Coronavirus – Bill on wage compensation to the private sector introduced

The Danish Government has introduced the Bill on wage compensation to the private sector. Whilst the Bill does clarify a number of issues relating to the scheme, various questions concerning the scope of the scheme are still unanswered.

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We have previously described the tripartite agreement concluded between the Danish Government and the social partners regarding wage compensation to businesses which, as a consequence of the current economic situation, are now facing redundancies. The article can be found here

A few days ago, the Government introduced the Bill regarding the wage compensation scheme. The Bill reflects the tripartite agreement.

In overall terms, the elements of the wage compensation scheme are as follows:

  • In the period from 9 March to 9 June 2020, businesses can send home the affected employees with full pay and receive compensation in this regard subject to application to the Danish Business Authority.
  • The scheme will apply to businesses that are facing dismissal of at least 30% of the employees or more than 50 employees.
  • The scheme will cover employees who were employed by 9 March 2020, and employees can be sent home with wage compensation at one day’s notice. The business can send home more employees on a continuous basis, if necessary.
  • The scheme is conditional on the business opting out of existing schemes regarding the possibility of sending home employees without pay and the business cannot have the same costs covered through other economic stimulus packages.
  • For salaried employees, the compensation to the business will amount to 75% of the employees’ salary subject, however, to a cap of DKK 23,000 per month per full-time employee if the business chooses to send home the employees instead of dismissing them. For non-salaried employees, the wage compensation will amount to 90% of the employees’ salary subject, however, to a cap of DKK 26,000 per month per full-time employee.
  • The individual employees for whom the business applies for wage compensation will not be entitled to pay for five working days during the period of being sent home. The five days without pay will be distributed proportionally across this period. However, the employee may instead choose 1) to take holiday or time of in lieu, 2) to take holiday which has not yet accrued, subject to agreement with the employer, 3) to take holiday accrued in the period from 1 January 2019 to 31 August 2019, or 4) to take unpaid leave. The timing of the five working days without pay will be agreed between the employer and the employee.
  • After the expiry of the period in which employees are sent home, the employees will resume the employment terms and conditions that applied prior to this period.
  • As a general rule, a business can only enter and exit the scheme once. It is therefore crucial for businesses to ensure that they meet the conditions for participation in the scheme – on entry and on a continuous basis – as long as they wish to participate in the scheme.

As mentioned above, various questions concerning the wage compensation scheme are still unanswered.

Norrbom Vinding will provide further information when the Bill is enacted.

The content of the above is not, and should not be a substitute for legal advice.

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