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Vacation and Holidays Pay: What Employees Need To Know

Businessman working at desk on the beachMost companies have different rules about vacation pay. However; some rules remain common to all companies across different countries. Often, new employees are unaware of the rules regarding vacations and holidays. So, in this guide, we will discuss the basics of vacation pay briefly so that every employee is aware of the basic facts.

Vacation pay: Who gets it?

Vacation and holiday pay is typically given to only those employees who have been employed with the company for at least 12 months. You also need to have worked for at least 90% of this time period. Some companies even tend to give vacation pay to people who have worked for even 5 days. Also, employees who have worked for consecutive 15 years or more for the same company tend to get several benefits in the form of paid 2 week vacations which may be taken as a single two-week vacation or two one-week vacations in the work year. Workers in Australia can get more information about vacation pay from their payroll service Australia. Many employers also mention holiday pay rates in the advertisement they make for the job post. Once a successful candidate has been offered the job, s/he can get all the details pertaining to this topic.

Where else is holiday and vacation pay mentioned?

The written contract between the company and the employee states the same. Some employers also tend to give written particulars to their employees regarding the vacation or holiday pay as well.

What constitute typical holidays?

Public holidays of a country are also mentioned in the contract. These include common festival holidays, bank holidays, and common law holidays. If Christmas and New Year’s fall on weekends, alternate days may be declared as holidays.

When can an employee ask for his/her vacation pay?

Most employers give the vacation pay to their workers one day before the latter leave on vacation. Some companies tend to pay it in every pay period but this has to be indicated by payroll and advised to the employer.

Calculating vacation pay

Usually, in most countries, vacation pay is calculated at 4% of the total wages, which are the gross wages with commissions and extras including overtime pay and so on. For employees who have been consecutively employed for more than 15 years with the same company, the pay may be calculated at 6% of the gross wages.

Deductions on vacation pay

Most commonly applicable deductions on normal pay are also available on vacation pay such as income tax, employment insurance premium, pension/401 K plans etc.

Taking and applying for vacation

It is every employee’s right to apply for vacation provided s/he gives a notice well in advance. Usually, most employers give a minimum leave period: in some cases it is twice as long as the period of actual vacation. Thus, if you are planning to go on 1 week leave, give a notice period at least 2 weeks in advance.

Employers’ restrictions

Sometimes, employers may impose restrictions on the leave taken. They may, for example, nominate certain days of the year as closure where the employers have to take their annual leave. They can also impose limits on the maximum number of leaves one can take and also periods when the leave may be taken. Sometimes, though rare, drastic measures may lead the employer to cancel an employee’s leave, but s/he might want to compensate for it through monetary means.