Tripartite agreement on compensation of wages and salaries for private undertakings

New COVID-19 initiative: Tripartite agreement on compensation of wages and salaries to private undertakings 15 March 2020

Gorrissen Federspiel

01. Background

Gorrissen Federspiel

Trepartsaftale om lønrefusion til private arbejdsgivere | 15. marts 2020

2

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

3

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

4

02. Conditions for entitlement to compensation

Gorrissen Federspiel

Trepartsaftale om lønrefusion til private arbejdsgivere | 15. marts 2020

5

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

6

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.

Gorrissen Federspiel

Trepartsaftale om lønrefusion til private arbejdsgivere | 15. marts 2020

7

03. How are undertakings compensated?

Gorrissen Federspiel

Trepartsaftale om lønrefusion til private arbejdsgivere | 15. marts 2020

8

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

9

04. Examples of compensation of wages and salaries

Gorrissen Federspiel

Trepartsaftale om lønrefusion til private arbejdsgivere | 15. marts 2020

10

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

Gorrissen Federspiel

Trepartsaftale om lønrefusion til private arbejdsgivere | 15. marts 2020

11

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

Gorrissen Federspiel

Trepartsaftale om lønrefusion til private arbejdsgivere | 15. marts 2020

12

05. Contact details and current updates

Gorrissen Federspiel

Trepartsaftale om lønrefusion til private arbejdsgivere | 15. marts 2020

13

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

Gorrissen Federspiel

Trepartsaftale om lønrefusion til private arbejdsgivere | 15. marts 2020

14

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

Trepartsaftale om lønrefusion til private arbejdsgivere | 15. marts 2020

15

Gorrissen Federspiel

København

Aarhus

Axeltorv 2 1609 København V

Silkeborgvej 2 8000 Aarhus C

T 33 41 41 41 F 33 41 41 33

T 86 20 75 00 F 86 20 75 99

Kontorer i København og Aarhus

Med stærke internationale forbindelser Gorrissen Federspiel

16