Coronavirus – tripartite agreement on extension and wind-down of the wage compensation scheme as well as new executive order on the scheme

The Government and the social partners have made a tripartite agreement on extension and wind-down of the wage compensation scheme and the Ministry of Industry, Business and Financial Affairs has issued a new executive order on this scheme. In addition, the guidelines on the application process have been updated and the procedure for applying for extension of the compensation period has opened.

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Tripartite agreement on extension and wind-down of the wage compensation scheme
The Government and the social partners recently entered into a tripartite agreement to further extend the wage compensation scheme from 9 July until 29 August 2020.

According to Virksomhedsguiden, employers are only eligible for compensation for the extended period if they have previously obtained approval of an application under the wage compensation scheme. Therefore, it is presumably a condition that employers enter the wage compensation scheme based on a period preceding 9 June 2020.

The agreement specifies that the wage compensation scheme ends on 29 August 2020. The scheme will, however, be further extended for businesses that are banned from opening pursuant to executive order. The scheme will be in effect for these businesses until the ban is lifted.

Under the agreement, employees who are covered by the wage compensation scheme in the extended period must take three weeks’ holiday, unless they have not earned three weeks’ paid holiday under the Holiday Act. Irrespective of whether the employees actually take three weeks of holiday, there will be a 3-week period during which the employer will not be entitled to receive compensation for the employees.

The other terms and conditions of the scheme remain the same during the extended compensation period.

New executive order and opening of the application process for the extended compensation period until 8 July 2020
The new executive order puts into practice the political agreement of 18 April 2020 regarding extension of the wage compensation scheme. You can read our commentary on this agreement here

The executive order specifies, among other things, that the deadline for applying for compensation for the period until 8 July 2020 is 30 July 2020.

The application process relating to continued compensation for the extended period, i.e. 9 June until 8 July 2020, is open. Guidance on the specific application process has been published, e.g. specifying that on extension of the compensation period the employer’s compensation will be determined on the basis of the pay agreements applicable when the employer entered the scheme. This may have significance for employers that have made pay cut agreements expiring before the scheme end date.

The guidelines on the regular application procedure have also been updated. This procedure must be used by businesses submitting an application for wage compensation that is not based on a wish to extend an earlier/approved application.

Both routes of application – as well as the applicable guidelines – can be found at virksomhedsguiden.dk.

Norrbom Vinding will of course follow and comment on any new developments.

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

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