The new Holiday Act
Are you up-to-date on the changes to The Holiday Act? No? Then keep reading. A warning before you do, it gets pretty technical, but stick with it. You’ll be glad you did.
In Denmark, it has long been standard practice that the days off employees earned during one calendar year were used during the following ‘holiday year’ (starting the 1st of May and ending on the 30th of April). Changes to the Danish Holiday Act that came into effect on the 1st of September 2020 mean a new way of earning and using days off.
Instead of earning days off during one period and then using them in another, under the new system you can use your days off as you earn them.
A transitional period began on the 1st of January 2019. The most important details are:
- during the first eight months of 2019, employees earned 16.7 days off that could be used during the period of the 1st of May 2020 till the 31st of August 2020, the final day before we transitioned to the new system
- As a result unused holiday pay was originally intended to be banked up and paid out when you retire or stop working in Denmark.
- However, due to the corona situation the Danish Government has made it possible that your holiday allowance can be claimed by the 1st of October 2020.
- For more information read the article 'Claim your banked holiday allowance early'
The changes to the Holiday Act are the result of an EU directive requiring Denmark to be more accommodating of people entering the job market. Under the previous rules, recent graduates (or other newcomers to the Danish labour market) could find themselves in a situation in which they had to wait a full 16 months before they could take paid days off.
The 1st September 2020 and onwards
Once the law was fully implemented in 2020, the holiday year runs from the 1st of September to the 31st of August. During a given holiday year, employees will continue to earn the right to 25 paid days off, as they used to.
You will be able to use your days off during the period of the 1st of September till the 31st of December of the following year. This means that you have 16 months, known as the holiday period, to use the days off you earn in a single year. The longer period gives employees a greater degree of flexibility when planning their time off.
Many people get more than the minimum of 25 days mandated by the Holiday Act. Different workplaces call this extra time off by different names: floating holidays, the sixth holiday week or something different. These extra days are not, and have never been, regulated by the Holiday Act. Any rules for how these additional days off are to be held are agreed on during collective bargaining or by individual agreement with employers. For that reason, the description below applies only to the days off guaranteed by the Holiday Act.
From consecutive to concurrent
In at least one respect the new Holiday Act is like the previous one: you earn 2.08 days off per month of work. What’s new is that after the new act has come into effect you can take those days off as soon as you earn them.
From the 1st of September 2020, you earned your first 2.08 days off as soon as you started working. From there on you keep adding 2.08 days for every month you work. Doing it this way means that most people will need to rethink how they plan their holidays, especially if you’d like to take time off at the start of the holiday period, and you haven’t earned enough days off yet.
If you’d like to take time off even though you haven’t earned enough days off, you can ask your manager if you can borrow from what you will earn from the rest of the holiday year and then pay those back during the holiday year.
If you choose to do it that way, you will pay back what you owe with the 2.08 days off you earn each month.
One thing to be aware of: you can’t borrow more days than you can earn the right to during the rest of the holiday year. And, if you resign before you have paid back the days you have borrowed your employer will deduct the value of the days you owe from your final month’s pay.
The short holiday year in 2020
Between the 1st of January 2019 and the 1st of September 2020 there were some transitional rules that facilitated the changeover to the new system:
- in 2020 the holiday year was shorter than usual, and lasted from the 1st of May 2020 until the 31st of August 2020.
- during the short holiday year, employees were able to take 16.68 days off. These days have been earned from January 2019 till August 2019.
- days off earned between the 1st of September 2019 and the 31st of August 2020 has been paid into a newly established fund (Lønmodtagernes Feriemidler (LD) (See ld.dk/English)). These days will be paid out when you withdraw from the Danish labour market or if you claim a part of your holiday allowance due to the corona situation.
Banked days off
You haven’t lost any money as a result of the changeover to the new Holiday Act.
During the period of 1st of September 2019 till the 31st of August 2020, your employer calculated what the value of your earned days off amounted to. You have two options: Either you can receive the money when you retire or stop working in Denmark, or you can decide to claim a part of your holiday allowance due to the corona situation.
The reason for banking the value of your days off is that you will have earned the right to days off in a holiday year that never happened, due to the change over to the new system.
Your banked days off will be administered by Lønmodtagernes Feriemidler (LD), a fund that will be responsible for managing the banked funds and for ensuring they are profitably invested. Your money will be paid out to you when you withdraw from the Danish labour market. Your employer needs to notify the LD of the amount you are owed, but can wait to deposit that amount for as long as you remain working.
Whether your employer deposits the money immediately or chooses to wait has no consequence for you. If the LD has been notified of the amount you are owed, you will receive your money when you stop working even if your employer cannot – or will not – deposit the money.
The value of your banked days off will be regulated annually, regardless of whether your employer has deposited the money. The amount is regulated at the same rate for all employees.
Your employer has until the 31st of December 2020 to notify the LD of the value of the days off to be banked. The LD will then notify you of the amount. More information about holiday allowance and frozen holiday funds is available at Life in Denmark.
Still have questions about the new rules? Give us a ring on 33 95 97 00.