Holiday allowance: when is it paid and how is it calculated?
Posted: Thu Dec 26, 2024 3:16 am
Every year, with the arrival of summer, everyone thinks about their well-deserved vacation. But it is also time for companies to do the math and take care of their commitments to employees, namely the payment of vacation allowance .
Holiday pay is a right of employees that is enshrined in labor legislation. However, it is important not to confuse holiday pay with remuneration for the period of vacation. Both are rights that must be observed by employers and correspond to different costs for companies.
When they are not automated, they are also processes that consume valuable time from Human Resources.
What is holiday pay?
While taking their rest days, workers receive their pay as if they hong kong whatsapp number database working. In addition to the holiday pay, they are also entitled to a holiday allowance. Holiday allowance is therefore an extra salary given to the worker, which is why it is commonly referred to as the "14th month" .
According to article 264 of the Labour Code (Law no. 7/2009), "the worker is entitled to holiday pay, comprising the base salary and other remunerative benefits that are a counterpart to the specific way in which the work is carried out, corresponding to the minimum duration of the holiday”.
Holiday allowance discounts (IRS and Social Security)
As with most of the workers' recurring salaries, the holiday allowance is subject to social security deductions and withholding for IRS purposes. In the case of IRS, the allowance is subject to independent withholding and cannot, for the purpose of calculating the tax to be withheld, be added to the remuneration of the month in which it is paid or made available to the workers.
When is holiday pay paid?
It is common practice for companies to pay this subsidy in full at the beginning of summer, which usually coincides with the longest holiday period for most workers. However, when the holiday is not taken all at once, the law provides for the proportional payment of the subsidy.
According to article 264 of the Labour Code, "unless otherwise agreed, the holiday allowance must be paid before the start of the holiday period and proportionally in the case of interpolated leave", that is, as the worker takes his or her holiday.
In the case of public servants , payment is always made in June , while retirees and pensioners receive the subsidy in July .
How do twelfths work?
There is another option for paying the holiday allowance: in twelfth installments . For this to be possible, there must be an agreement between the company and the employee. Furthermore, in this payment method, only half of the total amount of the allowance can be paid in twelfth installments (12 times). The remaining 50% is paid within the legally stipulated period.
When is the right to holiday pay acquired?
It is the signing of an employment contract and the provision of work under it, under whatever form, that defines the right to holidays and, consequently, the acquisition of the right to holiday pay.
Right to vacation
As a rule, the duration of vacation is 22 working days. The right to vacation expires in January of each calendar year and is related to work performed in the previous year.
However, there are exceptions:
In the year of admission or conclusion of the contract
In the year of termination of the employment contract
In these cases, the right to vacation days and vacation pay are proportional to the days or months of work actually performed in the year.
How is the holiday allowance calculated?
For most workers, the amount to be paid in holiday pay corresponds to one month of extra pay per year.
To calculate the value of the holiday allowance, the following are considered:
Recurring salaries, including base pay;
The prizes;
Remuneration for exemption from working hours;
And specific remuneration for night or shift work.
Other payments granted in the form of allowances are excluded from the calculation of the holiday allowance , such as:
The food allowance;
The transport subsidy;
The allowances .
When the holiday is taken interpolated, the amount of the allowance must be calculated in proportion to the days taken at each time, considering a total of 22 days.
Calculation of holiday allowance in the year of admission
In the year of admission, the employee is entitled to two working days of vacation for each month of the duration of the contract, up to a limit of 20 days. These days can only be enjoyed after six full months of the duration of the contract.
The worker is also entitled to the respective subsidy, proportional to the months worked.
The calculation of the holiday allowance is based on the hourly rate, the number of monthly hours worked and the number of days of holiday by right, considering, in this case, the proportion of two days per month:
[Hourly wage x (weekly hours x 52 weeks / 12 months) / 22 days] x entitlement vacation days
Streamline employee benefits management
Payroll processing and managing holiday and Christmas bonuses are HR processes that take up some time when they are not automated. But you should know that it is easy to make them more agile and automatic.
For these and other automatable processes, there is ROSE People, a people management platform that guarantees maximum productivity and rigor in administrative tasks and offers reliable data to support management.
This cloud platform provides an integrated view of each employee's benefits through a Benefit Account model. At any time, you can consult:
The vacation days
Holiday and Christmas bonuses
Annual leave
Complementary Rest
The amounts to which each employee is entitled (credit)
What has already been enjoyed (debit)
Meet ROSE People and become a people-first organization!
Holiday pay is a right of employees that is enshrined in labor legislation. However, it is important not to confuse holiday pay with remuneration for the period of vacation. Both are rights that must be observed by employers and correspond to different costs for companies.
When they are not automated, they are also processes that consume valuable time from Human Resources.
What is holiday pay?
While taking their rest days, workers receive their pay as if they hong kong whatsapp number database working. In addition to the holiday pay, they are also entitled to a holiday allowance. Holiday allowance is therefore an extra salary given to the worker, which is why it is commonly referred to as the "14th month" .
According to article 264 of the Labour Code (Law no. 7/2009), "the worker is entitled to holiday pay, comprising the base salary and other remunerative benefits that are a counterpart to the specific way in which the work is carried out, corresponding to the minimum duration of the holiday”.
Holiday allowance discounts (IRS and Social Security)
As with most of the workers' recurring salaries, the holiday allowance is subject to social security deductions and withholding for IRS purposes. In the case of IRS, the allowance is subject to independent withholding and cannot, for the purpose of calculating the tax to be withheld, be added to the remuneration of the month in which it is paid or made available to the workers.
When is holiday pay paid?
It is common practice for companies to pay this subsidy in full at the beginning of summer, which usually coincides with the longest holiday period for most workers. However, when the holiday is not taken all at once, the law provides for the proportional payment of the subsidy.
According to article 264 of the Labour Code, "unless otherwise agreed, the holiday allowance must be paid before the start of the holiday period and proportionally in the case of interpolated leave", that is, as the worker takes his or her holiday.
In the case of public servants , payment is always made in June , while retirees and pensioners receive the subsidy in July .
How do twelfths work?
There is another option for paying the holiday allowance: in twelfth installments . For this to be possible, there must be an agreement between the company and the employee. Furthermore, in this payment method, only half of the total amount of the allowance can be paid in twelfth installments (12 times). The remaining 50% is paid within the legally stipulated period.
When is the right to holiday pay acquired?
It is the signing of an employment contract and the provision of work under it, under whatever form, that defines the right to holidays and, consequently, the acquisition of the right to holiday pay.
Right to vacation
As a rule, the duration of vacation is 22 working days. The right to vacation expires in January of each calendar year and is related to work performed in the previous year.
However, there are exceptions:
In the year of admission or conclusion of the contract
In the year of termination of the employment contract
In these cases, the right to vacation days and vacation pay are proportional to the days or months of work actually performed in the year.
How is the holiday allowance calculated?
For most workers, the amount to be paid in holiday pay corresponds to one month of extra pay per year.
To calculate the value of the holiday allowance, the following are considered:
Recurring salaries, including base pay;
The prizes;
Remuneration for exemption from working hours;
And specific remuneration for night or shift work.
Other payments granted in the form of allowances are excluded from the calculation of the holiday allowance , such as:
The food allowance;
The transport subsidy;
The allowances .
When the holiday is taken interpolated, the amount of the allowance must be calculated in proportion to the days taken at each time, considering a total of 22 days.
Calculation of holiday allowance in the year of admission
In the year of admission, the employee is entitled to two working days of vacation for each month of the duration of the contract, up to a limit of 20 days. These days can only be enjoyed after six full months of the duration of the contract.
The worker is also entitled to the respective subsidy, proportional to the months worked.
The calculation of the holiday allowance is based on the hourly rate, the number of monthly hours worked and the number of days of holiday by right, considering, in this case, the proportion of two days per month:
[Hourly wage x (weekly hours x 52 weeks / 12 months) / 22 days] x entitlement vacation days
Streamline employee benefits management
Payroll processing and managing holiday and Christmas bonuses are HR processes that take up some time when they are not automated. But you should know that it is easy to make them more agile and automatic.
For these and other automatable processes, there is ROSE People, a people management platform that guarantees maximum productivity and rigor in administrative tasks and offers reliable data to support management.
This cloud platform provides an integrated view of each employee's benefits through a Benefit Account model. At any time, you can consult:
The vacation days
Holiday and Christmas bonuses
Annual leave
Complementary Rest
The amounts to which each employee is entitled (credit)
What has already been enjoyed (debit)
Meet ROSE People and become a people-first organization!