The new Holiday Act enters into force on 1 September 2020

The new Holiday Act enters into force on 1 September 2020, meaning that the interim period where holiday allowance was frozen expires and a number of new principles are introduced, including the concurrent holiday system. Below is an overview of the most important changes that the new Holiday Act entails.

Accruing and taking holiday 

Concurrent holiday means that employees will accrue and take holiday at the same time.

Under the new Holiday Act, employees will continue to accrue 2.08 days of holiday per month, but due to the introduction of concurrent holidays, the holiday can be taken the month after it has been accrued. An employee can thus take holiday accrued in September 2020, in October 2020.

The holiday period runs from 1 September until 31 December following the end of the holiday year. This means, for example, that holidays earned in the period 1 September 2020 to 31 August 2021 can be taken in the period 1 September 2020 to 31 December 2021.

The holiday year changes

According to the new Holiday Act, the holiday year will run from 1 September to 31 August. The holiday year is set during this period so that it matches the holiday pattern of the employees covered by the Holiday Act. The period means that employees can manage to earn three weeks’ paid holiday, which can be held during the summer period.

Placement of holiday

According to the new Holiday Act, employees have the right to take five weeks’ holiday within the holiday year. Employees also have the right to take three weeks’ holiday in the period from 1 May to 30 September.

Settlement of holiday in advance

Employees who have not yet earned the right to paid holiday can make an agreement with his or her employer to take holiday in advance.

This means that employees can take holiday before the holiday has been earned and a negative holiday balance would therefore be established. If an employee with a negative holiday balance resigns, the negative holiday balance can be offset from the employee’s salary.

1% ’s holiday supplement

According to the new Holiday Act, employees are still entitled to a holiday supplement of 1 percent. The changed holiday year means that the payment of the holiday supplement will be changed with the new Holiday Act.

The holiday supplement must either be paid on an ongoing basis as a portion, corresponding to the holiday taken, or alternatively divided so that holiday supplement for the period 1 September to 31 May is paid together with the salary for May, and holiday supplement for the period 1 June to 31 August is paid together with the salary for August. Most employers will probably choose the latter model.

Holiday obstacles

If an employee has not taken all of his or her holiday before the holiday period expires, on 31 December, due to illness, leave or other holiday obstacle, the employer must transfer the amount of holidays not taken to the next holiday period.

Payment or transfer of the 5th holiday week

The 5th holiday week can be transferred to the next holiday year by agreement between the employee and the employer. If it has not been agreed that the 5th holiday week is transferred, the employer must automatically pay out the 5th holiday week after 31 December to the employee.

Holidays with pay or holiday allowance

Monthly-paid employees are entitled to paid holiday. Employees with paid holiday can, in accordance with the new Holiday Act, continue to choose holiday pay of 12 percent instead of paid holiday.

Employees paid by the hour continue to be entitled to 12.5 percent in holiday allowance.

Notice of holiday

The main holiday must be notified with three months and the remaining holiday with a one month’s notice. It is no longer legal to deviate from the notice periods in advance by agreeing this in the employment contact.

It will still be possible to give notice of holiday during the notice period.

The period with frozen holiday funds and reporting of holiday allowance

The interim period where holiday funds are frozen into The Employees’ Fund for Receivable Holiday Funds ends on 31 August 2020. Holiday allowance which relates to a pay period over the turn of the month from August to September 2020 is considered to have been earned in September 2020. This means that only holiday earned before 1 September must be included in the reporting of holiday allowance to The Employees’ Fund for Receivable Holiday Funds.

Reporting to the Employees’ Fund for Receivable Holiday Funds must be done no later than 31 December 2020.

Early payment of frozen holiday allowance

On 17 August 2020, the Danish Parliament passed a bill that allows employees to request payment of the three weeks’ frozen holiday allowance. This was done in order to boost the economy due to the financial impact of COVID-19.

However, the employer’s obligation to pay frozen holiday funds does not change as a result of the new act, and the employer is not obliged to pay the frozen holiday pay, even if the employee requests that it be paid. The employer can continue to choose whether the earned holiday funds are retained in the company until the employee reaches the state pension age or leaves the labour market for other reasons, or whether the earned holiday funds are paid into the fund before.