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Legal News - a short introduction to The Danish Holiday Act

17. June 2014

The holiday season is approaching and the main holiday period has already started. The Danish holiday system is unique and it is thus very important to get familiar with the rules when working in Denmark or when having employees in Denmark.

The Danish Holiday Act

According to the Danish Holiday Act, an employee shall be entitled to 25 days of holiday each year. The Act covers any person receiving remuneration for personal work in an employment relationship. As an exception, the Act does not cover Managing Directors of companies. However, many employments are regulated by collective agreements, which may deviate from the rules of the Holiday Act.

Qualifiction year and holiday year

It is important to note that the Danish Holiday Act distinguishes between the “qualification year” and the “holiday year”. During a calendar year (qualification year) an employee accrues 2.08 days of paid holiday for each month of employment. This accrued holiday can be taken during the period from 1 May to 30 April (the holiday year) following the qualification year. Holidays, that an employee e.g. accrues in 2014 (1.01.2014 to 31.12.2014), can thus be taken as paid holiday in the holiday year starting 1.05.2015 to 30.04.2016.

When an employee starts working at a company, he has to earn the right to paid holiday and is thus not entitled to this from the employer, before the following holiday year has begun and the employee has accrued paid holiday during the qualification year. If the employee chooses to take a holiday leave the employer is entitled to deduct 4.8 per cent of the monthly wage for each day of holiday taken by the employee.
The Act provides the minimal rights of an employee and as an employer you may at all times give the employee better rights, and if you agree to paid holidays from the first day of employment, such payments cannot be set off at a later stage.

The main holidays and the remaining holidays

Furthermore, it is important to note that the Holidays Act distinguishes between main and remaining holidays.
At least 15 days of the accrued holiday (the main holiday period) shall be given as a consecutive period between 1 May and 30 September. Other days of holiday shall also be given as consecutive periods of at least 5 days if requested by the employee, but may be placed outside the holiday period (remaining holiday).

This distinction is important as it concerns the notification the employee is required to give before a holiday (3 months for the main holiday period and 1 month for any remaining holiday) and whether it is possible to take holiday during a notice period.

It is possible to deviate from these rules by agreement (collective or individual) and to agree on a shorter notification period. A recent court decision has confirmed that such agreements are valid when agreed in the employment contract at the commencement of the employment.

The transferal of holidays

The first 20 days of holiday cannot be transferred to the next holiday year. Holiday earned in addition to 20 days may be transferred to the following holiday year provided that a written agreement has been concluded before 30 September after the expiry of the given holiday year. If an employee thus had been entitled to more than 20 days of holiday in the holiday year that ended on 30 April 2014, the employee may ask you to transfer remaining holidays to the new holiday year that started on 1 May 2014. Alternatively the employee may ask you to pay out the remaining holidays. If such request has been made before 30 September after the expiry of the holiday year – in this example before the 30 September 2014 - the employer has to pay out the holiday or agree to transfer the holiday to the next holiday year. If such request is not made before 30 September the employee will lose his right to demand payment.

Employees leaving the company

The reason why the Danish system is different is because employees who leave a company are entitled to a holiday allowance for holiday for the current qualification year and for that part of previous qualification years in respect of which the employee has not yet taken holiday. The holiday allowance correspondents to 12.5 per cent of the wage during the qualification year and is to be paid into the Holiday Account (“Feriekonto”). If the employee thus is taking holiday at the new employer, the employee is entitled to payment from the holiday account.

The above is just a short introduction to the Danish holiday system in order to show that there are significant differences and that it is important to understand the Danish system in order to act accordingly. Please do not hesitate to contact Attorney at law, Alexandra Huber in Copenhagen if you may have further questions to the Danish holiday system.