The government has proposed that two of the five weeks’ worth of frozen holiday allowance funds be paid out this autumn. Payouts of the frozen holiday allowance have long been on the table as one of the policy measures designed to kick-start growth following the Covid-19 lockdown. A proposal for partial payouts of the holiday allowance funds is now under discussion.
Employers must continue to report holiday allowance funds
The two weeks’ holiday allowance that is then due to be paid out will be paid in the autumn at the earliest. This is because employees are currently in the process of accruing their holiday allowance, which continues to accrue right up until 31 August 2020.
We are now looking at what is practically feasible in terms of much earlier payouts.
We must, of course, have the specific framework in place first to safeguard both employers and employees. Employers and payroll agencies must be able to submit reports, and employees must also be able to raise objections if the information submitted is incorrect.
At present, the deadline for employers to report accrued holiday allowance funds is 31 December 2020. If the holiday allowance funds are to be paid out in the autumn, the reporting deadline must be brought forward.
Increased pressure on enquiries
We are currently experiencing an exceptionally high volume of enquiries – both at Customer Services and via the self-service portal. However, you cannot yet see the amount you are due to receive. This is because only the provisionally reported holiday allowance funds are visible in the self-service portal, and only if your employer has chosen to report them on an ongoing basis. It is therefore not possible to get an overview of how much the two weeks’ holiday allowance funds will amount to.
“We fully understand the high level of interest, but at the moment we are unable to tell individual employees how much their payouts will be. There are around 3 million employees currently saving up accrued holiday allowance funds, and that amounts to approximately 40 billion Danish kroner before tax to be paid out. Unfortunately, we cannot be any more precise than that at this stage,” says Dorrit Vanglo. “There will, of course, be significant differences in how much each individual employee will receive, as this depends on their individual income circumstances.”
The government is responsible for the payouts
Originally, the plan was that all the five weeks’ holiday allowance funds that employees save up during the transitional year to the new holiday pay legislation would be held as savings with the Holiday Allowance Fund, which could only be paid out as a lump sum upon leaving the labour market. With brought-forward partial payouts, it is expected that the state will cover the early payouts so as not to drain companies’ liquidity.
Under the current rules, employers may retain employees’ accrued holiday allowance funds within the company, subject to annual indexation, until such time as the holiday allowance funds must, by law, be paid into The Holiday Allowance Fund. It is therefore expected that the state will initially finance the two weeks’ worth of frozen holiday allowance for employees.
The Holiday Allowance Fund manages the frozen holiday allowance funds and is a new fund that operates as a separate financial entity under LD Pensions.
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