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Workforce Flexibility and Government Incentives in times of Covid-19 - Denmark

Short-Term Work State Aid

Covid-19 Questionnaire

Are there any regulations in place providing an employer with possibility for flexible workforce planning such as part-time work/temporary leave which are triggered in a situation similar to a pandemic outbreak as Covid-19?

Yes

If YES on question 1, please describe which type of regulation. Please confirm if and to what extent such leave can be supported by state aid and/or other extra-ordinary governmental support.

The employer may choose to enter into a local agreement with a group of employees (all employees in the group must accept) on certain working time reduction/part time work ("arbejdsfordeling") with immediate effect during a period of 13 weeks. No redundancies must take place within this group of employees during the period. The employees will receive reimbursement from an un-employment union – if they are members – up to full time employment at certain rates. If the employer chooses to use this scheme - the employer is not entitled to get governmental support on the new special salary compensastion scheme. Further, If a collective bargaining agreement includes the right: blue-collar employees can be requested not to attend to work with immediate effect – with no payment – having the right to un-employment benefits if member of an un-employment union at a rate of up to DKK 19,000 per month

if YES on question 1, please describe which contacts that may need to be initiated with trade unions and/or works councils. Must a special process be followed?

Yes, if a collective bargaining agreement applies stipulating the possibility of part-time work the rules in the CBA must be followed. If no CBA applies, the part-time work must be entered into with a group of employees.

Are there any governmental programs if a company needs to close totally or partially for a certain time period?

New rules on temporary wage funding

The Danish government has passed a new resolution which entitles private companies to be temporary funded by the Danish government if the company contemplates redundancies of more than 50 employees or minimum 30 % of the workforce due to lack of work because of COVID-19.

The purpose of the funding scheme is to support employment and ensure that employees can retain their jobs and wages for a period of time despite of the deep economic downturns due to the COVID-19.

The companies can receive a temporary financial support from the state of an amount of up to 75 % of the monthly salary for a white-collar employees, but capped at DKK 23,000 per month per white-collar employee – and up to 90 % of the monthly salary for a blue-collar employee, but capped at DKK 26,000 per month per blue-collar employee.

The temporary funding scheme can be used by private companies from 9 March 2020 and until 9 June 2020 – thus, the scheme can be applied for retrospectively, in case the employer has, prior to 15 March, sent employees home with pay due to lack of work. The company can use the funding scheme for a maximum of 3 months.

It is a condition for financial support from the state that:

  • the employer pays the employee full salary during the period,
  • the employer do not dismiss employees for financial reasons during the period,
  • the affected employee was an employee of the company on 9 March 2020,
  • the affected employee must not attend work and must not work during the period and
  • the affected employee must pay 5 days him/herself during this compensation period – using accrued holidays and/or overtime.

Applications for compensation can be submitted to the Danish Business Authorities (Erhvervsstyrelsen) from week 13. Cash out is expected in week 14.

The temporary funding scheme cannot be combined with an agreement on certain working time reduction.

Agreement on certain working time reduction

A company may alternatively choose to enter into an agreement with a group of employees on certain working time reduction with the purpose to ensure that employees can retain their jobs.

By entering into such an agreement, the working time can be reduced in a temporary period of up to 13 weeks. No redundancies may take place within this group of employees during the period.

An agreement on certain working time reduction must be reported to the public employment agency. The Danish government has decided to make this scheme more flexible given the current situation. Therefore, the agreement on certain working time reduction can now enter into force as soon as the public employment agency has been notified. This will suspend the normal requirement for the agreement to be reported to the public employment agency no later than one week before it can enter into force.

The working hours must be reduced in one of the following ways for the agreement to be permissible:

  • At least 2 full working days per week,
  • 1 week of full time work followed by 1 week of unemployment,
  • 2 weeks of full time work followed by 1 week of unemployment or
  • 2 weeks of full time work followed by 2 weeks of unemployment.

Some employees are covered by collective bargaining agreements which may include provisions regarding the right to conclude an agreement on certain working time reduction. In other cases, the agreement on certain working time reduction must be concluded as an collective agreement covering a group of employees and it is a requirement that all employees in the group accept the agreement.

The employees may receive reimbursement from an un-employment union up to full time employment, however typically at hourly rates that are lower than the employee’s usual salary – provided that they are members of an un-employment union and provided they are entitled to receive reimbursement from the un-employment union according to the normal requirements.

24 March 2020 the Danish Government will pass a bill which entitles companies to be funded by the Danish government if the company contemplates redundancies of more than 50 employees or minimum 30 % of the workforce due to lack of work due to covid-19. The funding will amount to up to ¾ of the salary for a white-collar, however within a maximum of DKK 23,000 – and up to 90 % of the salary for blue-collar however within a maximum of DKK 26,000. The funding takes places with effect from 9 March 2020 and until 9 June 2020 provided that the employee has been employed with the company on 9 March 2020. It is a condition for payment of the funding that the employer pays the employee full salary during the period and the employee should not attend work and should not be entitled/obligated to work. The applications can be submitted to the Danish Companies Agency (Erhvervsstyrelsen) starting in the week 13. The employee must pay 5 days him/herself during this 3 months period – using accrued overtime or holidays. The employer will not be funded from the Danish Government if the employer during the funding period enforces redundancies (due to lack of work) or if the employer requires the employee to go home without salary or if the employer may choose the above mentioned part-time work scheme ("arbejdsfordeling")

If state aid and/or other extra-ordinary governmental support is available, please describe the necessary prerequisites to qualify for such state aid.

Please refer to 1 and 2

If state aid and/or other extra-ordinary governmental support is available, please describe the application procedure for such state aid (e.g. how and when is the application filed with the government etcetera; what shall such application include).

The employer can file with the Danish companies agency for the salary compensation funding above from week 13 and the funding will be paid out for the period 9 March-9 June 2020 if no redundancies, part-time work funding ("arbejdsfordeling") or home-sending-without-salary have taken place during this period.

Please note that the COVID-19 scenario is constantly changing and that this information is current as of 02 April 2020. This publication should not be regarded as offering a complete explanation of the legal matters referred to and is subject to changes in the law and other applicable rules.