Holiday Pay in Denmark: 12.5% Allowance, 2.08 Days/Month, FerieKonto

Foreign companies posting workers to Denmark must submit a posting declaration on the Register of Foreign Service Providers (RUT) website before starting operations. This registration is a critical first step. Under the Danish Act on Posting of Workers, posted workers have the same rights as Danish citizens regarding a safe and healthy working environment, equal pay, and certain working hours regulations.

These equal rights extend directly to holiday entitlements. Under the Danish Act on Posting of Workers, posted workers are covered by the holiday rules of their home country, but they are guaranteed the minimum rights provided by the Danish Holiday Act (Ferieloven) if those are more favorable. If the holiday scheme in the posted worker's home country is less favorable than the Danish Holiday Act, the worker accumulates additional paid leave during their posting in Denmark.

To manage these guaranteed minimum rights, employers must understand how the Danish Holiday Act structures time off. Under the Danish Holiday Act, employees accrue 2.08 days of paid leave per month of employment, which equals 25 days (five weeks) of holiday for a full year. Whether a posted worker is employed full-time or part-time has no influence on the number of holiday days they accumulate; part-time workers still accumulate 2.08 days per month.

This monthly accrual is tied to a specific timeline. In September 2020, Denmark implemented a concurrent holiday system (simultaneous accrual), meaning employees can take holiday as soon as the month after they have earned it. This allows newly posted staff to take paid time off quickly.

When a posted worker accumulates additional paid leave because the Danish minimum standards are more favorable than their home country rules, a specific administrative distinction applies. Any additional paid leave accumulated due to Danish minimum standards must be taken in accordance with the holiday rules of the home country, not the Danish Holiday Act.

While the accrual of days is standardized, calculating the financial value of these holiday days depends on how the worker is compensated. For hourly and temporary employees, the employer must pay a holiday allowance (feriepenge) of 12.5% of their qualifying gross salary. This percentage must be calculated on all earnings that qualify for holiday pay under Danish standards.

Salaried employees who receive a fixed monthly salary follow a different payment structure. For monthly-paid salaried employees who are entitled to full pay on public holidays and during sick leave, they are entitled to their normal salary during annual holidays plus a holiday supplement (ferietillæg) of at least 1% of their annual salary.

Sometimes, operational needs or personal schedules lead to a worker taking leave before they have fully earned it. The concurrent system allows for this, but it carries immediate payroll consequences if the balance is negative. If an employee takes holiday they have not yet earned, they receive a salary reduction calculated at 4.8% of their monthly salary per day of unearned vacation taken.

Managing these calculations also requires respecting the rigid timelines established for scheduling and taking leave. The holiday year (earning period) runs from 1 September to 31 August of the following year, while the period to take the holiday is 16 months, running from 1 September to 31 December of the following year. This provides a four-month overlap to help workers utilize their accrued time.

Within this 16-month period, employees have a right to take at least three consecutive weeks of primary holiday during the main holiday period (hovedferieperioden), which runs from 1 May to 30 September.

Scheduling this time off requires advance planning due to strict notice deadlines. An employer must notify an employee about the timing of their primary holiday at least three months before it starts, and for other holiday days, at least one month in advance. These notice periods protect the worker's ability to plan their personal time.

When calculating the duration of a holiday, the Danish Holiday Act counts only official working days. Under the Danish Holiday Act, holiday is counted in working days (Monday to Friday), meaning a full week of holiday uses exactly five days. Saturdays and Sundays do not count toward the holiday balance, simplifying the tracking of consecutive weeks off.

To remain compliant with these timing rules, employers must follow a specific reporting and deposit workflow. Employers report their employees' holiday entitlement via eIndkomst (Denmark's income register administered by SKAT) and pay the amount to FerieKonto. FerieKonto is Denmark's public holiday pay administration fund, and late deposits into the fund result in penalties for employers.

The timeline for making these payments depends on the employment status and whether the worker remains with the company or is departing. Employers report the employee's qualifying gross earnings and accrued holiday days through the eIndkomst register. For active employees under the 12.5% model, the employer must deposit the calculated holiday pay into FerieKonto (or an approved private holiday fund) no later than the last banking day of the month following the month in which the holiday pay was earned.

Different rules apply when an employee's contract ends. Upon termination, the employer must settle all accrued but untaken holiday pay and transfer it to the public holiday pay fund, FerieKonto. For employees transitioning from the holiday-with-pay model to the 12.5% model upon departure, the employer must pay 12.5% of qualifying earnings for the remaining untaken days into FerieKonto. For employees who leave a company, this holiday pay must be transferred to FerieKonto no later than the 7th day of the second month following their resignation.

Failing to meet these specific deadlines triggers penalties. Employers must ensure that all reports and deposits are completed accurately and on time to avoid these issues.

These holiday pay rules must be viewed within the broader context of the Danish labor market. In Denmark, there is no statutory minimum wage; instead, wages are typically fixed in collective agreements (CBAs) for different types of work. Foreign employers must be aware of which collective agreement applies to their sector, as these agreements often dictate higher standards than the statutory baselines.

Enforcement of these standards is rigorous, with specific protections in place for cross-border staff. The Danish Labour Market Fund for Posted Workers (AFU – Arbejdsmarkedets Fond for Udstationerede) is responsible for paying out unpaid wages, pensions, and holiday pay to posted workers if their employer fails to pay and the case is ruled on by a labor court.

To avoid legal disputes and penalties, foreign companies must take proactive measures before sending any personnel to Danish work sites. This process begins with a comprehensive review of existing employment contracts against the mandatory standards of the Danish Holiday Act.

Finally, establish your payroll reporting channels well in advance of the mobilization date. Ensure your payroll software or external provider is configured to report through eIndkomst and can process monthly transfers to FerieKonto. Taking these administrative steps early guarantees a smooth, compliant operation and protects your business from costly disruptions on site.