Global Compliance Desk – Denmark

Based on the findings and recommendations in the Holidays Committee’s “Report on a New Holidays Act” issued on 22 August 2017, the Danish Parliament has adopted a new Holidays Act which will enter into force on 1 September 2020.

Current Rules of Staggered Holiday
Under the current rules, holidays are earned from January to December (accrual year), wherein employees cannot spend their accrued holidays before 1 May of the following year. Therefore, new employees may have to work up to 16 months without leave before they can take paid holiday leave.

New Rules of Concurrent Holiday
According to the new Holiday Act, employees can accrue and take the leave at the same time in a 12-month period (the holiday year). This means that the holiday earned in February can be taken as soon as March the same year.

The amendment introduces a new period for accruing and taking leave. The change to concurrent holiday implies that the holiday year – the period in which holiday entitlement is accrued – will run from 1 September to 31 August. The period in which the accrued holiday can be taken will be the same as the holiday year + 4 months, i.e. from 1 September to 31 December the following year, in total 16 months.  Hence, the employee will have the opportunity to take the earned vacation for an additional 4 months, which means that he will have 16 months to take the earned holiday (holiday period). This gives the employee higher flexibility to take the holiday.

Transition Phase
The new Act enters into force on 1 September 2020, following a transition period which runs from 1 January 2019. In order to, ensure a smooth transition to the new Holiday Act, the following transition scheme has been introduced:

• Holiday accrued from 1st January 2019 to 31st August 2019 (16.7 days of paid
  holiday) may be used between 1st May 2020 and 30th September 2020.
• Holiday accrued from 1st September 2019 to 31st August 2020 (25 days of holiday)
  will be frozen in a new fund Lønmodtagernes Dyrtidsfond. The fund will be called the
  Employees’ Fund for Receivable Holiday Pay and will manage employees frozen
  holiday.
• The frozen holiday cannot be used or paid out until the employee leaves the labor
  market. In terms of the current scheme, this means that employers will pay the last
  year of accrued holiday when the employee retires.

The transition scheme ensures that the employee can take up to five weeks of paid holiday during the transition year, and that employers avoid paying for up to ten weeks of holiday in one year.

Number of holidays accrued
The number of accrued days (25 days) and the statutory allowance of 1 percent is not changed by the new act. The employees continue to accrue 2.08 days per month.