Holiday pay in Estonia: why a holiday month looks different

Calendar days, not working days

Basic annual leave is 28 calendar days a year. Note the word calendar: weekends are inside that number. Twenty-eight days of leave is not 28 free working days, it is four weeks on the calendar.

The basis of the calculation follows from that. Average calendar-day pay is the gross earnings of the reference period divided by the calendar days in it. For a steady salary this reduces to the monthly figure divided by the average month length, 30.4375 days.

The reference period is the 6 months before the leave. The calculator treats them as 6 x 30.4375 = 182.625 days, so with a steady salary the result does not depend on whether February or longer months fell in the period.

A worked example

Take a steady gross salary of 2,000 EUR a month and the full basic leave.

• Average calendar-day pay: 2,000 / 30.4375 = 65.71 EUR.
• 28 calendar days of leave: 65.71 x 28 = 1,839.88 EUR gross holiday pay.
• The same taxes are withheld from holiday pay as from salary.
• If the leave straddles two months, the payment is split between them.

Four salary levels side by side

The same formula across salaries shows that holiday pay for 28 days is always about 92% of a monthly salary, because 28 days is a little shorter than the average month of 30.4375 days.

• Minimum wage 946 EUR (from 1 April 2026): day pay 946 / 30.4375 = 31.08 EUR, 28 days = 870.24 EUR. A one-week leave (7 days) pays 217.56 EUR.
• Gross 1,200 EUR: day pay 1,200 / 30.4375 = 39.43 EUR, 28 days = 1,104.04 EUR.
• Gross 2,000 EUR: day pay 65.71 EUR, 28 days = 1,839.88 EUR.
• Gross 3,000 EUR: day pay 3,000 / 30.4375 = 98.56 EUR, 28 days = 2,759.68 EUR. The gap to a normal monthly salary is already 240.32 EUR here, clearly visible on the payslip.
• Shorter leave on 2,000 EUR: 14 days = 65.71 x 14 = 919.94 EUR, 7 days = 459.97 EUR.

Uneven pay: when monthly earnings differ

If your pay varies month to month, do not calculate from the last month's pay or your base salary. The basis is the actual gross total for the six months. Whether a particular one-off payment belongs in that total is worth checking with payroll.

Example: five months at 1,800 EUR gross and one month at 2,600 EUR. The six-month total is 5 x 1,800 + 2,600 = 11,600 EUR.

• Average calendar-day pay: 11,600 / 182.625 = 63.52 EUR.
• Holiday pay for 28 days: 63.52 x 28 = 1,778.56 EUR.
• Using only the 1,800 EUR base salary would give 59.14 EUR a day and 1,655.92 EUR, which is 122.64 EUR too little.
• Mistakenly treating the largest month of 2,600 EUR as the monthly salary would give 2,391.76 EUR, well above the real figure.

How much holiday pay you actually receive

Holiday pay is taxed like ordinary salary. Here is the net calculation for 1,839.88 EUR, assuming it is the only income that month, the 700 EUR basic exemption is applied and the II pillar contribution is 2%.

• Unemployment insurance contribution 1.6%: 29.44 EUR.
• II pillar pension contribution 2%: 36.80 EUR.
• Taxable income: 1,839.88 - 29.44 - 36.80 - 700 = 1,073.64 EUR.
• Income tax 22%: 236.20 EUR. You receive 1,537.44 EUR.
• The 700 EUR exemption is monthly. If holiday pay and salary are paid in the same month, it applies once to their total, not to each separately.

Holiday pay from the employer's side

Because holiday pay is taxed like salary, the employer also pays 33% social tax and the 0.8% employer unemployment insurance contribution on it. On 1,839.88 EUR of holiday pay, social tax is 607.16 EUR and the contribution 14.72 EUR, so the employer's total cost is 2,461.76 EUR.

A small business should set money aside for holiday pay every month. The 1,839.88 EUR for 28 days of an employee on 2,000 EUR, divided by 12 months, is about 153.32 EUR gross a month, or roughly 205 EUR a month with employer taxes. That way a summer month with several people on leave does not surprise the cash flow.

Why a holiday month feels worse

Two reasons. First, if you take leave in a month with many working days, you are replacing more-than-average working days with pay calculated on calendar days. In a summer month with 22 working days the effect is more visible than in a short one.

Second, holiday pay is usually paid before the leave starts rather than on the normal payday. The month as a whole may not be smaller, but the money moves differently and the payslip looks unfamiliar.

Because of that, the next regular payday can feel thin: part of the month's money arrived earlier. Before the leave, plan your budget so that the early holiday pay also covers the start of the month after it.

Splitting leave into parts

If your salary stays the same, splitting the leave does not change the total: on 2,000 EUR two 14-day parts give 2 x 919.94 = 1,839.88 EUR, exactly the same as one 28-day block.

A difference appears when your pay changes between the parts, because each part's day pay is based on the 6 months before it. Say the first 14-day part is in May on 2,000 EUR, your salary rises to 2,300 EUR from 1 June, and the second part is in December. All 6 months before December are paid at 2,300 EUR, so day pay is 2,300 / 30.4375 = 75.56 EUR and the second part pays 75.56 x 14 = 1,057.84 EUR, 137.90 EUR more than the first.

Choose the dates of each part deliberately: the working days calculator shows how many working days a given calendar period really covers.

Unused leave and the final settlement

When employment ends, unused basic leave is compensated in cash and the calculation is exactly the same: average calendar-day pay multiplied by the number of days compensated.

Unused days expire after the period set in law, so hoarding leave indefinitely is not a strategy. If you are planning to change jobs, check your leave balance before you start negotiating.

Example: gross pay has been 2,400 EUR a month and 10 days of leave are unused when you leave. Day pay is 14,400 / 182.625 = 78.85 EUR and the compensation 78.85 x 10 = 788.50 EUR gross. If it is the only income that month and the basic exemption applies (II pillar 2%), you receive 746.89 EUR.

Common holiday pay mistakes

These are the errors behind most mismatches between your own figure and the payslip.

• Dividing by working days. The formula uses calendar days, 30.4375 per month, not 21 or 22 working days.
• Using the latest salary when pay has changed. The basis is the actual six-month total of pay.
• Treating gross as net. Unemployment insurance, the II pillar contribution and income tax are all withheld.
• Counting the basic exemption twice when holiday pay and salary arrive in the same month.
• Expecting 28 days of leave to pay the same as a full month's salary. In practice it is about 92% of it.
• Waiting for holiday pay on the normal payday. It is usually paid before the leave starts, so check your account earlier.

Check your own numbers

The holiday pay calculator works out the average calendar-day pay and the gross holiday pay. If your salary has not been steady, enter the actual gross for the reference period rather than a monthly figure multiplied by the number of months.

• Find the gross amounts for the 6 months before the leave on your payslips and add them up.
• Enter the total and the number of leave days in the holiday pay calculator.
• Use the working days calculator to see how many working days the leave covers and when your first working day after it is.
• Work out the net amount with the salary calculator, taking into account whether salary is paid in the same month.
• Compare the result with your payslip; if the gap is large, ask payroll which payments were included in the reference period total.