THE NEW DANISH HOLIDAY ACTA guIDE fOr EmpLOYErS

The new danish holiday act in briefA new Danish Holiday Act was passed by the Danish Parliament on 25 January 2018 and will come into force on 1 September 2020. In 2020, the present staggered holiday principle will transfer to a new principle of concurrent holiday. However, a specific transitional arrangement will already be initiated in 2019, applying to holidays ac-crued prior to 1 September 2020 - the time when the Act comes into force.

In this leaflet, we provide you an overview of the new rules and the main points you should pay special attention to as an employer.

What is concurrent holiday?

The new Holiday Act introduces ‘concurrent holiday’ which means that employees may take paid holiday at the same time as the holiday entitlement is accrued.

In addition to this, the holiday year will be changed from the current period which is 1 May - 30 April to 1 September - 31 August.

Employees will still accrue 2.08 days of paid holiday per month of employment during the holiday year.

If the employee does not take all of his/hers accrued 25 days of paid holiday during the holiday year, the employee has an additional 4 months from 31 August to 31 December to take this holiday, thus allowing the employee a holiday period of 16 months in total.

What does the transitional arrangement imply?

The new Danish Holiday Act will come into force on 1 September 2020, however already one year before the effective date, a special transitional arrangement will be implemented.

The transitional arrangement is intended in particular to secure employers against a material liquidity draw being of the new Danish Holiday Act and the transition to concurrent holiday.

The transitional arrangement entails inter alia that holiday earned during the period 1 September 2019 to 31 August 2020 - a total of 25 days - will be “frozen” in a new fund, set up under The Danish Employees’ Capital Pension Fund, the “Employees’ Holiday Funds” (”the Fund”).

Freezing of accrued holiday will secure that the employee can neither take nor be paid holiday in lieu before the employee is leaving the labour market.

Employers must during the transitional period report to the Fund which accrued holi-day funds each employee is entitled to.

Employers may choose to pay the employee’s amount outstanding to the Fund in connection with reporting or at an optional later date. Employers may also choose to postpone payment until the employee is leaving the labour market.

Employees, entering the labour market as of 1 September 2020, will accrue and take holiday according to the rules on concurrent holiday.

Accrual of holiday and the transitional arrangement

Accrual of 16.7 days of holiday according to the current holi-

day act

Accrual of fund holi-days for new employ-

ees on the labor market - a maximum of 8.3

days of fund holidays

25 days of holiday are accrued and frozen.Holiday allowance

(1%) accrued in this period must be frozen

New holiday scheme with con-

current holiday

01-09-2020 -01-09-2019 -31-08-2020

01-09-2019 -31-12-2019

01-01-2019 -31-08-2019

Reporting to the Employees’ Holi-day Fund - an overview

June 2019: First collection ofTotal Payment Management Fee (in Dan-

ish: Samlet Betaling)

31.12.2020 (at the latest): The employer reports the holiday funds outstanding for

each employee to the Fund

31.12.2020: The employer notifies the Fund that the employer would like to keep the holiday funds outstanding with the em-

ployer

January 2021: The employee is informed about the reporting of receivable holiday

funds

June 2021: Indexing of remaining holiday funds

July 2021: First collection of holiday funds payable to employees who are leaving the

labour market

No later than 1.9.2021 (and every year to come): Annual confirmation to the Fund, if the holiday funds still will be administered

by the employer

The employee leaves the labour market vdfvd

The Fund pays the holiday savings to the employee

The Fund collects the holiday funds from the employer

The Fund pays the holiday savings to the employee

January 2021: The employee is informed about the reporting of receivable holiday

funds

The employee leaves the labour market

31.12.2020: The employer pays outstanding holiday funds to the Fund

Holiday increment (1%) accrued during the period 1.1.2019 -

31.8.2019 is to be paid if this is usually paid in

May

Holiday accrued dur-ing the period 1.1.2019

- 31.8.2019 must be taken during the period 1.5.2020

- 30.9.2020, including special fund holiday

Payment of increment holiday allowance for

the period June - August

The new Holiday Act comes into force with concurrent holiday + any transferred holiday from the current Holiday Act may be taken.

From this date, holiday increment (1%) must be paid twice a year or at the same time as the

corresponding holiday commences

May 2020 August-pa.01-09-202001-05-2020 - 30-09-2020

Taking holidays and payment of holiday allowance

Payment of holiday incre-ment (1%) for the period 1

September - 31 May

May-pa.

Holiday allowance at resignation – salaried employees

Salaried employees and other employ-ees on a monthly salary take paid holiday and receive holiday increment. Employer

settles holiday allowance by 12.50% to FerieKonto (Holiday Account) when the

employee resigns* from his/hers position

Resignation* before 1.9.2019

Resignation* after 1.9.2019 but before 31.8.2020

Resignation* after 31.8.2020

The current holiday act applies. The employer shall pay the holiday allowance

to Holiday Account no later than 2 months after

resignation

Employers can keep frozen holiday funds or deposit

these into the Fund

The employer pays holiday allowance for the frozen

holiday to Holiday Account. Holiday Account freezes

the holiday funds and pays these to the Fund

Holiday accrued during the transitional period must be

frozen

Holidays accrued before 1.9.2019 must be treated according to the current

Holiday Act. The employer must pay holiday allowance to Holiday Account no later

than 2 months after resignation

The freezing period comes into force on 1.9.2019

Holiday accrued after 1.9.2020 are processed

according to the rules on holiday allowance in the

new Holiday Act

*The termination/resignation date is the date when the employee’s entitlement to remuneration from the employer ceases

Holiday allowance at resignation – hourly paid employees

Employers must report holiday pay on an ongoing basis after each pay period for

their hourly-paid employees to eIndkomst at the Danish Tax Agency

Holiday Account collects holiday pay from the employer on a quarterly basis, based on

the employer’s reports

Resignation* before 1.9.2019

The current rules apply

Holiday accrued before 1.9.2019 must be processed

according to the current rules

Holidays accrued during the transitional period must be

frozen

Holiday Account automati-cally forwards reports from

the employer on holiday pay accrued during the period from 1.9.2019 to 31.8.2020

to the Fund

*The termination/resignation date is the date when the employee’s entitlement to remuneration from the employer ceases

Holiday accrued after 1.9.2020 are treated accord-ing to the rules on holiday payment in lieu of untaken days of holiday in the new Holiday Act

Resignation* after 1.9.2019 but before 31.8.2020

Resignation* after 31.8.2020

Trainees enrolled in an employee training programme according to the Skilled Work-ers Educational Act are entitled to 5 weeks

paid holiday during the first and second entire holiday period after commencement

of employment

Rules applicable before 1 Sep-tember 2020

If the trainee’s employ-ment has commenced

before 1 July in a holiday year, the trainee is en-

titled to 25 days (5 weeks) of holiday in the holiday

year

If the trainee’s employ-ment has commenced after 1 July, the trainee is entitled to 5 days of holiday in connection with company closure

during the period from 1 October to 30 April

If the employment has commenced during the

period from 1 November to 30 June, the trainee

is entitled to 3 weeks of holiday during the main

holiday period and 5 days of holiday during com-

pany closure prior to the main holiday period

If the employment has commenced during the

period from 2 September to 31 October, the trainee

is entitled to 5 weeks of holiday during the holi-

day period

Rules applicable after 1 Sep-tember 2020

Holiday - trainees

Need legal assistance?

Michael Møller NielsenPartner, Attorney mmn@les.dk+45 33 300 262 / +45 40 514 949

Nikolaj Sommers GjettermannAssistant Attorneyngj@les.dk+45 33 300 205 / +45 21 457 225

Julie Flindt RasmussenAttorney jfr@les.dk+45 33 300 227 / +45 21 847 497