As a further measure during the coronavirus crisis, several parties have highlighted the possibility of releasing the frozen holiday allowance. Among other things, there have been suggestions to send employees on holiday funded by money frozen in the new fund – The Holiday Allowance Fund. However, it is not quite that simple.
The vast majority of the frozen holiday allowance is currently held by employers, rather than in the new fund, the Holiday Allowance Fund. Only DKK 2.9 billion of the estimated DKK 100 billion in holiday pay assets is held in the fund. In practice, this means that if a decision is taken to pay out the employees' frozen holiday allowance funds that have been accrued to date, this will in many cases place a further strain on companies’ liquidity.
For employers, the first statutory payments to the fund are due in September next year – specifically on 1 September 2021. At that time, contributions must be made for employees who have left the labour market. Holiday Allowance funds for other employees may remain with the employers. The Holiday Allowance Fund will thereafter collect holiday allowance each year solely for employees who have left the labour market. Employers may thus retain holiday allowance for younger employees for a very long time.
Only employers who pay holiday pay via holiday funds or via Feriekonto are required to pay in frozen holiday allowance during 2020. This is estimated to amount to a total of DKK 8–10 billion for 2020. Of this estimated amount, the fund has so far received DKK 2.9 billion, which has been paid in by Feriekonto and relates to frozen holiday allowance funds for employees who left their jobs between September and December 2019. From these funds, the fund is to pay out the 2020 Holiday Advance (also known as ‘fund holiday days’) to employees who have accrued very few holiday days to take during the short holiday year from May to August 2020. This may, for example, be for young people who are new to the labour market. The fund must also finance death benefit payments from the start of 2021 using these funds.
Employers are permitted to pay the holiday allowance funds into the fund in advance, but in the current crisis this is not expected to be of interest to employers. One of the aims of the new fund is precisely to enable employers to retain the funds over several years, thereby alleviating any pressure on liquidity during the transition to the new holiday legislation.
