On 17 August 2020, a broad majority in the Danish Parliament passed the Minister for Employment’s bill, which allows employees to receive up to three weeks’ worth of the holiday pay they have saved up in the Holiday Allowance Fund.
The Holiday Allowance Fund comprises up to 5 weeks’ holiday pay, which, under the Holiday Pay Act, is accrued during the period from 1 September 2019 to 31 August 2020. Back in 2018, it was decided that holiday pay from this period would be converted into a pension sum that could be paid out upon retirement from the labour market. The new law amends the rules so that employees can request to have some of their holiday pay paid out as early as October this year. This is being done to boost the Danish economy following the coronavirus crisis, which is still affecting earnings in many companies.
It will be optional whether you wish to have up to three weeks’ worth of your frozen holiday allowance paid out. You can have holiday allowance funds paid out that were accrued between 1 September 2019 and 31 March 2020. The amount paid out will later be offset against the balance of your pension savings in the Holiday Allowance Fund. A guide on how to apply for holiday payouts will soon be available at borger.dk/feriemidler.
If no action is taken, the holiday pay will remain as pension savings in The Holiday Allowance Fund. This means that the funds will continue to accrue interest at the rate generated by LD Pensions for The Holiday Allowance Fund. The funds are paid out upon reaching state pension age, unless you retire from the labour market for other reasons before then, in which case you may have your holiday pay paid out.
