Since 3 April, it has been possible to apply to the Holiday Allowance Fund for an advance on the 2020 holiday allowance – also known as ‘fund holiday days’. The fund received just over 5,000 applications in April, and it appears that it is mainly young people who are applying for an advance on the holiday allowance funds that would otherwise have been set aside as savings.
At the moment, everyone in employment is saving up holiday pay. These so-called ‘frozen’ holiday allowance funds, which are being saved during the transition year to the new holiday pay legislation, are held as savings with the Employees' Holiday Allowance Fund and can only be paid out when you leave the labour market. This will amount to holiday pay for 25 days’ holiday if you remain in employment throughout the transitional year from 1 September 2019 to 31 August 2020.
Payouts for Holiday Advance 2020
However, special rules allow those new to the labour market and others who have accrued only a modest amount of holiday pay by the summer of 2020 to have some of their holiday pay paid out over the coming months. And there has proved to be considerable interest in the 2020 Holiday Pay Advance, particularly amongst young people.
Around 60 per cent of those who have applied for the 2020 Holiday Advance from the Holiday Allowance Fund are under 30 years of age. By the end of April 2020, 2,500 employees had received an advance payment. The average payout is 6,900 kr. before tax. The fact that the amounts paid out are often small indicates that many applicants were only in employment for a short period or worked just a few hours per month between 1 September and 31 December 2019. Only holiday allowance funds accrued during that period are eligible for payment.
Of the just over 5,000 applicants who applied for the 2020 Holiday Pay Advance in April, just over half have had their applications rejected. Many are rejected because they have not accrued any holiday pay that can be paid out. Others are rejected because they do not meet the criterion of being new to the labour market. This is because one of the conditions is that you must have accrued no more than 8.4 days’ holiday pay during the first 8 months of 2019. Even if you have only worked a few hours a week, each month counts as 2.08 days’ holiday entitlement. It is not the amount of holiday pay per day that is decisive, but the duration of your employment.
Expecting a large number of payouts in 2020
The Holiday Allowance Fund is responsible for paying out the 2020 Holiday Advance. The fund is managed by LD Pensions. In April, Feriekonto transferred DKK 2.9 billion to the fund, and it is on the basis of this transfer that we are able to pay out the 2020 holiday advance. In April, we are paying out approximately DKK 16.5 million. We expect to pay out DKK 300 million in 2020 Holiday Advances over the course of 2020.
It is called the 2020 Holiday Pay Advance because you receive an advance on the holiday allowance funds that would otherwise have to be saved up and paid out upon retirement at a later date.
