Practical guide to compensation of wages and salaries to private undertakings 21 April 2020
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01. Background
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Practical guide to compensation of wages and salaries to private undertakings
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01. Background
Tripartite agreement for compensation of wages and salaries to private employers - background § On 15 March 2020, the Government announced a new COVID-19 initiative in the form of a tripartite agreement between the Government, the Danish Employers’ Confederation and the Danish Trade Union Confederation.
§ The agreement was entered into on 14 March 2020 and will be administrated by the Danish Business Authority. § The bill was introduced on 19 March 2020. § Amendments were proposed on 23 March 2020. § The bill was passed on 24 March 2020. § The consolidation Act was published 25 March 2020. § 30 March 2020 the pay limit was raised to DKK 30,000 per employee per month. § 18 April 2020 the compensation scheme was extended by one month, so it now applies until 8 July 2020. The reapplication on the extension of the period must be done to the Danish Business Authority.
§ The object of the agreement is to avoid dismissals and to ensure that employees receive wages and salaries as usual through a state
compensation scheme for private undertakings, which are extraordinarily affected by COVID-19 and therefore face having to dismiss employees.
§ The temporary compensation scheme will apply from 9 march to 8 July 2020. Gorrissen Federspiel
Practical guide to compensation of wages and salaries to private undertakings
01. Background
Tripartite agreement for compensation of wages and salaries to private employers - background
The State pays 75% of the employee’s salary (max DKK 30,000) Gorrissen Federspiel
The undertaking pays 25% of the employee’s salary
The employee waives five holidays
Practical guide to compensation of wages and salaries to private undertakings
02. Conditions for entitlement to compensation
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Practical guide to compensation of wages and salaries to private undertakings
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02. Conditions for entitlement to compensation
Conditions for entitlement to compensation § The undertaking must have a Danish CVR-number. § The undertaking is not founded 50% or more by government grants. § The undertaking must send home at least 30% of its staff of employees or more than 50 employees due to COVID-19. Trainees can also be sent home with compensation. The number is calculated at undertaking level per CVR-number.
§ The number of employees is calculated by number of units and not by number of full-time employees. A casual worker who is not allocated any hours, is not covered by the scheme.
§ Employees for whom compensation is applied, must have their place of work in Denmark. § Employees who are sent home cannot work for the undertaking. § Compensation can not be obtained for employees, if the payroll expenditure are reimbursed in other ways, including by insurance or other state pay compensation schemes due to COVID-19. It can not be ruled out, that undertakings that are forced to close, may obtain a refund of 100% of staff costs. Gorrissen Federspiel
Practical guide to compensation of wages and salaries to private undertakings
02. Conditions for entitlement to compensation
Conditions for entitlement to compensation, continued ยง The private undertakings continue to pay full salary to employees during the compensation period. The employees under threat of dismissal are not allowed to work, but are sent home with full salary during the compensation period.
ยง The individual employee for which the undertaking applies for compensation, must take holidays and/or take time off in lieu of overtime amounting to a total of five days in connection with the compensation period, if the compensation period is fully utilized from 9 March to 8 July. For a shorter compensation period, the employee must take holidays/ time off in lieu of overtime proportionately.
ยง If the employee does not have holidays, time in lieu of overtime, etc. corresponding to five days left, time off must be taken without salary or holidays from the new holiday year must be taken. Undertakings cannot receive compensation for such days.
ยง If a wage cut was agreed immediately prior to the employee being sent home, the employees must not take holidays.
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Practical guide to compensation of wages and salaries to private undertakings
02. Conditions for entitlement to compensation
Conditions for entitlement to compensation, continued § The undertaking must not notify dismissals for economic reasons during the compensation period. It is possible to apply for compensation of wages and salaries even though dismissals have been completed prior to the application for compensation. In that case, compensation can only be applied for the period after the dismissals have been completed and there can not be applied for compensation to the employees who have been dismissed.
§ It will be possible to recall a part of the compensated employees with 24 hours of notice. In this case, compensation of wages and salaries will only cover employees, who are still sent home. It is a condition that the undertaking continues to meet the requirement of at least 30% of employees having been sent home after a recall of employees.
§ The number of employees being sent home may be increased as required. § Sending employees home partially is accepted to an unspecified extent: Thus, it is not a requirement that the same period is reported for all the effected employees. It is unclear which restrictions apply in respect of sending home employees partially. Sending home employees cannot constitute actual be division of labour, but must be without a duty to work during the compensation period. § It will be acceptable to send home Employee 1 in April and to send home Employee 2 in May. § It is unclear whether continuous replacement is possible, for example where 2 employees work every other week. Gorrissen Federspiel
Practical guide to compensation of wages and salaries to private undertakings
03. How are undertakings compensated?
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Practical guide to compensation of wages and salaries to private undertakings
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03. How are undertakings compensated?
How are undertakings compensated? § The State compensation of wages and salaries for employees under threat of dismissal will constitute 75% of the total payroll expenditure for the involved employees; however, maximum DKK 30,000 per month per full-time employee. For hourlypaid employees and trainees, the state compensation can constitute 90%; however, maximum DKK 30,000 per month per full-time employee.
§ The full wages and salaries are covered by the compensation scheme, which means the agreed wages and salaries including holiday allowance, contribution to a free choice account, regular predictable inconvenience payments and the employers’ pension contributions.
§ Undertakings may be covered by the scheme for a maximum of four months. § Compensation of wages and salaries will be paid based on the undertakings’ information about the number of employees, which would otherwise have been dismissed due to the COVID-19 situation.
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Practical guide to compensation of wages and salaries to private undertakings
04. How do I apply for compensation of wages and salaries?
Gorrissen Federspiel
Practical guide to compensation of wages and salaries to private undertakings
04. How do I apply for compensation of wages and salaries?
Application for compensation of wages and salaries § Application for compensation of wages and salaries must be submitted electronically to the Danish Business Authority via virk.dk. § Application for compensation of wages and salaries opened on 25 March 2020. § The following information must be provided: § How many employees you expect to apply compensation of wages and salaries for due to COVID-19 (minimum 30% of the staff of employees or more than 50 employees) § Danish personal identification number, name, wages and salaries, expected number of hours a week and the terms of employment (information about whether the employee is a salaried employee, blue-collar employee or trainee/ apprentice) for each employee. § The period for which compensation of wages and salaries is applied (the maximum period is from 9 March t0 8 July). § For each of the employees for whom compensation of wages and salaries is applied for, it must be stated, whether the undertaking receives other public refunds in relation to the employees concerned during the same period. § Statement of truth that the provided information is correct.
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Practical guide to compensation of wages and salaries to private undertakings
04. How do I apply for compensation of wages and salaries?
Application for compensation of wages and salaries, continued § The compensation of wages and salaries will be paid directly to the undertaking when the application is approved by the Danish Business
Authority. Compensation will not be paid out if the documentation submitted is insufficient. Payment of compensation is made directly to the undertaking’s Nemkonto. The compensation can be paid in advance. If an excessive compensation amount is paid in advance, the overpayment can be required to be repaid.
§ Not later that 6 months after the end of the compensation period, the undertaking must submit the following additional documentation:
§ The number of employees who have been sent home. The undertaking must provide documentation that the employees have been sent home
without work. The documentation must be accompanied by a certificate from a professional representative in the undertaking stating that the employees concerned have been sent home without work. If the undertaking does not have e professional representative, the undertaking must provide documentation that the employees have been sent home without work. § The actual periods during which the employees were sent home without work. If there is a difference in the duration of the employees actual and reported home sending period, including any interruption periods. § The undertakings contractual obligation to pay out wages and salaries. § That the undertakings payroll expenditure for the individual employee are not compensated in any other way during the compensation period, including receiving other public refunds. § That the undertaking did not dismiss employees for economic reasons during the compensation period. § If you are in doubt about whether compensation of wages and salaries is an option for your undertaking, we will be pleased to assist you.
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Practical guide to compensation of wages and salaries to private undertakings
05. FAQ
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Practical guide to compensation of wages and salaries to private undertakings
05. FAQ
FAQ Q: Do my employees have to consent to be send home in order for me to receive compensation of wages and salaries? A:
No, you can just send home your employees. However, we recommend that the works committee is informed and is involved in the process.
Q: The compensation of wages and salaries scheme does not cover my undertaking. Do I have other options? A:
Sending employees home without pay to the extent permitted under your collective bargaining agreement. Notification of remaining holidays and special holidays without notice. We note, that main holiday must still be notified with 3 months notice or as agreed. Note, that you actually agree on otherwise due to the Corona-crises. Division of labour where employees for a period work shorter and take a pay cut while receiving supplementary unemployment benefits. Dismissal of employees; note that the rules governing collective dismissals apply on unchanged terms.
Q: What happens if I dismiss employees during the compensation period? A:
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Compensation of wages and salaries ceases as per the date of the dismissals.
Practical guide to compensation of wages and salaries to private undertakings
06. Contact details and current updates
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Practical guide to compensation of wages and salaries to private undertakings
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05. Kontaktdetaljer og Løbende Opdatering om Nyheder
Current updates § We will provide current updates on the most important issues on our website, where you can also sign up for our updates https://gorrissenfederspiel.com/viden/nyhedsservice
Gorrissen Federspiel
Practical guide to compensation of wages and salaries to private undertakings
Contact us Jacob Sand Partner | Labour & Employment Law
D +45 86 20 74 04 M +45 24 28 69 09 jas@gorrissenfederspiel.com
Sabine Brandhøj Overgaard Attorney | Labour & Employment Law
D +45 86 20 74 63 M +45 24 28 68 59 sbo@gorrissenfederspiel.com
Gorrissen Federspiel
Practical guide to compensation of wages and salaries to private undertakings
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