 25 days of annual leave) + 2.4% (for 5 extra days of annual leave) = 14.4%.