Summary
The new Holiday Act came into force in 2020 and introduced ‘concurrent holiday’, meaning that you accrue and take your holiday during the same period. Here you’ll find answers to the most common questions about accruing, taking, carrying forward and receiving payment for holiday.
The new Holiday Act – in a nutshell
The new holiday entitlement legislation applies to all employees and is based on the principle of concurrent holiday entitlement. Here you will find answers to the most common questions about accruing, taking, carrying forward and receiving payment for holiday.
What is the new holiday law?
The new Holiday Act came into force on 1 September 2020 and applies to all employees. The most significant change is that we have switched to what is known as ‘concurrent holiday’, meaning that you accrue and take your holiday during the same period. This is particularly beneficial for new entrants to the labour market, who no longer have to wait up to a year and a half before being able to take paid holiday.
What does ‘concurrent holiday’ mean?
Concurrent holiday entitlement means that you accrue and take holiday on an ongoing basis within the same holiday year – rather than under the old system of deferred holiday, where you accrued holiday in one year but could only take it later. This means you can take your holiday as and when you earn it.
When does the holiday year run?
The holiday year (the holiday entitlement year) runs from 1 September to 31 August of the following year – that is, 12 months. Holiday leave may be taken right up until 31 December of the following year, giving a total holiday period of 16 months.
How many days’ holiday do you accrue?
You accrue 2.08 days’ holiday per month, amounting to 25 days’ holiday – that is, 5 weeks’ holiday – over a full holiday year. This applies regardless of whether you work full-time or part-time.
Can new employees take holiday straight away?
Yes. With concurrent holiday entitlement, a new employee can take holiday as early as the month after it has been accrued. For example, if an employee starts on 1 November, they will accrue 2.08 days’ holiday in November, which can be taken in December. If the employee wishes to take more holiday than they have accrued, this requires an agreement on advance holiday.
What is an advance holiday?
Advance holiday is when an employee, by agreement with their employer, takes holiday before it has been accrued. The days are deducted from the holiday the employee accrues later. If the employee leaves the company before the holiday entitlement has been accrued, the employer may deduct the days taken from the final pay.
What are the sixth week of holiday and holiday leave days?
The sixth week of annual leave and special leave days are not covered by the Annual Leave Act. They are governed by a collective agreement, employment contract or staff handbook and are taken in accordance with the rules set out therein. If there is no agreement on additional holiday days, you are only entitled to the 25 days guaranteed by the Holiday Act.
What is a holiday allowance?
Employees entitled to paid holiday (typically white-collar workers) accrue a holiday allowance of at least 1 % of their holiday-qualifying pay. This is paid either twice a year – usually with the May and August pay – or on an ongoing basis as the holiday is taken.
What happens to holiday entitlement that isn’t taken?
The first four weeks’ holiday (20 days) are protected under the Directive and must, as a general rule, be taken by 31 December. The fifth week of annual leave may be paid out or carried over by mutual agreement. 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 and is transferred to the Labour Market Holiday Fund. Read more about end of the holiday year.
What is holiday hindrance?
An obstacle to taking holiday is when an employee is prevented from taking their holiday due to, for example, illness, maternity leave or compulsory military service. In such cases, special rules apply, and the holiday entitlement can often be carried over to the next period, even if it would otherwise have had to be taken or paid out.
What if an employee falls ill whilst on holiday?
If an employee falls ill after their holiday has begun, they may, under certain conditions, be entitled to compensatory leave. This typically requires the employee to report sick immediately and provide evidence of their illness, and a qualifying period applies. The rules can be quite detailed, so it is a good idea to clarify them in specific terms.
What are the frozen holiday funds?
When we transitioned to the new holiday pay legislation, holiday pay accrued during the transitional year (1 September 2019 to 31 August 2020) was “frozen” in the Employees’ Holiday Pay Fund. As a general rule, the money is only paid out once the employee reaches state pension age or leaves the labour market.
Get your holiday sorted with Dansk Løn Service
The Holiday Entitlement Act can quickly become quite technical – especially when it comes to accruing, transferring, paying out and reporting holiday entitlements correctly. At Dansk Løn Service, we ensure that your employees’ holiday entitlement and pay are handled correctly every step of the way. If you want peace of mind when it comes to holidays, then Read about outsourcing payroll or Contact us.