What should you consider at the end of the holiday year?
The end of the Danish holiday year marks not only the transition of seasons but also the onset of various practical challenges encountered by payroll departments in relation to the management of the remaining holidays.
In this article, we have assembled and provided answers to the most frequently encountered inquiries concerning the end of the Danish holiday year in order to equip you with the requisite knowledge for navigating the complexities of this matter.
1 What is the difference between the holiday year and the holiday settlement year?
The Danish holiday year runs from September 1 to August 31 of the following year.
All employees accumulate 25 days of holiday per holiday year, meaning the employees will accumulate 2.08 holidays per month.
The holiday earned during a holiday year can be taken in the period from 1 September to 31 December of the following year (ferieafviklingsår). The holiday settlement year is therefore the holiday year plus the subsequent four months.
2 How many days of holiday must be settled?
As a general rule, 20 days of the accumulated holiday must be settled in the holiday settlement year and cannot be transferred or paid out to the next settlement year. Any employee who has accumulated 25 days of annual holiday can therefore, in agreement with the employer, transfer a maximum of five days into the following holiday settlement year. If no agreement is made to transfer these remaining holidays, the employee is entitled to payment of the five days.
If the 20 days are not settled, they must be paid into the Labor Market Holiday Fund (Arbejdsmarkedets Feriefond) or another private holiday fund and the employee thereby loses the entitlement.
However, if the employee is prevented from taking the holiday within the holiday settlement year due to a holiday obstacle, such as illness or maternity leave, up to 20 days of holiday can be transferred to the following holiday settlement year. If the employee is still sick or another holiday obstacle occurs in the following holiday settlement year, the transferred days of holiday can be paid out to the employee.
3 How is holiday transferred?
Holiday that exceeds 20 days of holiday (the so-called 5th holiday week) can by agreement be transferred to the following holiday settlement year, currently to the period September 1, 2023, to December 31, 2024.
The employee has no legal right to transfer these holidays. The transfer of holiday always requires an agreement between the employer and the employee. This agreement must be concluded no later than December 31.
We recommend a short-written agreement between the employer and employee, so the payroll administration can register the changes. A confirmation by email is also sufficient.
4 When can the 5th week of holiday be paid out?
If the employee was only able to take 20 days of holiday and no agreement was made to transfer the remaining holiday, the employee is entitled to payment for the 5th week of holiday.
Employers must pay the employee for holiday that exceeds 20 days and that has not been taken or transferred to the following year, no later than March 31, 2024.
Payment to the employee may also be made during the period from September 1 to December 31, 2023, if the employer and employee agree.
5 Can the employer impose the settlement of the remaining holiday until December 31, 2023?
If the employer wants the remaining holiday to be held and not transferred or paid out, the employer may order the holiday to be taken with one month’s notice. Holiday that is to be taken in December 2023 must therefore be announced to the employee no later than October 31, 2023.
We recommend that all employers review the employees’ holiday balances in October 2023 and decide during October, how the holiday balances should be handled. For companies with many employees, it is advisable to regulate such issues in the personnel handbook or a holiday policy.
If you have questions about holiday or would you like to receive a form to arrange with your employee(s) to transfer remaining holiday into the following holiday settlement year, contact us!
Your labor law team