New COVID-19 initiative: Tripartite agreement on compensation of wages and salaries to private undertakings 15 March 2020
Gorrissen Federspiel
01. Background
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Trepartsaftale om lønrefusion til private arbejdsgivere | 15. marts 2020
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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 is expected to be adopted by the Danish Parliament next week.
The agreement is entered into on 14 March 2020 and must be administrated by the Danish Business Authority.
Read more about the agreement by following this link, where the entire agreement and fact sheets are available:
https://www.fm.dk/nyheder/pressemeddelelser/2020/03/trepartsaftale-skal-hjaelpe-loenmodtagere
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 9 June 2020.
Gorrissen Federspiel
Trepartsaftale om lønrefusion til private arbejdsgivere | 15. marts 2020
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01. Background
Tripartite agreement for compensation of wages and salaries to private undertakings – background
The employee retains his/her job and his/her full salary
The State pays 75% of the employee’s salary (max DKK 23,000) Gorrissen Federspiel
The undertaking pays 25% of the employee’s salary
The employee waives five holidays
Trepartsaftale om lønrefusion til private arbejdsgivere | 15. marts 2020
This example is for an employee with a monthly salary
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02. Conditions for entitlement to compensation
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Trepartsaftale om lønrefusion til private arbejdsgivere | 15. marts 2020
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02. Conditions for entitlement to compensation
Conditions for entitlement to compensation • The agreement covers private undertakings facing dismissal of at least 30% of its employees or more than 50 employees. Compensation of wages and salaries is an alternative to dismissal and is conditional upon the undertaking not dismissing employees for economic reasons during the compensation period, but instead sends employees home with salary. Dismissals justified by other reasons, such as for instance disloyal conduct can still be carried through. • The State pays compensation for wages and salary to undertakings for the number of employees, which the undertaking expects to send home instead of dismissing due to COVID-19. Undertakings con only use the new compensation scheme, if they waive existing options for sending employees home without salary.
Gorrissen Federspiel
Trepartsaftale om lønrefusion til private arbejdsgivere | 15. marts 2020
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02. Conditions for entitlement to compensation
Conditions for entitlement to compensation, continued
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.
The individual employee for which the undertaking seeks 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. The undertaking may purportedly give notice of additional holidays to be held in addition to the five days, which are a minimum requirement, and which are the salary earner's contribution to the overall tripartite agreement.
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.
Undertakings cannot receive compensation for the same costs under other COVID-19 schemes.
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Trepartsaftale om lønrefusion til private arbejdsgivere | 15. marts 2020
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03. How are undertakings compensated?
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Trepartsaftale om lønrefusion til private arbejdsgivere | 15. marts 2020
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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 23,000 per month per full-time employee. For hourlypaid employees, the state compensation constitutes 90%; however, maximum DKK 26,000 per month per full-time employee.
Undertakings may be covered by the scheme for a maximum of three 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.
Gorrissen Federspiel
Trepartsaftale om lønrefusion til private arbejdsgivere | 15. marts 2020
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04. Examples of compensation of wages and salaries
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Trepartsaftale om lønrefusion til private arbejdsgivere | 15. marts 2020
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04. Examples of compensation of wages and salaries
Example 1: Restaurant
A restaurant with 19 employees expects to give notice of dismissal and send home 10 employees due to the Coronavirus situation. The employees receive a monthly salary of DKK 25,000.
In this event, the restaurant receives DKK 18,750 in compensation from the State per employee sent home, corresponding to 75% of the employee’s salary. The employee retains his/her job and continues to receive his/her monthly salary of DKK 25,000. In connection with the compensation period, the employees that have been sent home must take five holidays. The compensation can be obtained for maximum 3 months.
Source: The Danish Ministry of Finance’s fact sheet
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Trepartsaftale om lønrefusion til private arbejdsgivere | 15. marts 2020
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04. Examples of compensation of wages and salaries
Example 2: Industrial scale factory
An industrial scale factory with 500 employees expects to give notice of dismissal and send home 60 employees due to the Coronavirus situation. The employees receive a monthly salary of DKK 34,000.
In this event, the employer obtains DKK 23,000 in compensation per employee from the State, corresponding to the maximum compensation. The employee retains his/her job and continues to receive his/her monthly salary of DKK 34,000. In connection with the compensation period, the employees must take five holidays. The compensation can be obtained for maximum 3 months.
Source: The Danish Ministry of Finance’s fact sheet
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Trepartsaftale om lønrefusion til private arbejdsgivere | 15. marts 2020
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05. Contact details and current updates
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Trepartsaftale om lønrefusion til private arbejdsgivere | 15. marts 2020
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05. Contact details and current updates
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
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Trepartsaftale om lønrefusion til private arbejdsgivere | 15. marts 2020
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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
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Trepartsaftale om lønrefusion til private arbejdsgivere | 15. marts 2020
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