The new Holiday Act part 2: Preparation and information to the employees

On 1 September 2019, a new phase began in the transition period which lasts until the new Holiday Act enters into force on 1 September 2020. During this phase, the employees will accrue holiday as usual, but the leave will be frozen in a special fund called The Employees’ Fund for Residual Holiday Funds (Lønmodtagernes Fond for Tilgodehavende Feriemidler). The frozen assets will not be due until one leaves the labour market.  

Currently, we are in the last holiday year as we know it. On 1 May 2020, a new shortened holiday year begins which only will last till 31 August 2020 – however, the main holiday must be given consecutively in the period from 1 May to 30 September 2020, and companies may up to 1 September 2020 give notice to take holiday pursuant to the current Holiday Act until 30 September 2020. In the shortened holiday year, the employees can take the holiday that has been accrued in the shortened accrual period from 1 January to 31 August 2019 – in total 16,64 holidays for employees who have accrued full holiday.

For employees who are new on the labour market in 2019, i.e. new graduates without accrued holiday or foreign employees who come to Denmark, special rules on fund holiday (fondsferiedage) apply. We have focused on this topic in our previous newsletter.

Companies’ preparation and information to the employees

The new Holiday Act’s entry into force is approaching, and there are several legal and practical matters that companies should respond to even now to prepare for the new holiday system.

For instance, it is important that companies consider what the introduction of the holiday system will entail for their specific processes, systems, contracts, and holiday or employee policies. Furthermore, companies should decide on whether the company wants to make use of the possibility to let the employees take holiday in advance.

Many employees are in doubt as to what the new Holiday Act will entail for them. Therefore, it may be a good idea to inform the employees of what the changes mean in practice. For instance, the transitional rules and the new Holiday Act will affect employees who usually takes 4 weeks of summer holiday, or usually take 1 week of autumn holiday. This is because employees cannot take more than 16,64 days paid vacation in the summer 2020 unless the employee carries over holiday to the upcoming holiday year, or the company’s holiday policy provides extra holiday. Nor can employees take paid autumn vacation in Autumn 2020 unless the employee has carried over holiday to the new Holiday Act’s entry into force, the company’s specific holiday policy allows for it, or the company uses the rules on holiday in advance.

IUNO’s opinion

The new Holiday Act entails substantial changes to the entire holiday system. Even though, the new Holiday Act does not enter into force until 1 September 2020, there is good reason for companies to prepare themselves and their employees for the upcoming changes already now. It may be a good idea to inform the employees of the new Holiday Act and how it will affect them through town hall meetings or the like. The companies should also now decide on whether the company wants to allow holiday in advance and if so, how much and whether it is necessary to amend the company’s policies regarding carrying over of holiday, and rights to special holidays etc.

Up to the entry into force of the new Holiday Act, we will focus on the different changes which the companies must consider. We also report the latest news regarding this topic. Additionally, we provide mini courses about the interim arrangement, and the new rules, tailored to the company’s individual needs. We also take part in information meetings in companies, and assists in updating employment contracts and policies.

If you are interested in hearing more about this, please contact our specialist, Søren, on shk@iuno.law to get more information.