International Newsletter

Denmark to Overhaul Holiday Entitlement

May 14, 2019
Denmark

The new Danish Holiday Act will go into effect on September 1, 2020, and will remove the unusual feature of Danish law that currently requires holiday leave earned in one year to be held back until the following year.

Introduction: Concurrent holiday

The most central change compared to the present Holiday Act will be the introduction of concurrent holidays—just like the holiday system in many other European countries. Under the present Holiday Act, Danish employees earn holiday time in a calendar year, but cannot take it until the next holiday year (running from May 1 to April 30).

Under the new Holiday Act, an employee will be able to take holiday leave during the year in which it is earned (subject to not taking more holiday leave than has been accrued to that point in the year). Employees may carry over holiday leave into the next holiday year as long as they use it within the first four months of the following year. The new period for taking holidays will therefore be 16 months, from September 1 to December 31 the following year.

Transition period

To avoid employees benefiting from a “double holiday” in the first year under the new rules, there will be a transition period under which holiday time earned by the employee in the period between September 1, 2019 and August 31, 2020 will be frozen and turned into “residual holiday pay.”

The qualifying year starting on January 1 will therefore only run until August 31, 2019. In this period, the employee may earn up to 16.64 holiday days, which, together with holidays transferred from earlier years, are to be taken in the period from May 1, 2020 to August 31, 2020.

Residual holiday pay

No later than December 31, 2020, the employer must calculate each employee’s residual holiday pay as of August 31, 2020, and report the amount to the Employees’ Fund for Residual Holiday Funds (in Danish: Lønmodtagernes Fond for Tilgodehavende Feriemidler). At the same date, the employer must either pay the amount to the fund, or notify the fund that it wishes to keep the amount until it needs to be paid to the employee. If the employer decides to keep the amount, it is required to index the amount based on fund directions. The employer can then choose to pay the amount to the fund at any time, but no later than the date when the fund decides to pay the employee.

At the date of reporting, the fund will be subrogated to the residual holiday pay. This means that the employee has a claim against the fund, and the fund will have a claim against the employer. The fund will pay residual holiday pay to the employee when the employee is entitled to state pension or leaves the Danish labor market.

Written by Marianne Lage of Horten and Roger James of Ogletree Deakins

© 2019 Horten and Ogletree, Deakins, Nash, Smoak and Stewart, P.C.