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LIFE IN DENMARK

EXPLAINED: Denmark’s ‘frozen’ holiday pay: how does it work and what are the problems with payouts?

People who are employed in Denmark can look forward to a windfall in October this year when so-called ‘frozen holiday money’ can be paid out.

EXPLAINED: Denmark’s 'frozen' holiday pay: how does it work and what are the problems with payouts?
Photo: Henning Bagger/Ritzau Scanpix

The payments were approved earlier this year as part of a larger government economic stimulus package in response to the coronavirus crisis.

‘Holiday money' or feriepenge is a monthly contribution paid out of your salary into a special fund, depending on how much you earn.

You can claim back the money once per year, provided you actually take holiday from work.

If you are employed in Denmark, you will be notified when the money can be paid out (this is in May under normal circumstances) and directed to the borger.dk website, from where you claim it back from national administrator Udbetaling Danmark.

READ ALSO: EXPLAINED: How to understand your Danish payslip

A new version of the Danish Holiday Act (Ferieloven) comes fully into effect on September 1st, implementing a change in the way the money is earned and used and specifically the dates around which the earning period is set.

As such, the calendar year will no longer applies for earning holiday – instead, wage earners accrue vacation time in the period September 1st — August 31st.

 

The result of this is that a certain amount of money from an overlapping period of accrual would not be paid out. When the Holiday Act was renewed, the intention was that this money would be ‘frozen’ and paid out when you leave the Danish labour market, for example on retirement.

READ ALSO: What you need to know about vacation in Denmark – and how the rules are about to change

That was changed in 2020 after the coronavirus lockdown and its resultant economic impact encouraged parliament to pass provisions for the ‘frozen’ holiday money to be paid out as soon as October.

But administrative issues reported this week mean that many may receive incorrect amounts.

That is because many employers are yet to report the correct amounts to Udbetaling Danmark, news agency Ritzau reports.

 

When employers do not report holiday money earnings by deadlines, the payouts are calculated based on earnings alone, but this can result in errors.

That is because the tax register does not take into account other factors – such as holiday or pension deposits – which are included in the calculation.

For example, when someone is on holiday they do not earn holiday money, but the tax register cannot see this. Resultantly, too much may be paid out.

But pension contributions are deducted by the tax system, even though these are eligible for holiday money. It is therefore also possible to receive less than the correct amount of ‘frozen’ holiday money.

Companies will report the correct amounts of holiday money by the end of 2020, Ritzau reports. That is because reporting now would require an overhaul of the registration system, according to the Confederation of Danish Employers (Dansk Arbejdsgiverforening).

In a measure intended to mitigate potential incorrect payments, parliament has now decided to withhold the final two weeks of accrued holiday money from the October 2020 payouts, according to a Jyllands-Posten report.

A decision on when to release the final two weeks for payment will be made following negotiations later this year.

It will also be possible for wage earners to choose not to receive the frozen holiday money in October and instead postpone the payment to a later time.

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FEATURE

What changes about life in Denmark in June 2021?

Coronavirus rules, travel restrictions and car registration fees are among the areas set to see announcements, updates or rule changes in Denmark in June.

What changes about life in Denmark in June 2021?
An electric-powered harbour bus operating in Copenhagen in June 2020. Photo: Claus Bech/Ritzau Scanpix

Changes to coronavirus restrictions

Denmark initially outlined a phased plan to lift its coronavirus restrictions back in March. The plan has been updated (and accelerated) on a number of occasions, with politicians meeting regularly to discuss adjustments based on the status and progression of the epidemic.

Initially, the government said it would lift the majority of restrictions by the end of May, when it expected to have vaccinated everyone over the age of 50 (apart from those who choose not to be vaccinated). Although the vaccination calendar was pushed back, restrictions are still being lifted, with the government citing progress with vaccinations and general good control of the epidemic.

In an agreement reached earlier this month, the government said rules requiring the use of face masks and corona passports will be revoked when all people over 16 in Denmark have been offered vaccination. The end-stage of the vaccination programme is currently scheduled to be reached at the end of August. But more detail on the plans for phased lifting of these rules is expected to surface in June.

READ ALSO: When will Denmark stop requiring corona passports and face masks?

A return to offices and shared workspaces, already set out to occur in three steps, will continue. In the first phase, which began on May 21st, 20 percent capacity were allowed back at physical workplaces. Remaining staff must continue to work from home where possible. This proportion will increase to 50 percent on June 14th (and 100 percent on August 1st).

Public assembly limit to be raised indoors, lifted outdoors

The current phase of reopening, which has been in place since May 21st, limits gatherings indoors to 50 people. This is scheduled to increase to 100 on June 11th.

Outdoors gatherings, currently limited to 100 people, will be completely revoked on June 11th.

August 11th will see the end of any form of assembly limit, indoors or outdoors, according to the scheduled reopening.

Unfortunately, this does not mean festivals such as Roskilde Festival – which would normally start at the end of June – can go ahead. Large scale events are still significantly restricted, meaning Roskilde and the majority of Denmark’s other summer festivals have already been cancelled.

Eased travel restrictions could be extended to non-EU countries

Earlier this month, Denmark moved into the third phase of lifting travel restrictions , meaning tourists from the EU and Schengen countries can enter the country.

The current rules mean that foreigners resident in EU and Schengen countries rated orange on the country’s traffic light classification (yellow, orange and red) for Covid-19 levels in the relevant countries, will no longer need a worthy purpose to enter Denmark, opening the way for tourists to come to Denmark from across the region.

Denmark raised the threshold for qualifying as a yellow country from 20-30 to 50-60 cases per 100,000 people over the past week.  

However, the lower threshold only applies to EU and Schengen countries, which means that, for example, the UK does not qualify as a yellow country despite falling within the incidence threshold.

READ ALSO:

But the 27 member states of the European Union recently announced they had agreed to allow fully vaccinated travellers to enter the bloc.

A Ministry of Justice text which sets out the plan for Denmark’s phased easing of travel restrictions suggests that the fourth phase, scheduled to take effect on June 26th, will see Denmark adopt the EU’s common rules on entry for persons from outside the bloc, meaning non-EU countries could qualify for the more lenient rules for yellow regions.

New car registration fees come into effect

New rules for registration fees for new vehicles, adopted in February, take effect on June 1st.

The laws, which will be applied retroactively from December 18th 2020, mean that different criteria will be used to calculate the registrations fees applied to cars based on their carbon dioxide emissions, replacing the existing rules which used fuel consumption as the main emissions criteria.

New rules will also be introduced offering more advantages for registering electric and hybrid vehicles.

You can find detailed information via the Danish Motor Vehicle Agency.

READ ALSO: Why is it so expensive to buy a car in Denmark?

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