On September 1, 2020, the new holiday law came into force. This article highlights the changes and the background to them. As a reader, you will gain insight into the consequences the new holiday law may have for your company, and the article also explains what you as a business owner should pay particular attention to in relation to the change in the law.
“Holidays” have been one of the biggest topics in today’s Denmark. A topic that has raised many questions, partly due to the worldwide COVID-19 and partly because Denmark has just received a new holiday law.
Staggered holidays – an accrual principle in conflict with the EU
For many years, we in Denmark have had staggered holidays. Staggered holidays mean that the holidays are accrued during the calendar year, but can only be taken from May 1 of the following year. Staggered holidays do not meet the rules that politicians have agreed on in the EU. The rules in the EU require that all employees must be entitled to four weeks of paid holiday, which the employee must be able to both earn and take within 12 months. The problem with staggered holiday is that it can take up to 16 months before a newly hired employee can get paid holiday. Therefore, concurrent holiday is now being introduced for the country’s employees.
The new holiday law – concurrent holiday
Concurrent holiday means that employees earn holiday days continuously and can take the holiday as soon as the days have been earned. An employee who has worked for one month is entitled to take 2.08 days of paid holiday in the following month. Under the new holiday law, employees will earn holiday from 1 September to 31 August of the following year. The holiday will be able to be taken in the period during which it was earned and the following 4 months until 31 December.
The new Holiday Act still gives the right to 25 days of paid holiday and the payment will be the same as in the previous Holiday Act.
You should be aware of this
As an employer, you should ensure that your company’s agreements are in line with the rules in the new Holiday Act. This could be, for example:
Employment contracts
Personnel handbook
Collective agreements and local agreements
As an employer, you must also decide what to do with the holiday money provided from the transition period:
Keep the holiday money in the company and pay interest on it until the employee leaves the labour market or
Pay the money to the Employee Holiday Fund, which will take over responsibility for the interest and administration
Before 31 December 2020, you – as an employer – must decide whether you want to keep the money or whether the money should be paid into the fund.
By keeping the money in the company, the company achieves liquidity. The disadvantage of this is that the company instead has to spend time and money on administration in connection with annual calculations of the amount that the company pays interest on for the employee.
For the employee, it makes no difference, as the holiday allowance accrues interest in the same way, regardless of whether it is administered by the employer or by the fund.
At LegalUp, we can assist you and your company with questions and advice regarding the new holiday law.
