Options available to employers during COVID-19

The spread of COVID-19 and the related effects on society give rise to a number of questions from both employees and employers.

Below we will go through some of the most typical questions during the COVID-19 crisis as well as the measures which can be initiated by employers.

Should we make our employees redundant or put them on paid/unpaid leave?

Shortage of work may to a great extent cause companies to cut staff and such termination will be effected for operating purposes and therefore based on objective reasons.

The Danish government and the Danish labour market parties have entered into a three-party agreement in order to help employers retain employees instead of terminating their contracts due to financial difficulties.

If employers choose to retain their employees and put them on paid leave, they may apply for salary compensation. This applies to companies which may have to cut staff by at least 30% or more than 50 employees in total. In this case, they may apply for compensation for:

• Salaried employees: 75% of their monthly salary, however, maximum DKK 23,000 per month
• Hourly-paid employees: 90 % of their monthly wages, however, maximum DKK 26,000 per month

Follow this link for more information about salary compensation.

Employers who wish to retain their employees, however, putting them on temporary unpaid leave, may do so where provided for by a collective agreement. Some collective agreements offer a right to temporarily lay off employees during periods of shortage of work. Employees are, however, obliged to return to their jobs when required.

Are employers allowed to instruct employees to take holiday and time off in lieu?

Notice of holiday to be taken may be given at any time subject to the ordinary period of notice of the Danish Holiday Act. This implies that notice of the main holiday must be given at least three months in advance and notice of remaining holiday must be given at least one month in advance, provided, however, that special circumstances do not prevent this.

Special circumstances may be essential, extraordinary and unforeseeable conditions which are of vital importance to the operations of the business.

As a result of the Danish government’s decision to shut down large parts of the Danish society on 11 March 2020, there are in our view special circumstances which make it possible to permit exemptions to the ordinary period of notice of the Danish Holiday Act. Employers may therefore instruct employees to take holiday at one day’s notice to the extent that the employees have any remaining holiday and, in our opinion, the same applies to special holidays.

In case of periods of shortage of work, employers and employees may also agree that employees take time off in lieu. Under the present circumstances, it is our view that notice of time off in lieu can be given at one day’s notice.

If employers choose to apply for salary compensation instead of making their employees redundant, see the above, it is a requirement that employees take five days of holiday, special holiday or time off in lieu.

Work-sharing

As companies are in general very reluctant to terminate employees and as some of these companies would like for their employees to save accrued holiday for the coming summer holiday season, it often being quiet periods for some companies, an alternative to firing employees or giving notice of holidays may be to make a collective agreement about work-sharing. This step is primarily taken in companies subject to collective agreements, e.g. industrial companies, however, such work-sharing agreement can also be entered into in companies without collective agreements provided that all employees accept such agreement.

If a work-sharing agreement is entered into between an employer and the employees of a business, the employees accept to work shorter hours as, in this case, the present tasks will be distributed among the employees.

If a work-sharing agreement is concluded, the employees will work some days and be unemployed on other days. On days when the employees are unemployed, they will – provided they are full-time insured unemployment fund members – receive complementary unemployment benefits. The Danish government has decided to make the work-sharing scheme more flexible and it may thus be initiated as soon as notification has been given to the job centre. This implies a suspension of the present requirement according to which notification of a work-sharing agreement must be given to the job centre at least one week before the work-sharing scheme becomes effective.

A work-sharing agreement may as such only cover a period of 13 weeks. An extension of the work-sharing period must be approved by the Danish Regional Labour Market Council.

Further measures

Follow this link (in Danish) for more information about employees who are on sick leave or put in quarantine due to COVID-19, employers’ right to reimbursement and self-employed persons’ right to sickness benefits as a result of COVID-19.