So if I'm understanding you correctly (and I'm not sure that I am), your employer withholds bits of your earnings and prepays taxes to give you back a lump sum in June that seems to be forced savings for you to use to pay for a vacation trip (or other vacation expenses). Have I got that straight?
Yes, exactly as it is.
I think the confusion is in using the word "vacation" to mean multiple things here. Employer "vacation" time, at least in the U.S., is paid time off. I.e., you don't work, but get paid as if you did. During that time off, you MAY go away on a "vacation", which you pay for anyway you like - from savings, or on credit cards, etc.
With vacation time, I mean time that you are allowed to take off. For example here in Norway the people in their first year of working who haven't saved up the vacation money, are still allowed to take 5 weeks off, totally unpaid.
It is funny to see that we in Norway have a total misunderstanding of the rest of the world. Many of us think that Americans (and Japanese) have very little vacation and can hardly take any time off. That is perhaps why the Japanese "do Europe" in just one week. But it turns out that you Americans have very good options of taking vacation (taking free from work) and that you even get paid for many weeks off. It looks to be related to how long you work somewhere.
Sick leave is whole different issue.
Don't know if the rest of us misunderstand, or if you misunderstand. The five weeks of vacation in Norway is paid, it is just paid based on what you earned while you earned the right to get paid leave. People working 100 % for a year, have the right of 5 weeks paid leave the next year. If you then leave the employer, you can get the payment for the five weeks paid out to you in front. It is your duty to take time off at your new empoyer, and spend the money as and when you see fit. Why am I so certain that my interpretation is the correct one? Because if you were right, the employer would "force save" a larger part of the normal paycheck when the number of vacation weeks were increased from 4.1 to 5 a few years ago. This did not happen. Instead, the normal paycheck was kept at the level it was, and vacation money was increased from 10.4 to 12 % of last year's paycheck; the employee ended up with a net gain.
If you, due to being freshly out of college or something similar, haven't earned any vacation time or money, many unions have negotiated that you get time off with ordinary salary. This is for instance common for teachers their first year. Sorry you didn't have the right union or get the right information about how to ask for this, Linda. A problem we do have in Norway is that many of us know about all the social security systems and how to negotiate them, but we forget to inform newcomers.
That the taxes are pulled at different rates at different times, makes the system more confusing. But the taxes are not prepaid. You get taxed the year you get the money, it is just not pulled from that paycheck, but all the other ones that calender year. It is the same logic that makes them pull only 50 % taxes from the December pay check. You end up paying the same for every Krone earned, but for many people it feels like they get a bonus twice a year.
I think it varies widely. I get 7 weeks total leave time. Some companies don't distinguish for personal sick leave and vacation. Linda, curious what you get in addition for sick time?
I don't think we are financially punished in any way for being sick. But I hardly know, because I am practically never sick, 0-2 days a year with many years of 0.
All Norwegians have 100 % pay for one year, 66 % pay for the next 4, and if you still are not well, you should be heading for disability (also at around 66 %). In addition, each parent can take a minimum of 10 fully paid days for sick children (it increases with number of children, and type of diagnosis). And then there are the nursing money if your child is very ill, paid time off for breast feeding, paid time off to learn how to take care of a disabled child, etc.
Far too few people read the social security law (trygdeloven) with explanations. It is really quite easy to read and understand, and it makes it much easier to negotiate the system.
https://lovdata.no/dokument/NL/lov/1997-02-28-19