The Danish government and the Danish labour market parties have entered into a three-party agreement regarding financial help to COVID-19 crisis-hit companies. Such agreement is to help prevent collective redundancies, retain employees on the labour market and put them on paid leave during the period of shortage of work.
COVID-19 has affected several companies financially which leads to a great amount of uncertainty for both employers and employees. Employers face the choice of sending employees home with their usual salary or dismiss them in order to minimise financial losses for the company.
The Danish government and the labour market parties do not want to see many employees dismissed and in order to prevent collective redundancies in Denmark, Danish employers are given the opportunity to receive salary compensation if employees are put on paid leave during the period of shortage of work instead of being dismissed.
All companies in the private labour market can apply for salary compensation, if crisis-hit and contemplate future collective redundancies of a minimum of 30% of their employees or more than 50 employees.
The temporary compensation scheme will be effective from 9 March until 9 June 2020.
If a crisis-hit company has contemplated to dismiss 30% of its employees or more than 50 employees and instead put them on paid leave, the company will be entitled to receive the following compensation:
A crisis-hit company must meet the following requirements to obtain salary compensation:
If the company meets the above requirements, salary compensation of up to 75% or 90% can be paid to the company, however, up to a maximum of the salary ceiling of DKK 23,000 and DKK 26,000, respectively.
Every employee subject to salary compensation must take five days of 5 holiday during which the employer will not receive salary compensation. If the employee does not have any remaining holidays to take, the employee must take time off in lieu of unpaid overtime or special holidays. To the extent the employee has no such leave left, the five days of leave must be paid by the employee.
The employer must apply for payment of salary compensation through the Danish self-service solution on www.virk.dk. Expectedly, employers can request salary compensation from week 13 with payment from week 14.
Salary compensation will be based on the company’s information of employees who faced collective redundancies due to the COVID-19 crisis. The company must state the period in which it expects a shortage of work, however, the period cannot exceed a period of three months – from 9 March 2020 to 9 June 2020.
Each company must document having put the relevant employees on paid leave during the period specified above.
PwC will be updating this article on an on-going basis.