In a judgment of 6 December 2024, the Supreme Court ruled that a secretary who resigned from his position due to the employer’s failure to pay salary was not entitled to compensation for unfair dismissal pursuant to section 2(b)of the Salaried Employees Act.
Facts of the case
The case concerned a secretary covered by the Salaried Employees Act, who was employed by a consulting engineering firm. The secretary had a period of sick leave in June 2018, following which there was a disagreement between the secretary and the company regarding the payment of wages during the sickness and possible set-off in connection with overpaid wages and bonuses (bonuses).
The company did not pay the secretary’s salary for August 2018.
On 14 September 2018, the secretary, with the help of Djøf, terminated his employment with the company based on the fact that the company had fundamentally breached the employment contract by not paying the secretary’s salary for August 2018.
The secretary then made a claim against the company for payment of the missing salary and for compensation for unfair dismissal pursuant to section 2(b) of the Salaried Employees Act.
The company was subsequently placed under bankruptcy proceedings, and the claims were reported to the Employees’ Guarantee Fund.
The Employees’ Guarantee Fund acknowledged the claims for the non-payment of wages, but the claim for compensation for unfair dismissal was not rejected. The Employees’ Guarantee Fund did not consider that section 2(b) of the Salaried Employees Act applied as the employment relationship was terminated by the secretary and not by the employer.
The secretary’s union then made a claim in the courts for compensation pursuant to section 2(b) of the Salaried Employees Act.
The Supreme Court’s decision
Pursuant to section 2b(1) of the Salaried Employees Act, an employer must pay compensation if the dismissal of a salaried employee is not reasonably justified by the employee’s or the company’s circumstances. The provision also applies in the event of unjustified summary dismissal, cf. subsection (3).
The Supreme Court held that the wording of the provision applies not only to the employer’s dismissal of a salaried employee, but also to circumstances in which the employer behaves in a manner that fundamentally breaches the contract entitling the employee to treat themselves as terminated by the employer.
The Supreme Court further stated that, considering the provisions of section 2(b) it must be able to apply where the employee resigns from employment in circumstances where the employer’s behavior amounts to an unjustified dismissal. The decisive factor in such situations is whether the employer’s breach of its obligations is such that it amounts to an act of harassment based on a desire to get the salaried employee to resign from his or her position.
The Supreme Court found on the facts of the case that prior to the secretary’s termination of the employment relationship, there were various disagreements between the secretary and the company, including regarding remuneration during illness and set-off of previously paid salary, etc. After an overall assessment, the Supreme Court found that the evidence did not support that the company’s non-payment of salary was conduct that amounted to a dismissal or intention to dismiss. The court found that the company’s breach in not paying salary was not motivated by a desire to get the secretary to resign from his position.
Therefore, the secretary was not entitled to compensation under section 2(b) of the Salaried Employees Act.
The High Court had reached the same conclusion.
Mette Klingsten Law Firm notes
Mette Klingsten Law Firm assists with advice on all aspects of employment law. For further information, please contact Mette Klingsten at mk@mklaw.dk or Mads Bernstorn at mb@mklaw.dk.
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)
