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Article:

Provisional wage compensation for wage-earners in the private sector labour market

18 March 2020

Tanya Honoré Schultz , Senior Manager, Tax Legal |

Note: The below document was prepared before the introduction of a bill, for which reason changes may rise. We do not know all the answers, but we have tried to give the best possible answers.

 

Description of the arrangement

The Danish government and the labour market parties have entered into a tripartite agreement concerning a wage-earner package to aid Danish workplaces and ensure that wage-earners receive their wage as usual.

The wage compensation arrangement from the Government includes companies which face giving notice to at least 30 % of the staff or more than 50 employees.

The companies which make use of the arrangement must commit themselves not to give notice and dismiss employees on financial grounds during the period of wage compensation.

It should be noted that there are still a number of unsolved questions and that for this reason the publication will be updated in step with clarification of the rules.

 

Outline of the arrangement

Government aid to the employees the company decides to lay off amounts to:

  • Hourly employees – 90 % wage compensation, DKK 26,000 per month maximum, i.e. DKK 162.17 per hour maximum.
  • Salaried employees – 75 % wage compensation, DKK 23,000 per month maximum.

It is possible for the companies to receive a part refund for wage costs paid to laid off employees in the period from 9 March to 9 June 2020. The arrangement includes both full- and part-time employees, as long as the wage earners in question were employed by the company before the starting date of the aid package of 9 March 2020.

It is a condition of the aid that the companies lay off the employees in question on full pay, and that the employees do not do any work during the lay-off period. At the same time, it is a condition that the participating companies opt out of existing possibilities of lay-off without pay.

Consequently, the company must not dismiss employees on financial grounds during the wage compensation period. Notice can be given due to the employee’s situation, e.g. the 120-day rule, incompetence or due to non-performance.

The laid-off wage earners must take a total of five holidays and/or days off in lieu in connection with the compensation period. If the employee does not have holidays and/or time off in lieu corresponding to five days, the employee must instead take time off without pay or transfer days from the new holiday year beginning on 1 May 2020. If the employee does not have holidays, days off in lieu, etc. corresponding to five days he/she must take time off without pay. The employer is not compensated for these days.

 

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