Summary
By the end of the holiday year, employees must have taken their holiday – in particular the four weeks of holiday protected under the Directive – by 31 December. The fifth week of annual leave may be paid out or carried over by mutual agreement. Any annual leave that is not taken or agreed to be carried over may be forfeited by the employee – but the holiday pay must still be paid.
Short answer
By the end of the holiday year, employees must have taken their holiday – in particular the four weeks’ (20 days’) statutory holiday entitlement, which, as a general rule, must be taken before the holiday period ends on 31 December. The fifth week of annual leave may be paid out or carried over by mutual agreement. Any annual leave that is neither taken nor agreed to be carried over may be forfeited by the employee – but the holiday pay must still be paid.
When does the holiday year end?
Under the new holiday legislation, the holiday year (the holiday accrual year) runs from 1 September to 31 August of the following year. Accrued holiday must be taken during the holiday take-up period, which runs from 1 September to 31 December the following year – that is, over 16 months. This means that, as the year draws to a close, you are approaching the end of a holiday take-up period, and any remaining holiday entitlement should be planned well in advance.
How much holiday do employees accrue?
All employees accrue 2.08 days’ holiday per month – equivalent to 25 days’ holiday (5 weeks) over a full holiday year. If employees are covered by a collective agreement providing for additional days’ holiday, different rates may apply. It is a good idea to get an overview of each employee’s remaining holiday entitlement well in advance of the end of the holiday period.
Four weeks’ holiday must be taken by 31 December
The first four weeks’ holiday (20 days) are protected under the Directive and must, as a general rule, be taken before the holiday entitlement period ends on 31 December. If an employee does not take their holiday, and you do not take any action, the employee may lose their entitlement to the holiday protected by the Directive. As an employer, however, you must still pay the holiday pay – it simply goes to the Labour Market Holiday Fund instead of the employee.
The 5th week of holiday: payment or transfer
Holiday entitlement in excess of four weeks – that is, the fifth week of holiday – may either be paid out to the employee or carried over to the next period by mutual agreement. If it has not been taken or agreed to be carried over, it will, as a rule, be paid to the employee after 31 December.
How to carry over holiday entitlement
If you wish to carry over holiday entitlement in excess of 20 days to the next holiday period, this must be agreed in writing with the employee – and the agreement must be in place by 31 December at the latest. The employee is not entitled to have holiday carried over if you do not agree to this. Please note that collective agreements may restrict the possibility of carrying over holiday.
Exception: inability to take holiday
If an employee has been prevented from taking holiday due to an impediment to taking holiday – such as illness, maternity leave or compulsory military service – special rules apply, and the holiday entitlement may be carried over. Agreements regarding carry-over due to circumstances preventing the taking of annual leave must be reported via the self-service portal at Virk.dk within the applicable time limits.
What should you do before the end of the holiday year?
In short, you should:
- get an overview of each employee’s remaining holiday entitlement in good time
- to plan the taking of the four weeks’ statutory holiday by 31 December
- decide on the payment or carry-over of the fifth week of holiday
- enter into written agreements regarding any transfer by 31 December at the latest
- check whether your collective agreements contain any specific provisions
We’ll help you get through the end of the holiday season safely
The rules on holiday entitlement can be difficult to keep track of – especially when a period is coming to an end. At Dansk Løn Service, we ensure that your employees’ holiday entitlements are handled correctly and in a timely manner, so that neither you nor your staff find themselves in a difficult situation. If you want your holiday and pay arrangements to run smoothly without any worries, then Read about outsourcing payroll or Contact us for a chat.