New Holiday Act introduces more flexibility

In May 2000 the Danish parliament adopted a new Holiday Act which will come into operation by the turn of the year 2001. The new law increases flexibility as to when the holiday is to be taken - primarily by making it possible to conclude agreements concerning the transfer of one of the five weeks of statutory annual leave from one holiday year to the next. The new rules have been introduced after many years of discussion and reflect a strengthening of the role of the social partners. Employees in areas which are not covered by any collective agreement will also be covered by the Act, but are to follow the rules laid down in the agreement which would normally be applicable in the area concerned. The Holiday Act does not regulate the so-called "sixth week of holiday" which is currently being introduced in most Danish collective agreements in the form of "special holidays".

It has been discussed for more than a decade whether it would be possible to make the rules laid down in the Holiday Act (ferielov) less restrictive so that it would, for instance, be possible to transfer annual leave from one holiday year to the next. Such a change has not been possible until now because of considerations about the need to protect individual employees' rights to a long consecutive holiday period - although both employers and employees have argued that this protection is less necessary now that statutory paid annual leave stands at five weeks, compared with two weeks when the first Holiday Act was introduced in Denmark in 1938 - the table in the annex to this feature summarises the history of annual leave in Denmark. It was not until 16 May 2000 that a new Holiday Act was adopted by parliament; it will come into operation on 1 January 2001. The main change in the new Act is that it will now be possible to agree to transfer one of the five weeks of statutory annual leave to the following holiday year.

More flexible provisions

The rules in the new Holiday Act concerning when annual leave is to be taken correspond to the rules in the old Act. It is thus still the employer which decides when the holiday is to be taken, with due consideration to the wishes of the employee. As a new element, special consideration must be given to ensuring that the main holiday can be taken at the time of the school summer holiday of any children of the employee, but considerations of the operational needs of the enterprise continue to have greater weight.

The "main holiday" constitutes three out of the five weeks of annual leave laid down by the Holiday Act. A shorter period can be agreed individually, but it must be a minimum of two consecutive weeks. The remaining annual leave must, as the main rule, be taken as consecutive periods of at least one week, unless this is not possible for operational reasons. The second new element in this area introduced by the new Act is that it can be agreed to transfer one of the five weeks of statutory annual leave to the following holiday year. This is, however, only possible if the employee is covered by a collective agreement under which it is possible to conclude such agreements. In the initial bill, there was no exception to this rule, but under pressure from the Conservative and Liberal parties, provisions were introduced whereby employees in areas not covered by collective agreements may also agree with their employers to transfer holiday from year to year. However, in such cases it is a condition that reference can be made to a collective agreement in a related field and that the parties observe the provisions laid down in that agreement.

However, the main rule is still that all five weeks of leave must be taken in the year in question. It is only in quite exceptional cases, for instance in connection with a move to a new job, that the new Act makes it possible for an employee to refrain from taking leave and instead receive holiday pay in cash.

An agreement with more or less the same flexible provisions as in the new law was concluded in the public labour sector in connection with the 1995 collective bargaining round. However, this agreement never came into operation as it was overruled by the Ministry of Labour. The agreement would have required a revision of the Holiday Act to which the two largest central social partner organisations - the Danish Employers' Confederation (Dansk Arbejdsgiverforening, DA) and the Confederation of Danish Trade Unions (Landsorganisationen i Danmark, LO) - were initially opposed. However, this led to the start in 1996 of the preparatory work which four years later resulted in the adoption of the new Act.

It should be noted that the new so-called "special holidays" (feriefridage) are not regulated by the Holiday Act. These special holidays have been introduced in most collective agreements in recent years and it is expected that all employees covered by collective agreements will soon be entitled to five special days of leave per year. In the trend-setting field covered by DA/LO, this will take place during the four-year agreement period up to 2004 (DK0002167F). This effectively corresponds to a sixth week of annual leave. According to the agreements, the extra week will be administered even more flexibly. Special holidays may be taken as single days of leave and it is also possible not to take them and receive financial compensation instead. On the whole, this new total holiday period of six weeks opens the door to a much more flexible administration of annual leave than the old rules. This is also one of the most important reasons why the employers accepted the extension of the holiday period in connection with the conclusion of new collective agreements in the early months of 2000.

The introduction of the special holidays may be seen as a breach of the procedure which has existed since the 1930s, ie since the introduction of the first Holiday Act. According to this procedure, the social partners would first conclude agreements to extend the holiday period and then these agreements would be made universally applicable by means of amendments to the Holiday Act (the erga omnes pinciple). This practice can be seen as an exception to the general main principle in the regulation of pay and working conditions in Denmark, which is based solely on collective agreements without any supplementary legislation. For example, there is no legislation in Denmark concerning minimum wages or similar matters. With the new special holidays, the social partners have thus used this main principle, as they apply only in fields covered by collective agreements.

Commentary

It is worth noting that the new Holiday Act seems to strengthen the traditional parties in the Danish collective bargaining model. In order to enlist the support of the Conservative and Liberal parties, the government was forced to accept that the new flexibility in the Act should also apply to employees who are not covered by any collective agreement; but this was implemented in such a way that reference must be made to a collective agreement in a comparable field. In this way, the traditional organisations used the opportunity to stress the predominant role of collective agreements in the regulation of terms and conditions of employment. This is also the background to the criticism voiced by the spokesperson of the Christian Trade Union Movement (Den Kristelige Fagbevægelse) - which is an alternative to the traditional trade unions (DK9905123F) - on the drafting of the new Act. "This really smells of bait to make more Danish employees support DA/LO collective agreements," he wrote in a commentary in the Morgenavisen Jyllandsposten newspaper on 17 June 2000.

This viewpoint becomes even clearer when one looks upon the actual implementation of the sixth week of holiday which - as described above - has become a reality with the renewal of the collective agreements at the start of 2000 in the DA/LO field. It was especially the employee representatives in the negotiations who were firm in demanding that the extension of holiday entitlement should take the form of the introduction of the so-called special holidays. This means that this sixth week is not holiday in the sense of the Holiday Act and the social partners have not felt any urge to maintain the tradition of making holiday extensions generally applicable. The new Act does not regulate the special holidays; this means that they will, as a starting point, apply only in fields covered by collective agreements. In these fields, all employees - whether they are organised or not - will be entitled to these special holidays, so LO and its affiliated trade unions will not completely avoid the "free-rider" problem. However, together with DA, they highlight the importance of collective agreements. This is important at a time when attempts are made to increase the coverage of agreements, especially in the light of the discussion concerning the implementation in Denmark of EU Directives on employment issues (DK0001164F). LO and DA wish to maintain implementation by collective agreements rather than legislation as the general practice in Denmark and this makes it necessary to ensure the broadest possible coverage of collective agreements. (Jørgen Steen Madsen, FAOS)

Annex