The new paid holiday law – How long will be the summer of 2020?

The holiday pay legislation in Denmark has just changed starting with September 1st 2019 and it is not an easy thing to understand.

You might have heard the rumours going around this summer that you will not be getting any paid holiday in the next year but that is not exactly true. Or at least not for the most part.

To begin understanding what the changes are all about and how they will affect you personally we have to first look back to what the law looked like until the 1st of September and why these changes were needed.

For over 70 years, paid holiday in Denmark has been working on a retroactive earning principle, meaning that from 1st of January to the 31st of December you would earn your holiday days for the coming year, in which you could use the days only between 1st of May and 30th of April (following year). Most people were also allowed to transfer a number of unused holiday days after the 30th of April deadline.

Every month of work would have given you the right to 2.08 holiday days if you were a full-time employee, or 12.5 % of your income would go to the “holiday money fund” (Feriepenge) if you worked part-time or without a permanent contract. This meant that from the 1st of May each year, every employee in Denmark would have had 25 days of holiday to spend until the 30th of April the following year.

The reason why this has completely changed from this year is mainly due to the fact that the Danish holiday law was not in line with the EU directive on holiday pay and it was detrimental to the persons who were new in the job market. Up until now, persons who were employed for the first time or persons who came back to the job market after a long period of absence would have had to wait over a year to be able to take paid holiday.

The new legislation aims at rectifying this issue and also to allow employees to take their holiday as the year goes by, rather than using the retroactive earning principle. However, until reaching the point of fully entering into force, this legislation has quite a few setbacks for employees and their future vacation plans.

The new law is now in the period of “accommodation” and it will fully come into force from the 1^st of September 2020. This “accommodation” period has already started from the 1^st of January 2019 and it continues with a second step towards the new holiday law, from 1^st of September 2019.

For an easier understanding, here is a timeline of how this piece of legislation will be affecting you:

January 1^st 2019 – August 31^st 2019 – Employees will be earning their holiday days in the same way they have in the past. This will generally amount to 16,64 days of paid holiday.

September 1^st 2019 – August 31^st 2020 – Employees will start earning paid holiday days under the new system (2,08 days at the end of each month) but all this earned holiday will be paid out to a special fond called Employees’ Fund for Holiday Resources (Lønmodtagernes Fond for Tilgodehavende Feriemidler) which you, as an employee will only be able to access when you have exited the labour market.

May 1^st 2020 – August 31^st 2020 – Employees will be able to use their retroactively earned holiday days in 2019 (from 1^st of January to 31^st of August, which will generally amount to 16,64 days)

September 1^st 2020 – August 31^st 2021 – The new paid holiday legislation will have fully entered into force and all employees will be able to take their vacation days as the months go by. For example, after September 2020 an employee can take up to 2.08 days of paid holiday in October 2020 and so on each month. It will be up to each person when to spend their monthly earned paid holiday days.

The biggest problem with the implementation of this new law is the fact that a large proportion of the labour force in Denmark will be shortening their vacation considerably in 2020. Also, most of the young employees today will not have access to the money set aside in the above mentioned fund for about 50 years from now and the ones who have just entered the labour market, after 1^st of September, will not have access to any paid holiday until next year (2020) in October.

The transfer of the money corresponding to these “archived” holiday days towards the government set fund will have to be dealt with by the employer. At the beginning of the year 2021 everyone will receive a letter with instructions on how to check if the employer has set aside the correct amount of holiday pay into the governmental fund.

If you have any questions regarding this new legislation and how it will influence your personal holiday situation feel free to contact us through the contact form.