Adoption of the new Danish Holidays Act

Date 20 apr. 2011

 

On 7 April 2011, the Danish Parliament adopted Act no. 320 of 15 April 2011 on amendment of the Danish Holiday Act, the Unemployment Insurance Act etc. and the Act on legal rights and administration within welfare. The Act contains a number of amendments of consolidation act no. 407 of 28 May 2004 on holidays (hereinafter referred to as the “Holidays Act”). The major amendments and their consequences will be reviewed below and contain the following items:

 

1.                       Work-free days during the period of notice

2.                       Transfer of the fifth holiday week

3.                       Expiry of holiday pay

4.                       Control of payment to holiday funds

 

 Work-free days during the period of notice

 

Applicable law

Pursuant to the Danish Holidays Act, Section 16(2), any holiday of an employee who has been dismissed is considered to have been taken if said holiday and the Danish Holidays Act’s period of notification fall within the period of notice. This regulation should be viewed in connection with the regulations of the Danish Salaried Employees Act on dismissal, according to which the employee is obliged to seek new employment during the period of notice, but also entitled to receive the employee’s regular salary.

 

In practice, this has meant that in the event that the dismissed employee found new employment during the period of notice, the employee was able to work for the new employer while at the same time being regarded by the former employer as being on holiday.

However, the employer who had dismissed the employee was able to offset the pay during the period of notice against the pay which the employee would receive from the employee’s new employer. In practice, this has meant that the employee would lose the right to a paid holiday.

 

The content of the amendment

The amendment means that the holiday of the employee is only considered to have been taken during the period of notice if the employee has had a work-free period corresponding to the length of the holiday after the expiry of the notification time limit. The holiday is also considered to have been taken if the employer has not had the possibility to offset the employee’s pay against the pay from the new employer, e.g. as a result of an agreement or resignation agreement.

 

Consequently, the amendment means that the employee does not lose the right to paid holiday if the employee finds new employment during the period of notice.

 

The law will apply to dismissals after 1 May 2011.

  

Transfer of the fifth holiday week

 

Applicable law

Pursuant to the Danish Holidays Act, Section 19(1), employees who are covered by a collective agreement may not enter into an agreement with the employer on transferring earned holiday exceeding 20 days to the following holiday year, unless this is explicitly permitted in accordance with the agreement.

 

However, employees not covered by a collective agreement are not prevented from transferring earned holiday, cf. the Danish Holiday Act, Section 19(5).

 

The content of the amendment

The amendment aims at making it possible for both groups of employees – and effectively, all employees – to enter into an agreement with the employer on transferring holidays. However, the possibility to prevent these agreements in the event of a collective agreement remains.

 

The Act changes the existing basis and implies that in principle, agreements on transferring holidays are allowed unless it has been otherwise decided. The purpose of the Act is to create a greater degree of flexibility on the labour market.

 

 Expiry of holiday pay

  

Applicable law

The current regulations on limitation of holiday pay include two sets of rules.

 

According to one of these two sets of rules, the right to any holiday pay which has not been paid in or acknowledged by the employer expires if no claims against the employer have been made by 30 September of the following holiday year. If said claim is not met by the employer, the claim expires if no legal action is taken, industrial dispute procedures or the like have been commenced by 30 November of the following holiday year, cf. the Danish Holidays Act, Section 35(1).

 

Pursuant to the Danish Holidays Act, Section 41(2)(2), the employee’s right to any holiday pay which has already been paid in to Feriekonto or acknowledged by the employer three years after the end of the holiday year expires if the Director of the National Directorate of Labour has not been approached.

 

The content of the amendment

The amendment entails a discontinuation of the Danish Holidays Act, Section 35(1), so that only a three year time limit will apply. The wording of the Act does not attach importance to whether the claim is acknowledged by the employer, as is the case under currently applicable law. The only emphasis is on whether or not the claim has been paid in and if the time limit has been exceeded. The amendment entails a reduction in the employee’s burden of proof that the claim has been maintained and pursued with the employer.

 

The new regulations also entail a simplification of the means of discontinuation. With regards to any holiday pay which has been paid in to a holiday fund, only the fund or the Director of the Danish Pensions Agency needs to be approached, according to the amendment. Disruption of expiry of holiday pay which has not been paid in to a holiday fund is made by way of legal action, industrial dispute procedures or the like.

 

In this way, the Act thoroughly breaks with the possibilities of disrupting the period of limitation, and so the regulations under the Danish Limitations Act will not apply.

 

Control of payment to holiday funds

 

Applicable law

In accordance with the Danish Holidays Act’s current regulations, the employer must pay in any holiday pay, which the employee does not receive, to either the Labour Market Holiday Fund or a private holiday fund and the Treasury. This decision has been made to ensure that the employer does not profit when the employee does not take the holiday.

 

At the moment, the Labour Market Holiday Fund is not able to control whether or not the employer pays in any non-received holiday pay to the Labour Marked Holiday Fund or a private holiday fund and the Treasury.

 

When dealing with private holiday funds founded after 1 January 2005, the employer is obliged to submit a form with an accountant’s opinion on correct and punctual payment of non-received holiday pay to the fund. Private holiday funds founded before 1 January 2005 do not have this possibility of monitoring whether or not the individual employers profit when an employee does not take the holiday.

 

The content of the amendment

The Act contains improved control possibilities for the funds in that the Labour Market Holiday Fund may choose 150 random companies and demand an accountant’s opinion or any other documentation of correct payment of holiday pay. The Act furthermore entails that all private holiday funds are entitled to receive a standard form with an accountant’s opinion on correct payment of holiday pay.

 

The Act introduces possibilities for control and hence improves the existing possibilities to control regarding the collecting of holiday pay which the holiday funds are entitled to from the employers.  The objective with the Act, as well as with the current wording of the regulations, is to provide a greater degree of security so that the employers do not profit when an employee does not take the holiday.

 

The Act comes into force on 1 May 2011.

 

 

If you have any questions or require additional information on the amendments to the Danish Holidays Act, please contact Partner Thomas Weitemeyer (twe@mwblaw.dk or Junior Associate Pinar Göcken (pgo@mwblaw.dk).

The above does not constitute legal counselling and Moalem Weitemeyer Bendtsen does not warrant the accuracy of the information. With the above text, Moalem Weitemeyer Bendtsen has not assumed responsibility of any kind as a consequence of a reader’s use of the above as a basis of decisions or considerations.