As the summer of 2025 begins, many employees and employers start to wonder: how does holiday pay work and what is important to know to ensure everything is in order?
Here is a clear and practical guide.
What is holiday pay?
Holiday pay is a substitute for your regular salary during vacation.
Instead of receiving normal salary while you’re on holiday, you get holiday pay based on what you earned the previous year.
So, in 2025, your holiday pay is based on earnings from 2024.
How much do you receive?
The standard holiday pay rates are:
- 10.2% of gross earnings for most employees
- 12% for those entitled to an extra week of holiday (e.g., by collective agreement or over age 60)
Holiday pay is not calculated from overtime, reimbursements, or previous holiday pay.
When is holiday pay paid?
Most companies pay it out in June, but some pay in May or just before your main holiday.
The key is: you should receive your holiday pay before your vacation starts.
🚫 No salary + holiday pay at the same time
You don’t get regular salary during vacation – holiday pay is meant to replace it.
If you take 4 weeks off in July, you won’t get your July salary – you receive holiday pay instead, usually in June.
How does this affect your income?
June is usually a high-payout month, since you receive both salary and holiday pay.
But during your actual vacation (e.g., in July), you might not get paid, depending on how your employer handles payouts.
How much holiday are you entitled to?
By law, everyone is entitled to:
- 4 weeks + 1 day (25 working days)
Many employers also give a fifth week, especially in agreements or contracts.
Is holiday pay taxed?
Yes – holiday pay is taxable.
But in most cases, no tax is deducted when it’s paid in June – instead, tax is slightly increased over the rest of the year to compensate.
What if I quit my job?
If you leave your job, your earned holiday pay must be paid no later than your final salary payment.
IN SHORT:
- 2025 holiday pay = based on 2024 income
- Paid usually in June
- Standard rate: 10.2% or 12%
- No salary during vacation
- You’re entitled to at least 25 working days off
- It is taxable, just deferred
Plan your vacation smart – and know what to expect financially.