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LEGAL NEWS | The new Danish Holiday Act at a glance

Logo LEAD | Rödl & Partner
24. July 2020

In less than one month, on 1 September 2020, the new Danish Holiday Act will come into force, which will, among other things, change how holidays are taken in the future.

This article provides an overview of what is new in the new Danish Holiday Act, what companies need to be aware of as well as a checklist to ensure that the company is ready for the new act.

Legislation

Under the current Danish Holiday Act, Danish employees are not automatically entitled to holiday with pay after joining the company. They must first earn holidays with pay. Until the holidays have been accrued, a deduction of 4.8% per day of holiday is made from the employee's salary.

On 1 September 2020 a new Danish holiday act will come into force to bring Danish holiday rules into line with the European principle of "simultaneous holiday". Various transitional rules have already been in force since 1 January 2019.

The most important news at a glance

From 01.09.2020, there will be an adjustment to the principle of simultaneous vacation, which also applies in other European countries. This means that the acquired holiday entitlement can already be taken in the following month.

In future, the holiday year will run from 01.09. to 31.08. of the following year. Since there is no longer a different accumulation year, the vacation days can be taken continuously in the holiday year and in the following 4 months. This extends the holiday year until 31.12. (16 months instead of the previous 12 months). There is in most situations no longer any need to pay holiday allowance that has been earned but not yet used into the holiday account (Feriekonto).

Transition rules from 01.01.2019

From 01.01.2019 to 31.08.2019, a total of 16.64 days of paid holiday will be earned. This holiday can be taken from 01.05.2020 to 31.08.2020 according to the rules of the previous holiday act.

A transitional phase runs from 01.09.2019 to 31.08.2020. Holidays earned during this period will be "frozen" so that no double holiday entitlement arises during this phase. This means that no holiday pay will be paid for the transition year. The frozen funds are managed by a new fund ("employees' fund for holiday entitlements").

The frozen funds must be reported via the electronic wage tax system E-Indkomst by 31.12.2020 at the latest for each employee. The frozen funds from the transition period are generally only paid out to the employee when he or she leaves the Danish labour market, e.g. when the employee retires or moves abroad permanently. In 2021, each employee will receive a notification of the amount of holidays earned during the transition phase. However, to kick-start the economy during the corona crisis, the Danish Parliament has decided that the 3 out of the 5 weeks of frozen holidays will be paid via FerieKonto to the individual citizen no later than October 2020. This does not change the company's obligation to report the frozen funds by 31.12.2020.

Employees who are new to the Danish labour market and who have not yet saved up (full) holiday entitlement, e.g. job starters or employees who move to Denmark from abroad, can take a maximum of 8.3 so-called "fund holiday days" from 1 May 2020. These are days of holiday which are offset against the holiday pay earned from 1 September to 31 December 2020.

This will not change

The statutory holiday entitlement is still 5 weeks or 25 days. This means that 2.08 vacation days are earned every month (2.8 x 12 months = 25 days)

A further distinction is made between the main holiday (3 weeks) and the remaining holiday. The rules for announcing holiday - 3 months in advance for main holiday, 1 month for remaining holiday - continue to apply.

The holiday allowance under the Salaried Employees Act continues to be 1% (but can be paid at other times). When the employee leaves the company, the unused holiday will continue to be paid into the holiday account - however, in the future a much smaller amount is to be paid.

The new holiday year begins on 1 May 2020 – what should be considered?

The holiday year from 1 May 2020 is shortened (mini holiday year) and runs only until 31 August 2020, during which the employee can take the 16.64 days of paid holiday that he/she earned in the period 1.1.-31.8.2019.

Remaining holiday from the previous holiday year, which ended on 30 April 2020, can be carried over to the mini holiday year. For this purpose, a written agreement between the employer and employee must have been concluded by 30 September 2020, otherwise the accrued holiday will lapse. Any remaining holiday not used during the mini holiday year may also be carried over to the new holiday year from 1 September 2020, subject to agreement with the employer.

Checklist

You can check whether you are well prepared for the transition to the new rules with our checklist. If you have any questions, we will be happy to advise you.

  • Are your current employment contracts in line with the new holiday act?
  • Is there a staff manual, and if so, does it contain provisions on holiday that need to be adapted?
  • Is it ensured that the reporting obligations and deadlines resulting from the transition to the new holiday act can be met?
  • Have you decided how your company will deal with the holiday pay that is earned in the "freeze period”?
  • Do you know what special features have to be considered when employees leave in 2020?
  • Have you decided whether you want to grant your employees "holidays in advance" in the future and how this will be handled administratively?
  • Do you know what has to be taken into account when handling the summer holidays 2020 and the autumn holidays 2020?
  • How are the provisions for holiday pay to be taken into account in the annual financial statements?


For many years our team of experts at LEAD I Rödl & Partner has advised both Danish and foreign employers and employees on employment law matters and we are ready to assist you. For further information please contact our employment law team at +45 44 45 50 00.

 

Contact for further information

LEAD | Rödl & Partner   Jana Behlendorf, Advokat / Attorney-at-law (T +45 23 24 60 22 E jana.behlendorf@lead-roedl.com )

Last modified
24. July 2020
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