– how to handle the changes
As you know, the new Holiday Act takes effect on 1 September 2020.
In this company guide, we have gathered a number of points that will apply under the new Holiday Act, as well as general points on administering holiday once the new Holiday Act has taken effect.
It is important to note that the new Holiday Act concerns the 5 weeks' holiday that all employees in Denmark are entitled to.
Earning holiday
For each month of employment, the employee earns 2.08 days of holiday. This means that under the new Holiday Act, too, you earn 25 holiday days a year in total. This applies to both salaried and hourly paid employees.
Holiday is earned in the pay period the pay applies to. The holiday earned is added to the employee's holiday balance at the end of each month, which means the employee earns holiday after the very first month of employment – whether the employee is paid in advance, in arrears or every 14 days.
Holiday accrual period
Under the new Holiday Act, the period for earning holiday runs from 1 September to 31 August, which means a new holiday year now starts on 1 September every year.
Taking holiday
The new Holiday Act also introduces concurrent holiday. This means the employee can take holiday days as they are earned, at the earliest one month after earning them.
For those new to the labour market, this means holiday can now be taken as early as one month after starting work, as holiday earned in one month can be taken the month after.
Holiday-taking period
Under the new Holiday Act, the employee has a longer holiday-taking period, which stretches over 16 months from 1 September to 31 December the following year.
Rights to take holiday
The employee is entitled to take 5 weeks' holiday a year, whether or not they have earned holiday with their current employer. However, the holiday must be taken at the employee's own expense if paid holiday or holiday pay has not been earned for all the holiday days.
Holiday in advance
The new Holiday Act makes it possible to take holiday in advance, if the employee and the employer have agreed on it.
With this option, an employer lets their employees take holiday days that the employee has not yet earned. Holiday days given in advance must, however, be possible to earn back within the same holiday year.
So how many days you can have in advance varies, depending on whether you are at the beginning or the end of the holiday year.
If the employment ends before the holiday days taken have been earned, the days owed are offset against the final salary payment.
Administering holiday in advance
In Zenegy, the company can manage its holiday settings in the company profile. Here you choose, among other things, whether holiday in advance should be an option and, if so, define the number of days in advance.
Under the rules of the new Holiday Act, holiday taken in advance must be possible to earn within the holiday year in question. So it matters how many days, and when in the holiday year, the employee wants to borrow holiday in advance.
Holiday allowance
Salaried employees earn a holiday allowance of 1% on top of paid holiday. Under the new Holiday Act, the holiday allowance can be paid out twice a year, on 31 May and 31 August.
Holiday pay
Hourly paid employees earn 12.5% of their holiday-entitled pay.
The holiday funds transferred to a holiday account must be available to the employee as soon as possible after they are earned. This means the company must pay the funds into the holiday account earlier than before.
The deadline for paying into the holiday account is the same day as the reporting deadline, and in Zenegy the payment is made automatically with every pay run.
Transferring holiday
Sometimes an employee doesn't manage to use all their holiday before the end of a holiday year. As an employer, you can choose whether holiday not used in one year should be transferred to the next holiday year, or simply paid out.
Under the new Holiday Act, however, only the 5th holiday week can be paid out or transferred to the next holiday year – and there are different options here:
If the 5th holiday week has not been used by the end of the holiday-taking period on 31 December, the days are paid out.
Alternatively, it can be agreed that the 5th holiday week is transferred to the next holiday year.
Alternatively, it can be agreed that the days are paid out as early as the end of the holiday year on 1 September.
For full-time employees, the 5th holiday week is paid out automatically if it has not been taken, transferred or paid out by the end of the holiday-taking period on 31 December.
What if the employee doesn't take their holiday?
An employee can't simply choose not to take their saved holiday. The rules say that the employee must take at least four of the five weeks of holiday earned. If the employee fails to do so, the employee's holiday funds must be paid into Lønmodtagernes Feriefond, which means both the company and the employee lose the holiday funds.
Do you need tools for better planning of your employees' holidays?
Use Zenegy to register holiday and absence – all registrations can then be synchronised with the company's Google Calendar or Office 365 calendar, which gives a better overview of absence.
Special rules for the transition period
As a special case in the transition period, and part of the new Holiday Act, all holiday not used in the mini holiday year (holiday in the period from 1 May 2020 to 30 September 2020) is transferred automatically to the new Holiday Act, with a holiday-taking period until 31 December 2021.
Extra days off and care days
Extra days off and care days are not covered by the rules of the new Holiday Act, and may be subject to special rules/conditions in the collective agreement.
In Zenegy, companies will be able to manage settings for extra days off and care days, and choose whether they follow a) the calendar year, b) the old holiday year (from 1 May to 30 April) or c) the new holiday year (from 1 September to 31 August).
Read more about extra days off and how to administer them in our blog.
