A special holiday allowance is a financial benefit primarily available to employees in the public sector and those covered by a collective agreement. But what does it actually entail, and how does it differ from standard holiday pay?
If you are an employer responsible for calculating and paying special holiday allowances, it is crucial to understand the rules regarding rates, calculations, and deadlines. In this blog post, you'll find an overview of what a special holiday allowance is and what you, as an employer, need to be aware of.
What is the Danish special holiday allowance?
A special holiday allowance is an additional holiday supplement paid to employees in the state, regional, or municipal sector in Denmark. The rate varies between 1.15% and 1.95%, depending on the employee’s workplace. The amount is calculated based on the holiday-entitled salary earned in the accrual year – that is, the previous calendar year.
If you are an employer in a public organisation or your employees are covered by a collective agreement, you must be aware of this allowance, as it is your responsibility to ensure correct calculation and payment.
How is the special holiday allowance calculated?
All employees earn the right to paid holiday, either as holiday pay savings (12.5% of salary) or holiday with pay (including a holiday supplement).
If your employees receive holiday with pay, you must calculate and pay a holiday supplement.
The Danish Holiday Act sets a minimum supplement of 1%, but for employees in the state, regional, and municipal sectors or under a collective agreement, this rate is higher.
The extra percentage is called the special holiday allowance and is a beneficial arrangement for the employees in question.
The special holiday allowance is calculated based on the holiday-entitled salary from the accrual year (the previous calendar year). Some collective agreements spread the payment over three instalments, ensuring that the special holiday allowance aligns with the two annual holiday supplement payments.
Difference Between Holiday Pay and Special Holiday Allowance
Many people confuse holiday pay and special holiday allowance, but there are significant differences:
- Holiday pay (12.5%): Paid to hourly and temporary employees instead of paid holiday. The amount is deposited into FerieKonto and paid out one month before the holiday.
- Special holiday allowance (1.15 – 1.95%): Paid as an additional supplement to employees in the state, regional, and municipal sectors and collective agreement-covered employees who receive holiday with pay.
Holiday Pay When Changing Jobs
If an employee changes jobs, the earned holiday pay must be settled by the employer. The holiday pay (12.5%) must be transferred to FerieKonto no later than the 7th of the second month after resignation.
The holiday-entitled salary includes:
- Taxable income (including the value of free phone, company car, and other taxable benefits).
- Employee pension contributions.
- AM and ATP contributions.
- Salary during special holiday days and/or extra leave days.
If an employee is entitled to a special holiday allowance, it only needs to be settled upon job change if this is specified in the contract or collective agreement. This applies whether the employee is leaving or joining your company.
Payment Deadlines
The annual holiday supplement and special holiday allowance must be paid either:
- At the time of holiday leave, or
- Twice a year – in May and August (according to the Danish Holiday Act).
Need help?
Would you like to learn more about managing employee holidays or have other legal HR-related questions? Azets can assist you with all questions regarding HR legal matters.
FAQ about Special Holiday Allowance
What is a special holiday allowance?
Who is entitled to a special holiday allowance?
When is the special holiday allowance paid?
Are the holiday supplement and holiday pay the same?
