Prepare to be jealous of the Danes, because it looks like they are about to get a whole lot of….vacation days. How? It’s all thanks to the Denmark policy change.

As you may already know, Denmark passed legislation in 2018 that changed how paid leave works in the country. After a long transitional period that got over on September 1, 2020 — the rule is now officially in force. But what does it actually mean? And how will it affect you? We’ve got the answers. 

How everything started

In 2014, the European Commission found that the old Danish holiday law violated the EU’s Working Time Directive. The Directive states that employees are legally entitled to four weeks’ paid holiday per year. Danish leave policy, however, did not give employees this right. 

This new Denmark policy change, called the Holiday Act or Ferieloven, is based on the recommendations made by a government advisory committee in August 2017. Modernizing the Act and making it more flexible makes it more responsive to the dynamic labor market in Denmark, where 20-25% of the labor force takes up new employment each year. 

In order to prepare for the new law changes under the Holiday Act, Denmark implemented a transitional period from September 1, 2019, to August 31, 2020. During this period, employees continued to accrue leave and holiday pay. They, however, were not able to take leave or receive this allowance for this period. This ensured that employees did not accumulate double the amount of holiday days during the switch.

As an alternative, the accrued leave amount will be put into a special savings fund from which employees will be able to withdraw money upon retirement. But more on this later!

What are the new changes?

Currently, employees receive 12.50% holiday pay and accrue 2.08 days of paid leave a month in Denmark. But with these new changes, taking those days will be a lot easier.

Concurrent holidays

Denmark’s policy change will allow people to take a “concurrent holiday.” This means that rather than getting a bank of vacation days at the beginning of a year, people will earn them — and can use them — as they go. Hence, Danish vacation law will now be in line with many other European countries. It will also simplify the process of earning vacation time for everyone. 

Everyone gets time-off

This new policy change is also designed to be fairer for all. It ends the need for some people to work for up to 16 months before they can actually take the leave they’ve earned. As a result of this new rule, employees who are just beginning their job will not have to wait until the next holiday season to begin taking leave. Instead, you will get 2.08 days per month, which — for example — you can earn in November and cash in December. Danes can finally say goodbye to the long wait of cashing in their vacation time!

More flexibility

The purpose of this policy change is also to give all employees in Denmark more flexibility in planning and taking time off. So as of September 1st, 2020, workers will be able to take paid leave that they haven’t already banked. And if their employer allows it, employees can also sign an agreement to use any of those unused vacation days before they’re due. 

As a result, employees can take leaves without the need to deduct pay from their salaries. In simpler words, you can take advantage of your accrued leave within the same holiday year that it is earned (from September 1 to August 31 of the following year) rather than having to wait until the following holiday year to begin taking it. So instead of having to wait a WHOLE year to get a break from work, you can enjoy a break from work during the SAME calendar year that you earned it. Isn’t that awesome?

The aftermath of this transitional period

Now let’s circle back to those unused holidays from the transition period, shall we?

A transition scheme was introduced to ensure that employees can still only take up to five weeks of paid holiday in the transition year, while also retaining the right to all their accrued holiday. Doing so ensured that employers could avoid paying for up to ten weeks of holiday in one year. This transition scheme came into force on 1st January 2019.

When the transition period got over, employers had to manually calculate the due vacation pay for each employee. They then reported this data to FerieKonto/Feriepengeinfo or the new fund (Lønmodtagernes Fond for Tilgodehavende Feriemidler) by 31 December 2020.

Ultimately, your due holiday pay for the transition period will end up becoming savings in your vacation fund — called Lønmodtagernes Feriemidler in Danish. You can access these upon retirement or when you leave Denmark, whichever comes first.  

How we can help

If the thought of manually updating and calculating these leaves, vacations, and PTO onto your Excel spreadsheets has you sweating, listen up!

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Snigdha Gupta

An avid writer and aspiring marketer, Snigdha is a student at Concordia University’s John Molson School of Business.