Bill for a new Danish holiday act passed

On 25 January 2018, a new Danish Holiday Act was adopted that will fundamentally alter the Danish holiday system when coming into force on 1 September 2020.

The Act introduces 'concurrent holiday', which allows employees to take paid holiday in the same year as that in which the holiday entitlement is accrued. In addition, the Act contains a transitional arrangement facilitating the transition from staggered holiday to concurrent holiday.

The Danish Holiday Act Committee was set up in August 2015 for the purpose of aligning Danish holiday legislation with EU law. Comprising both employer and employee representatives, the Committee introduced its proposal for a new Holiday Act on 22 August 2017. On 31 October 2017, the Danish government, the Social Democratic Party, the Danish People's Party, the Alternative Party, the Social-Liberals and the Socialist People's Party agreed to introduce concurrent holiday in Denmark in accordance with the Holiday Act Committee's proposal. The Bill was presented on 6 December 2017 and submitted to the first reading on 12 December 2017. The Bill was then dealt with by the Committee, which submitted a report on 17 January 2018.

The new Holiday Act and the concept of concurrent holiday will enter into effect on 1 September 2020, while the transitional arrangement will enter into effect on 1 January 2019.

Main points of the Act

Change to concurrent holiday

The largest and most fundamental change in the new Danish Holiday Act is the transition from staggered holiday to concurrent holiday. The change implies that holiday can be taken in the same year as that in which the holiday entitlement is accrued. This means that new employees in the labour market can take paid holiday already during their first year of employment. Under the current Danish Holiday Act, in comparison, new employees in the labour market may have to wait up to 16 months from accrual of the holiday entitlement to their taking of the accrued paid holiday.

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.

The employee will still accrue 2.08 days of paid holiday per month and, accordingly, 25 days of paid holiday per year. In addition, the employee will be entitled to take at least 15 days of paid holiday in one continuous period (the main holiday). If the employee has accrued less than 15 days of paid holiday, the employee will be entitled to take all of the accrued days in one continuous period.

A transitional arrangement will freeze accrued holiday

In connection with the transition to concurrent holiday, the Holiday Act Committee has proposed a transitional arrangement, which has now been adopted. The transitional arrangement implies that holiday entitlement accrued under the current Holiday Act in the period from 1 September 2019 to 31 August 2020 will be frozen and can neither be taken nor paid in lieu. In connection with such freezing, a separate fund will be set up to administer the frozen funds: "Employees' Fund for Residual Holiday Funds" (Lønmodtagernes Fond for Tilgodehavende Feriemidler). The Fund is to administer the frozen holiday funds and will be established as a separate entity under the Danish Employees' Capital Pension Fund (Lønmodtagernes Dyrtidsfond).

The employer may choose to retain and pay interest on the frozen funds in the period until the deadline for mandatory payment to the Fund, i.e. at the latest at the time of the employee's retirement due to age. If the employee retains the funds, it is a requirement that the funds are subject to an annual indexation based on the development in pay. If the employer chooses to retain the funds, the frozen funds will be secured through the Danish Employees' Guarantee Fund (Lønmodtagernes Garantifond).

Notice rules and holiday in advance

In addition, it will no longer be possible, as hitherto, directly in the employment contract to generally deviate from the rules governing the notice period for holiday because, in the future, notice for holiday can be given by agreement with the employee if and when the need for shorter notice should arise. The notice rules remain unchanged in all other respects. The notice period required for the taking of holiday is still 3 months before commencement of the main holiday and 1 month before commencement of any other holiday. Also, it will still be possible to agree with the employee on the taking of holiday on a voluntary basis as hitherto.

In addition, the new Holiday Act introduces the possibility of taking paid holiday in advance if an employee has not yet accrued sufficient paid holiday to cover the required holiday period (e.g. in case of compulsory holiday closure). Such advance paid holiday must be agreed between the employee and the employer, and on termination of the employee's employment the employer may set off the value of such paid holiday against the employer's other payments to the employee.