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2020 Vision: the year ahead in Danish employment law

Written by
Norrbom Vinding, the largest labour and employment law practice in Scandinavia and the market leader in Denmark.
What can employers in Denmark expect in 2020? This article sets out some of the hot topics for the year.

The new Holiday Act, extra holiday entitlement and registration of employees’ working time are expected to be the hot topics in the field of employment law in 2020. Furthermore, 2020 is the year when most of the collective agreements in the private sector will be subject to re-negotiation. On another note, we have still not seen any fines in Denmark in relation to the GDPR.

The new Holiday Act

The new Holiday Act has been one of the hottest topics in Denmark in recent years: also within the area of employment law in 2019. However, the ‘Danish holiday saga’ is not over yet.

2020 is the year when the new Danish Holiday Act comes into force to ensure compliance between the Danish holiday rules and the European Working Time Directive. Instead of accruing and taking paid holiday on a staggered basis, employees will accrue and take holiday concurrently from 1 September 2020.

The new Holiday Act was gradually introduced in 2019, and the transition period began on 1 September 2019. Holiday accrued in the period 1 September 2019 – 31 August 2020 will not be transferred to the forthcoming holiday year, but will instead be ‘frozen’.

To handle the frozen holiday funds, a new holiday fund, the Employees’ Holiday Funds (Lønmodtagernes Feriemidler) has been established. Employers must decide whether they wish to keep the frozen holiday in the company (in exchange for paying an annual indexation amount to the fund), or if they wish to convert the holiday into savings in the fund. The fund will manage the accrued holiday to be paid out when employees retire or leave the Danish labour market.

According to the new Holiday Act, employees will still accrue 2.08 days of holiday with pay per month. However, from 1 September 2020 the accrual year and the holiday year will run from 1 September – 31 August. Further, employees will have the opportunity to take holiday in an additional four-month period (until 31 December), which means that the holiday period will cover 16 months.

It will still be possible to carry over and pay out holiday beyond 20 days if it has not been taken by 31 December. Furthermore, it will be possible to take holiday before it accrues, if agreed with the employer.

Extra holiday entitlement

In addition to employees’ right to 25 days of paid holiday under the Holiday Act, employers often provide an extra holiday entitlement to their full-time employees: five extra days is the most common arrangement. The extra holiday entitlement is not regulated by law but either through collective agreement or individual agreement between the employer and employee.

Usually, the extra holiday will be granted in accordance with the current Holiday Act. Under the current Holiday Act the accrual year runs from 1 January to 31 December, while the holiday year runs from 1 May to 30 April the year after the accrual year. Accordingly, most employers have chosen to grant the extra holiday entitlement as of 1 May.

In the light of the enactment of the new Holiday Act, there is some uncertainty as to how employers will handle the extra holiday entitlement in the future. It is up to the employer to choose whether it wishes to follow the same practice as usual, to follow the holiday year under the new Holiday Act, or perhaps to choose another option.

If the employer wishes to follow the holiday year under the new Holiday Act,  is an option to extend the period in which holiday can be taken in the present holiday year and, at the same time, increase the extra holiday entitlement correspondingly. After that, the employer can follow the same principles as usual and provide the same amount of extra days but simply follow a new holiday year.

Registration of working time

In May 2019, the ECJ ruled that employers are required to set up a system to register the duration of employees’ daily working time (see here). In the wake of the judgment, there have been many assumptions and concerns about how the Danish government will handle the judgment and what measures will be taken to comply with the new requirement.

So far, it has been announced that the Danish government and the social partners will discuss the meaning of the judgment and its consequences in relation to the Danish labour market. It will be interesting to see the outcome of these discussions, as it is our impression that most employers do not have adequate systems in place to comply with the comprehensive ruling by the ECJ. Hopefully clarification on the issue will be provided in 2020.

Renewal of collective agreements in the private sector

2020 is the year of renewal for most collective agreements in the private sector. As always, it is impossible to predict the outcome of such negotiations.

The principal rule is that the Danish government does not intervene in negotiations or industrial action, should the latter occur. The parties will most likely finalise the negotiations at the Official Conciliator (Forligsmanden) and he will submit the joint settlement proposal for a vote. If the proposal is rejected, a general strike may occur. However, if it is deemed necessary, the government has previously ended a general strike through statutory intervention and that may be the outcome this year as well.

GDPR fines

In Denmark, we have not yet seen any fines following the implementation of the GDPR.

At the time of writing, the Danish Data Protection Agency has handed over the two first cases to the police, which will have to investigate and press charges against the relevant companies. In these two cases, the Danish Data Protection Agency has recommended fines of DKK 1.2 and 1.5 million, respectively.

It will be interesting to see if the first fines under the GDPR are issued in 2020 and, if so, what the financial level will be, and whether the level will be in line with the fines issued in the rest of Europe.