Denmark: COVID-19: Draft bill on new salary compensation scheme to employers has now been proposed

By Søren Narv Pedersen, Mia Boesen, Pia Skovgaard Hansen

03-2020

A new draft bill re. a new salary compensation scheme has now been proposed and is expected to be passed on 24 March 2020.

Introduction
On 15 March 2020, the Danish government and the labour market's parties reached a three-party agreement according to which Danish companies, as a consequence of COVID-19, can obtain part salary compensation for salary cost of employees at risk of being terminated.

 

On 17 March 2020, the Danish Parliament's finance committee agreed to document no. 108 on the temporary salary compensation scheme. With document no. 108 the scheme was provided with 3,800 million DKK in 2020 for employees at risk of being terminated as a consequence of COVID-19.

 

The purpose of the bill, which has now been proposed, is to establish the employer and employees legal position when a company receives salary compensation pursuant to document no. 108.

 

Who is covered by the scheme?
The scheme covers all types of employees, e.g. both salaried employees, non-salaried employees and monthly employees – and both employees covered by a collective bargaining agreement and employees who are not.

 

When is the scheme in effect?
The temporary salary compensation scheme will apply from 9 March and until 9 June 2020.

 

What is the requirement to the employer?
The salary compensation scheme applies to all private companies which are registered in the central business register and which are "affected extraordinarily from a financial point of view" and therefore are faced with having to terminate:

  • Minimum 30 % of the employees (also on more p-numbers) or
  • More than 50 employees (also on more p-numbers).

Salary compensation is conditional on the company paying full salary to the employees in the salary compensation period - even though the company is hit hard financially due to COVID-19. The employees at risk of being terminated cannot work but must be send home with full salary.

Furthermore, the employees must have been employed before 9 March 2020.

 

What are the requirements of the employees?
The individual employee, for whom the company applies for salary compensation on their behalf, must use holidays, time of in lieu of unpaid overtime or other accrued freedom of a total of 5 days in connection with the compensation period. It is the employees choice whether to use further holidays, time of in lieu of unpaid overtime or other accrued freedom.

 

The proposed bill must be interpreted so that the employee must take 5 days regardless of for how long a period the employee is sent home pursuant to the scheme.

 

Accrued holiday, time of in lieu of unpaid overtime or other accrued freedom and time off without salary, which has already been held after 9 March 2020 is included in the calculation of the 5 days.

 

If the employee has not accrued holidays, time of in lieu or other freedom, the employee can choose to take 5 of the holidays which have been accrued between 1 January 2019 and 31 August 2019, i.e. borrow from part of the holidays which the employee could otherwise not use before 1 May 2020 (the new holiday year).

 

They can also choose to take 5 days off without salary.

 

When in the period should the employee take the 5 holidays without salary?
The employer must, after negotiation with the employee, determine when in the period the employee who does not receive salary for the 5 days, should take the days. The period must be placed proportionally during the period in which the employee is sent home. This means that if the employee is sent home for 3 months, the 5 days must be placed evenly during the period. For example, 2 days in the first month, 2 days in the next month and 1 day in the last month. The employer is obliged to meet the employee's request to the furthest extent possible.

 

How much can the company receive in compensation?
The compensation constitutes 75% of the total gross monthly salary costs for the covered employees up to a maximum of DKK 23,000 per month per fulltime salaried employee.

For non-salaried (hourly paid) employees, the salary compensation constitutes 90 % of the total gross monthly salary costs for the covered employees up to a maximum of maximum of DKK 26,000 per month per fulltime employee.

The companies can be covered by the compensation scheme for a maximum of 3 months.

When should the company apply and what are the requirements?
The salary compensation period commences at the time of the temporary lay-off of the first employee and finishes on the day the company notify or carries out termination based on financial reasons.

The companies can, as the main rule, apply once during the period from 9 March and 9 June 2020. In the need of further temporary lay-offs, another application can, however, be filed.

The companies must apply for salary compensation with the Danish Business Authority on www.virk.dk.

The salary compensation is paid on the basis of the company's information on the number of employees which should have been terminated as a consequence of the COVID-19 situation, but who are laid off temporarily instead. The information includes, amongst other things, the employees' rate of employment, salary, the lay-off period as well as solemn declaration that the information is correct and truthful.

The company must state and give reasons for the period it expects lack of work. Notwithstanding, the maximum period begins 3 months starting at the earliest on 9 March 2020 and ending on 9 June 2020.

In the application and the following audit, the employees must be registered with their CPR-no. The company must – after the payment of the salary compensation – document the employee's salary level, that the employee's has been employed before 9 March 2020 and that the company have temperately laid off the employees in question in the relevant period.

The documentation must, amongst other things, include an attestation from the employee's representative that the employees in questions were in fact laid off. If no such attestation exists, the union(s) can object if they do not consider the documentation as correct.

Furthermore, the Danish Business Authority will require that all companies apply an accountant. The requirement of accountant assistance can happen under various criteria, e.g. random test, the size of the compensation, assessment of the risk etc.

What now?
The proposed bill is expected to the passed on 24 March 2020.

Last reviewed 24 March 2020