Holiday

Here you can read about holiday.

1. What are holiday pay/benefits?
2. What is holiday allowance?
3. What is a vacation year - the vacation-taking period?
4. What are vacation days?

 

1. What are holiday pay/benefits?

Holiday pay (also called holiday benefits) is an amount all employees earn while employed in a company. There are different rules of payment for different types of employees, but as a main rule, all employees earn 2.08 vacation days a month.

Hourly employees earn 12.5% on top of their salary as vacation pay, which they can use as their income during vacation days. The actual amount of the employee’s vacation pay is calculated and settled with either Feriekonto or Feriekasse on a continuous basis. The employer must have entered into an agreement with the Danish state in order for this to happen.

Employees with a contract stating that they have paid vacation (also called salaried employees) will receive their regular salary during vacation time, when they use vacation days earned during their current employment. The total amount of holiday pay is calculated on the day they leave their current position and will be dispensable on Feriekonto or Feriekasse to collect, when taking vacation time while unemployed or newly employed without saved up vacation days, instead of the salary or benefit they would receive in the same time period. There is a continuous formation of vacation pay basis for salaried employees, which is the base for the calculation of the holiday supplements available for the individual.

Holiday pay is taxed just like regular salary. It is the employer’s responsibility to withhold and settle the tax, so the employee receives holiday pay as a net amount. Net holiday pay must be settled with Feriekonto or another vacation fund one or two times a month, depending on whether the employee is monthly or bi-weekly salaried. This happens automatically if the employer uses a payroll system such as Zenegy, or another recognized payroll system. The employer must calculate and settle holiday pay/benefits each time payroll is made for employees who are employed with holiday pay/benefits.

The employee can request holiday pay/benefits via borger.dk (the Danish citizen portal).

Read more about holiday pay and its administration here.

 

2. What is holiday allowance?

All employees in Denmark are entitled to five weeks of paid holiday each year. Holiday allowance is a compensation for employees that does not qualify for holiday pay equivalent to 12.5%, for example employees on paid leave.

The holiday allowance is at least 1% of the employee's holiday-entitled salary earned in the holiday accrual year. As an employer, you can provide better benefits to your employees than the law requires, so you may give a holiday allowance of more than 1%.

Holiday allowance can be paid in two ways:

•         Twice a year, in May and August (for 9 and 3 months respectively).
•         When the employee takes their vacation days.

If the employer uses the second method, holiday allowance does not need to be considered upon termination. With the first method, there may have been overpaid or underpaid holiday allowance in the period of employment, and this need to be settled. If the employee resigns, their contract expires or for another reason will not continue in their current position, the transferred vacation days from previous vacation years should be paid out with the final salary. The value of the vacation days within a current vacation year must be settled with FerieKonto or another vacation fund upon a change in the employee’s work status.

 

3. What is a vacation year - the vacation-taking period?

•         The vacation year is 12 months ranging from September 1 to August 31 of the following year
•         The vacation-taking period is 16 months, and runs from September 1 to December 31 of the following year
•         An employee earns 2.08 vacation days per month of employment
•         An employee can take up to 25 vacation days in the vacation-taking period.

If an employee does not take all days within their 5 weeks of vacation within the vacation-taking period, one week can be transferred to the following vacation year, according to the Danish vacation law. However, this requires a written agreement between the employee and the employer.

If the employee does not take all 5 weeks of their vacation days, a maximum of five days can be transferred to the following year. Days exceeding the five transferrable days are lost, unless there has been a vacation hindrance, such as maternity leave, long-term illness, military service or detention in a facility.

If no agreement has been made to transfer the 5th week of vacation to the new year, the employee has the right to be paid the value of the 5th week of vacation no later than with the March salary. It is the employer's responsibility to ensure that the employee takes their vacation.

The five weeks of vacation time is often split into two parts. Three weeks are reserved for the main vacation period, typically placed between May and September. All employees are entitled to three consecutive weeks in this period. However, the employer also has the option of placing the main vacation in a specific period of time during the year. This can for example be necessary if the company is closed for vacation in certain weeks. However, if this applies to your company, it is required that you provide your employees with notice of the vacation period at least three months in advance.

The remaining 2 weeks are residual vacation, which can be taken during the remaining vacation-taking period. If the employer wishes to place an employee's residual vacation at a specific time, for example, due to operational reasons, this must be notified at least one month in advance.

 

4. What are vacation days?

Some employees have the right to additional vacation days in addition to the mandatory five annual weeks per year. This may be agreed upon through an individual agreement with the employer or in a collective agreement, the employee is covered by on the labour market. Typically, the additional vacation time involves a 6th week of vacation with pay.

The employer or collective agreement determines how and when an employee is allocated the 6th week of vacation. The additional days can be taken either on an ongoing basis or all at once, for example in the end of the year, or when the new vacation year begins in September.

It is also the employer or collective agreement that determines when vacation days should be taken, whether they can be transferred to the next vacation year or paid out, and what happens to any unused vacation days, when an employee leaves the company.

It is important that the employer has described how the company operates its vacation days, so there is no misunderstandings between the employer and employee. The information can be given in several forms, however describing it in the employee handbook or directly in the contract, are the most common practices.