FAQ on the pay compensation scheme

The pay compensation scheme is in place to support those companies that experience exceptional financial hardship due to COVID-19 and face having to make redundancies of at least 30 per cent of the workforce or more than 50 employees as a result of the financial hardship. The scheme gives the company the right to temporary salary compensation from 9 March to 8 June 2020.

Below we answer some of the most frequently asked questions about the compensation scheme.

Is the right to salary compensation lost if at some point during the salary compensation period the company requests less than 30% of its employees to return to work?

It is possible to call a percentage of the salary-compensated employees back to work during the compensation period. However, if the company calls employees back to work, only salary compensation will be provided for those employees who do not return.

It is however a prerequisite for a claim of salary compensation under the scheme that the company face having to make 30% of the workforce or 50 employees redundant. Therefore, in order to continue to benefit from the compensation scheme the company, will need to continue to meet the scheme thresholds following the return of some of the employees to the workplace.

In cases where, for example, a fixed-term employment ceases or where an employee’s notice of termination expires during the return period and the company thereby falls below the 30% limit, it is still unclear whether the company will continue to be entitled to salary compensation.

Can employees be asked to work a flexible shift rotation and still receive salary compensation (rotation scheme)?

The compensation scheme cannot be used to allow flexible work rotations where employees are alternately at home and then at work to perform some work duties. To claim compensation the employees’ CPR numbers must be reported and not the total number employees thus preventing such flexible working arrangements.

However, companies have the opportunity to set one continuous period for each of the employees that the company expects to return to work. It is not a requirement under the scheme that the same period be reported for all affected employees.

Therefore, companies that already know at the time of application that they will need employees to return on a specific date during the compensation period can indicate at the time of application when they expect to recall the employees during the period. The amount of compensation will therefore be calculated on the basis of the period specified by the company rather than for the whole of the compensation period.

What happens if the company decided to terminate an employee whilst receiving pay compensation?

It is a prerequisite under that salary compensation scheme that during the salary compensation period the company does not terminate any employees due to financial reasons. The scheme is effectively a ban on dismissals for any employees and not just those comprised of the scheme for financial reasons.

However, the company can continue to terminate employees for reasons other than financial conditions, for example due to proven poor performance or under the 120-day rule.

Can the company terminate employees before joining the scheme?

Companies can still take advantage of the pay compensation scheme, even if the company has made redundancies as a result of COVID-19 prior to its entry into the scheme. However, salary compensation cannot be granted to employees that have been already made redundant, even if they are required to work during their notice period. If a termination made before the company’s entry into the scheme is withdrawn prior to the company’s entry, the company will however be able to receive salary compensation for employees who have been notified of dismissal.

There are no time requirements which prevent a company who have already made employees redundant from entering the scheme for other remaining employees.

Can only one salary compensation application be made?

The new order states that companies can, as a starting point, apply for salary compensation once during the three-month period from 9 March to 9 June 2020. Thus, the company must make an application for the entire period that it wishes to be covered by the scheme. However, if a shorter time period has been applied for and the company subsequently considers that an extension is needed, an application can be made again.

When should the five holiday days be held?

It is the employer who, after negotiating with the employee, determines when the period of 5 days holiday begins, during which period it will not be possible to receive salary compensation.

The holiday period must be placed proportionately over the compensation period, and the employer must, as far as possible, comply with the employee’s wishes in respect of the holiday period. For example, in a situation where the employee is not at work under the scheme for 3 months, the 5 days must be placed evenly over this period. Meaning that 2 of the days are placed in the first month, 2 days are placed in the second month, and 1 day is placed in the last month of the return period.

How to apply for temporary salary compensation?

Temporary salary compensation is applied for through this link .

When applying, specify the following in the application:

1. Proportion of employees to be repatriated (at least 30% or more than 50 employees).
2. PR number, salary and employment rate (if the employee is a full-time or part-time employee) for every employee subject to the scheme.
3. Period for which compensation is sought, as well as justification, eg lack of work.
4. Belief and promise from management that the information is accurate.

You can read more at this link from the Danish Business Authority’s guide to filling out the application for the salary compensation scheme .

If you are looking for an answer to a question not stated above, 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 updated the website regularly with news of the measures in connection with the outbreak of COVID-19.

Find the law on employers ‘and employees’ legal position in the compensation of companies in connection with covid-19 via the link here. The document is currently only in Danish, if you need help with the translation please get in contact with us.

Find order of salary compensation via the link here . The document is currently only in Danish, if you need help with the translation please get in contact with us.

Find document 117 via the link here. Document 117 has been amended with document 127, which you can find via the link here. The document is currently only in Danish, if you need help with the translation please get in contact with us.