Transitional allowance

You go back 24 months to a point in time as close to the transition as possible and calculate the transitional allowance based on how much additional work pay you have received in the period for which you could not take time off in lieu.

A period of 24 months has been selected because that period is long enough to account for the mix of busy and less busy periods. Other circumstances may, however, stand out, such as maternity/paternity leave or a refinancing wave. In this case, the company and the head of local union must agree on a more fair period.

If you've been employed for less than 24 months, it may be difficult to determine whether the additional work you have carried out provides an accurate picture of the position. In such cases, it is important to involve the head of local union. On the one hand, you may not be entitled to compensation at all because you have not suffered an actual loss. On the other hand, it is possible that the position notoriously triggers additional work, which has not yet become apparent because the period measured is too short. In such cases, the calculation may be based on the predecessor’s work or on an average of additional work in the department within the last 24 months. A third option is when the employee has been employed long enough, although not two years, to provide a realistic estimate of the future workload, in which case compensation may be calculated based on the actual period of employment.

No, they are not. Students are not covered by the transitional provisions. New employees hired specifically on a fixed salary with independent work organisation are also not covered by a transitional arrangement.

If you are offered a new position in the same company at a salary exceeding the threshold amount of DKK 56,050 (as of 1 April 2024), you are generally not entitled to compensation for lost additional work pay or hardship allowance, but if the pay increase is smaller than the compensation would have been, you should contact your union representative.

If you are considered to have independent work organisation, although, to some extent, you perform machine and system-dependent additional work the planning of which you are responsible for, then the answer is yes: your pay may be on a fixed salary basis. In that case, the pay for machine and system-dependent additional work in the past 24 months must be included in the calculation of your transitional allowance.

Because you have managed to keep within the annual norm, and you are expected to continue to be able to do so on a fixed salary. Employees taking time off in lieu have worked fewer hours than colleagues who have received pay for their additional work, and therefore their compensation amounts differ.

As the transitional arrangement is cost neutral, and the annual norm is expected to remain unchanged, calculation of the allowance must take into account whether the employee has been able to take time off for additional work in the preceding 24 months. If you have, you have kept within the annual norm. Therefore, you will not be compensated for the time you have taken off in lieu in the preceding 24 months. The additional work for which you have not taken time off in lieu, or for which you have been paid, must be included in the calculation of the allowance for transition to a fixed salary basis.

The arrangement must be cost neutral. This means applying a net principle when transitioning from additional work pay to a fixed salary. Compensation must be calculated based on the additional work you have had over the past 24 months less the additional work for which you have taken time off in lieu in the same period.

When transitioning from overtime work to additional work, the net principle does not apply. In this case, only the overtime pay of either 50 per cent or 100 per cent within the past 24 months should form the basis for the calculation of compensation. From this amount, you deduct the number of hours corresponding to a total of two week's extra holiday in those 24 months. You do not deduct the overtime work you have taken off in lieu, because only the overtime pay, and not the 1:1 payment for the overtime hours, will trigger compensation. That is, the employee will in future still be entitled to 1:1 payment for additional work.

When transitioning from overtime pay to a fixed salary basis, the two calculation methods must be combined. This means calculating the overtime pay for the past 24 months. The employee transitioning to a fixed salary also loses the 1:1 payment that was used to calculate the overtime pay. But as employees on a fixed salary are expected to keep within the annual norm, do not forget to deduct the overtime hours that the employee has taken off in lieu in the past 24 months. And, moreover, deduct the number of hours corresponding to a total of two week's extra holiday in those 24 months.

Yes. The transitional arrangement applies to all employees transitioning to a fixed salary.

The collective agreement does not give you the right to choose. However, if you receive compensation for transitioning to a fixed salary and it turns out that the job is not suited to this, you are no longer entitled to such compensation. On the other hand, you become entitled to registering your additional work and depositing it in your time bank, following which the hours may be paid out or taken off in lieu. If you disagree with your employer about whether you should be on a fixed salary, for example because your job does not contain the necessary independent work organisation, you should involve your head of local union or Finansforbundet.

Then you contact your head of local union or Finansforbundet. Finansforbundet and the FA understand that disputes may arise and have agreed to deal with these in accordance with standard disputes procedures. Therefore, if you disagree on the calculation, you should not hesitate to take up the matter and let the parties find a common solution.

Anne, who has a 37-hour working week, goes from overtime work and five weeks of holiday to additional work and six weeks of holiday.

Over the past 24 months, Anne had a total of 310 hours of overtime work.

Of these, 280 hours were spent on weekdays and within the first three hours beyond the agreed work schedule. For those hours, Anne received an allowance of 50 per cent, equivalent to the value of 140 hours. When transitioning to additional work, this allowance is lost, and Anne must therefore be compensated for the value of 140 hours.

The remaining 30 hours were spent on weekends. These hours earned her an allowance of 100 per cent of her pay, equivalent to the value of 30 hours. When transitioning to additional work, Anne must also be compensated for the value of the 30 hours.

Anne is granted one extra week of holiday per year when she transitions to additional work. This corresponds to a value of 74 hours over two years, and those hours are deducted from Anne's compensation.

Anne’s total compensation is therefore based on these hours over two years: 140 + 30 - 74 = 96 hours. That results in annual compensation of 48 hours. The 48 hours correspond to 4 hours per month and represent 2.49 per cent of her working hours.

Consequently, Anne is entitled to a 2.49 per cent increase in her monthly salary when transitioning from overtime work with five weeks' holiday to additional work with six weeks' holiday.

When transitioning to a fixed salary, the employee must be compensated for the additional work net pay and any hardship allowance that he or she has earned, on average, over the past 24 months. The resulting amount is added to the employee's salary.

Allan earns DKK 55,000 per month. In the past 24 months, he had 126 hours of additional work. During the same period, he took time off for 42 hours worked. Allan's net additional work hours in those two years therefore constitute 84 hours, equivalent to 3.5 hours per month.

Allan's weekly working hours have been agreed to 37 hours, equivalent to 160 hours per month. The 3.5 hours of additional work thus represent 2.2 per cent of the agreed working hours. Allan received no hardship allowance in the period in question.

Allan should therefore expect a pay increase of 2.2 per cent of DKK 55,000, corresponding to DKK 1,201 per month. His monthly pay upon transition to a fixed salary basis will thus be DKK 56,201.

Caroline earns DKK 54,050 per month. In the past 24 months, she had 242 hours of additional work. During the same period, she took time off for 74 hours worked. Caroline's net additional work hours in those two years therefore constitute 168 hours, equivalent to 7 hours per month.

Caroline's weekly working hours have been agreed to 36 hours, equivalent to 156 hours per month. The 7 hours of additional work thus represent 4.5 per cent of the agreed working hours. During the period, Caroline also received a hardship allowance totalling DKK 43,200, corresponding to an average of DKK 1,800 per month.

Caroline should therefore expect a pay increase of 4.5 per cent of DKK 54,050 plus an additional DKK 1,800.This corresponds to a total pay increase of 2,432+1800 = DKK 4,232, which increases her monthly pay to DKK 58,282 upon transitioning to a fixed salary.

Erik earns DKK 61,000.For the past 24 months, he has had 24 hours of additional work. During the same period, however, he also took time off for 24 hours worked. This means that Erik's net additional work in the two years is 0 hours. Erik received no hardship allowance in the period in question neither. Consequently, Erik's pay is maintained at DKK 61,000 when transitioning to a fixed salary.

Compensation for the transition from overtime pay to fixed salary can be calculated by first calculating the compensation for the transition from overtime to additional work, and then calculating the compensation for the transition to fixed salary. This provides a separate overview of the effect of the two elements.

Alternatively, the transition from overtime to fixed salary may be calculated directly. This is an example of such a calculation:

Mette goes from being employed on overtime pay with five weeks of holiday to fixed pay with six weeks of holiday. Her monthly pay is DKK 55,000.

In the past 24 months, Mette had 132 hours of overtime. 100 of those hours paid a 50 per cent allowance, while 32 hours paid a 100 per cent allowance. The total value of the overtime is thus 214 hours.

When transitioning to a fixed salary basis, Mette is entitled to one extra week of holiday per year, equivalent to a value of 74 hours. Mette has taken 48 hours off for overtime worked, which means that the total value of her time off is 122 hours over the past 24 months.

In total, Mette’s net overtime over the past 24 months is therefore 92 hours (214 less 122 hours). This corresponds to average net overtime of 4 hours per month.

With 37 weekly working hours, the 4 hours of net overtime constitute 2.4 per cent of the agreed working hours. This means that Mette is entitled to an allowance of 2.4 per cent of her monthly pay of DKK 55,000, corresponding to DKK 1,315, when transitioning to a fixed salary.

Mette moreover received DKK 12,000 in hardship allowance over the past 24 months. Such allowance must also be compensated for when transitioning to a fixed salary. The average hardship allowance paid per month is DKK 500.

Consequently, Mette is entitled to a monthly pay increase of 1,315 + 500 = DKK 1,815 when transitioning to a fixed salary basis, which means her new monthly pay will be DKK 56,815.

6.815 kr.

Employees who are not on the final grade retain their length of service increases until they reach the final grade.

Camilla was hired in February 2018 on pay scale 20 of salary level 20.

When hired, Camilla thus expected a length of service-based pay increase for 11 years until 2029 in accordance with the collective agreement.

In the example, all rates are stated at 2020 levels, and the agreed adjustments towards 2029 to the specific pay scale rates of the collective agreement are not taken into account. 

By 1 January 2021, Camilla had moved up three grades on the pay scale and was earning DKK 381,362. According to the length of service system, she was guaranteed an annual increase implying that by 1 January 2029, her guaranteed pay level would constitute DKK 435,857.This means a guaranteed pay increase from 2021 to 2029 of DKK 54,495 per year, equivalent to DKK 4,541 per month.

Camilla's union representative may agree to maintain the annual length of service increase until 2029. But the union representative may also enter into local negotiations with the employer about alternative compensation. A total compensation amount for opting out of the length of service system may, for example, be agreed upon. Or a shorter length of service period may be agreed in exchange for higher annual pay increases than stipulated by the collective agreement. The point is that there is no solution which ‘fits all’. If, for instance, Camilla expects to change jobs within a few years, it will probably be most beneficial to reduce the length of service period.  Camilla may also expect to negotiate more successful pay increases when her employer cannot use the argument that she is already receiving pay increases via the length of service system.