Below is an overview of some of the most important questions and answers affecting employers and employees in connection with the outbreak of COVID- 19 in Denmark, along with an overview of the issues that you as an employer also need to be aware of . If you are looking for an answer that is not listed below, you are welcome to contact Mette Klingsten Law Firm at tel. 31440100 or 31440102 and e-mail mk@mklaw.dk or mb@mklaw.dk . We will continue to update the information below .
1. Are employees entitled to wages whilst at home?
Salaried employees are entitled to regular pay if the company follows the authorities’ recommendation that people stay at home. If possible, the company may ask the employee to work from home during the period.
Hourly paid employees covered by the agreement can be sent home without salary, to the extent permitted by the agreement.
On 15 March 2020, the Government and the social partners concluded a tripartite agreement on a temporary salary compensation scheme for employees who are at risk of termination due to the extraordinary situation with COVID-19. The agreement gives companies that experience financial difficulties (due to a decline in orders and/or fewer customers) due to COVID-19, which subsequently results in them being unable to employ their employees, the right to partial reimbursement for expenses incurred for three months. The companies undertake not to dismiss employees for financial reasons during the period in which they receive the compensation.
All private companies can benefit from the scheme if they can demonstrate exceptional financial hardship as a result COVID-19 and therefore face having to make redundancies for at least 30 per cent. of the workforce or more than 50 employees. In those situations, the company receives a state salary compensation of 75 per cent. of the salaries of the employees concerned, subject to a maximum of DKK 30,000 per employee a month if they do not layoff or make redundancies. For hourly wage earners, the state wage compensation amounts to 90 per cent, but a maximum of DKK 30,000 per hour. month.
The Temporary Compensation Scheme applies from 9 March to 8 June 2020.
The individual employee for whom the company seeks salary compensation must use vacation and / or leave for a total of five days in connection with the compensation period. If the employee does not have holidays corresponding to five days, then they must take leave without pay or use holidays days from the new holiday.
If the company is faced with having to dismiss at least 30 per cent. of the employees, or at least 50 employees.
The companies must apply for compensation on the Danish Commerce Agency’s corporate portal VIR.dk.
Read more about the aid package at the link.
2. Can a company dismiss employees as a result of COVID-19? The possibility of reimbursement payments, cf. paragraph 1 above, lapses if the company dismisses the employees.
It is possible to dismiss employees on grounds of the company’s circumstances, including the company’s financial situation, and such redundancies will in principle be just if it can be documented that the company situation necessitated them. If it becomes necessary to lay off several employees, it should be noted that the rules of the Mass Reduction Act may apply if the statutory numbers are exceeded.
3. Can we require employees to take a reduction in hours or pay (significant job changes)?If the employee is covered by a collective bargaining agreement, there may be limitations to the changes that can be agreed with the individual employee.
Changes in the terms of a salaried employee that may lead to a decrease in salary and/or hours, as a rule, can only occur upon serving notice to which the salaried employee is entitled to in the event of termination. As an alternative such changes can be made with agreement from the salaried employee. Therefore, if the company cannot agree a reduction in hours and/or pay with the individual employee the change could only take place if the employee is notified with notice period given for termination.
4. Can the employee be required to take holidays?
The company may choose to notify holiday arrangements to an employee. At present, employees will only have residual leave remaining. Normally, residual leave must be notified at least 1 month before it starts (shorter notice may, however, be agreed in the contracts). The notification may be waived in the case of “special circumstances”.
Special circumstances are unpredictable operating conditions (a “milder” definition than force majeure).
For example, a company can send an employee on vacation without notice if they experience an acute raw material shortages or disruptions that could not be foreseen by the company with normal business insight.
Thus, in the current situation, it may be possible to notify holiday arrangements to employees with immediate effect if there is no relevant work in the workplace or if employee cannot work from home.
It can also be agreed with the employee that he or she is taking a holiday or unpaid leave without the need to notify them.
If the employee has already planned a holiday, for example in connection with Easter, it is recommended to abide by such agreement to the extent possible. If it is not possible to adhere to such an agreement, it follows from section 15 (1) of the Holiday Act. 3, that “If significant, unforeseen operational considerations make this necessary, the employer may change the previously stipulated holiday. The employee must be compensated for any financial loss as a result of the deferral. Holidays already started cannot be interrupted”.
The application of section 15 (1) of the Holiday Act. 2 and 3 will depend on a specific assessment and it is recommended to contact us if it is desired to apply the provisions.
It is noted that in cases where the company is compensated in accordance with point 1, in order to avoid redundancies, the individual employee must in return for the company receiving compensation take holiday and / or time off for a total of five days. If the employee does not have holidays, corresponding to five days, leave without pay or days from the new holiday year must be taken.
5. Illness and reimbursement
On 13 March 2020, the Government presented a bill on reimbursement of sickness benefits, which according to the schedule is expected to be adopted by the Parliament on 17 March 2020.
In accordance with the bill, the employer payment period of 30 days will be suspended so that sick pay becomes eligible for reimbursement from the first day of sickness if the employee is ill and incapacitated by COVID-19.
It also introduces a new right to reimbursement for the absence, in cases where the employee is unable to work because of COVID-19, but the employee still cannot go to work because of the authorities’ recommendations for specific groups to stay home because of COVID- 19.
6. Postponement of payment of A-tax
The Danish Minister for Taxation has introduced bill L 134, intended to help mitigate the financial consequences of the spread of coronavirus. Three tax initiatives are being taken to improve liquidity of businesses.
The initiatives are:
Postponed payment deadlines for payroll tax and labour market contribution, postponed VAT payment deadline for large businesses and increased limit for credit balance in the tax account
Under current rules, businesses must pay withheld payroll tax (“A-skat”) and labour market contribution in monthly installments. Small businesses must pay the installment on the 10th of the month following the settlement month. Large businesses must pay the installment on the last banking day of the month to which the income relates.
Large businesses are defined as businesses with a total payroll tax payment of more than DKK 1 million over a preceding 12 months period or a total labour market contribution payment of more than DKK 250,000 in the same period.
With the proposed bill, the payment deadlines for the installments in April, May and June are postponed by 4 months.
7. What does it mean for us with the closure of the borders?
With effect from 14 March 2020, non-Danish citizens and persons not resident in Denmark can only enter Denmark if they have a recognized purpose. The closure of the Danish borders is part of the attempt to contain the infection rates of coronavirus in Denmark. Therefore, persons with citizenship from abroad must expect to be rejected at the Danish borders, unless they have a recognized purpose for entry.
For an entry to be considered a worthy cause, the personal attendance must have a decisive character in the operation of the company.
Employees domiciled abroad can enter by presenting documentation for the employment. Such documentation may be an employment contract, employment certificate, paychecks or a letter from the company confirming that the employee must perform work for the company in this country.
It is recommended that meetings and travel be limited as far as possible or be conducted online / by telephone.
8. Should special measures be taken in respect of cyberattacks when employees work from home?
Several companies alreadt have seen IT criminals trying to exploit the outbreak of COVID-19 to scam employees working from home. There are genuibe concerns that this trend will increase with mass home working. Therefore, the government is now setting up a special cyber preparedness guidance that is intended to enhance the security of home-based businesses.
The Center for Cyber Security also states that companies and employees shall follow the following recommendations:
Thanks to the following contributors to the website: Steen Evald (photograph), Stine Heilmann (photograph), Count Pictures (video), Kunde & Co. A/S (design), WeCode A/S (coding)
