On September 1, 2020, a new holiday-leave regime will become effective in Denmark. However, commencing on January 1, 2019 there will be a transition period ensuring a smooth shift from the old to the new regime.

The purpose of the new rules is to ensure that all employees can take paid leave in the same year as they accrue the holiday, bringing Denmark in line with the rest of the European Union. The new act will result in several substantial changes:

A set of rules will ensure a transition period from the old to the new holiday leave regime.

The most important changes in the act are below.

A New Holiday Year and Concurrent Holiday

Currently, employees accrue leave during the calendar year running from January 1 to December 31. The leave can then be taken as a so-called “deferred holiday,” during the holiday year, which runs from May 1 to April 30 in the following year. With the deferred holiday, new employees could have to wait up to 16 months before they have accrued leave and can take 5 weeks’ paid holiday leave. The practice of deferred holidays is also causes a headache for employers, requiring them to make substantial payments of accrued holiday leave upon termination.

The new rules introduce what is called “concurrent holiday,” which aims to meet new employees’ need for paid leave. The new holiday act permits employees to accrue leave during the “holiday year” from September 1 to August 31. Employees will then be entitled to take leave during a period of 16 months from September 1 in the same year that leave started accruing in the “holiday year” to December 31 in the subsequent year (the leave period). With the new rules that permit employees to earn leave continuously, leave accrued in March, for instance, can be taken as early as April.

Transition from Old to New Rules

According to the new act, the concurrent holiday scheme will become effective on September 1, 2020. To prevent employees from accruing double holiday, 25 days of holiday, which are accrued in the interim period before the new arrangement enters into force, are to be frozen in a special new holiday fund. The frozen assets will only become due when the employee leaves the labor force.

Comment

Although an improvement, the holiday act does not achieve the simplification of the current rules that many employers had hoped for, and it looks as if the act will remain quite complex. Employers will want to review their contracts of employment, policies, and processes for compliance with the new rules.

Written by Anders Etgen Reitz of IUNO and Roger James of Ogletree Deakins