Denmark: The Danish Holiday Act Changes
What you need to know as the Danish Holiday Act changes go into effect September 1, 2020
In 2018, Denmark passed legislation that would change how paid leave works.
Currently, leave is accrued at the rate of 2.08 days per month (totaling 25 per year). In addition to this, employees receive 12.5% of the salary in holiday allowance. While there are many intricacies in how paid leave and holiday pay work in Denmark, the following is a brief overview of what is changing and how it will affect employees in Denmark.
Transition Period
To get ready for the new law changes under the Holiday Act, Denmark has implemented a transitional period from September 1, 2019, to August 31, 2020. During this period, employees will continue to accrue leave and holiday pay, however, will not be able to take leave or receive this allowance for this period. Instead, the amount accrued will go into a special savings fund that will be able to be withdrawn when the employee reaches the age of retirement.
By December 31, 2020, the employer must calculate the accrued amount during the transition period and report it to the proper fund (FerieKonto/Ferieoengeingo or the new Lønmodtagernes Fond for Tilgodehavende Feriemidler). The employer can either choose to pay the required amount to the proper fund or they can retain the same amount in the company.
Main Changes to Take Effect Starting September 1, 2020
Employees will still accrue 2.08 days per month and receive 12.50% holiday pay, however, the way in which paid leave can be taken will change.
The most significant change that the new amendments to the Holiday Act enforce is the way in which employees qualify for paid leave. The purpose of the change is meant to give employees flexibility in being able to plan and take leave. Starting on September 1st, employees will be able to take paid leave that has not yet been accrued. Because an agreement with the employer will now be permitted, employees will be able to take advantage of this new law.
This will essentially allow the employee to take leave without having to deduct pay from the employee’s regular wages. This will allow employees to enjoy their accrued leave in the same 12 months holiday year (September 1st to August 31 of the following year) that it is earned rather than having to wait the following holiday year to begin taking leave.
In the event of the termination of an employment agreement, the employer will now be able to deduct pay to offset any advance paid leave that the employee may have used.
This new rule is especially significant for employees who are just starting a job as they will not have to wait until the next holiday year to begin taking leave.
It is important to note that any extra leave granted to the employee above the mandatory minimum (also known as the 6th week) is not covered by the Danish Holiday Act. Instead, the terms of any additional leave are something that must be agreed upon between the employee and employer.
Another change the new amendments to the act bring is the transferring of leave. Employees who cannot take their leave will no longer be able to cash out their leave. Instead, the leave will be transferred to the next holiday year. This rule does not apply to leave that could not be taken due to illness, maternity, or paternity leave. In these instances, it will be possible to be paid out for unused leave.
As these changes are going to be implemented within a matter of weeks, it is pertinent for employers to understand how this will not only affect their employees but familiarize themselves with how they will need to adjust to these changes.
