The government has enacted a bill on wage compensation for private sector employers. The bill reflects the agreement between the government and the social partners regarding wage compensation for businesses which, as a consequence of the current economic situation, are facing dismissals.(1)
In addition to the act, the Ministry of Industry, Business and Financial Affairs has issued an executive order on the wage compensation scheme. The executive order sets out:
- the maximum compensation amount;
- the conditions for receiving compensation;
- the payment of compensation; and
- the rules on audit and repayment.
Many of the issues regulated in the executive order were also presented during the bill's passage through Parliament, including in the legislative material.
The executive order specifies that the basis of calculating wage compensation is an employee's average pay calculated based on "the higher average for the last 3 or 12 months, cf. the enterprise's reporting to the E-income register". This will be important in the calculation of some employees' pay, for example where an hourly paid worker has worked considerably more or fewer hours than usual in the past few months.
Further, guidelines on the application process for wage compensation have been issued at https://virksomhedsguiden.dk. According to these guidelines, the application process varies depending on whether an employer applies for wage compensation for more or fewer than 25 employees. The guidelines also list examples of situations where applications may be subject to manual review and thus incur additional processing time, which may have a heavy impact on the employer's cash flow.
Moreover, the Business Authority has opened the application process, so employers can now apply for wage compensation. Applications can be submitted via https://virksomhedsguiden.dk (in Danish only). According to the executive order, the final deadline for applying for wage compensation is 30 June 2020.
Two issues which arose during the bill's passage through Parliament are particularly worth noting:
- The wage compensation scheme may be combined with pay cuts; however, the pay cuts must be agreed with employee representatives or a majority of the affected employees. On the other hand, such employees will not have to take days off on their own account during the period of being sent home, and they will thus be entitled to receive pay throughout the compensation period.
- The number days off during the period of being sent home when the employees do not receive pay but must instead take holiday or time off in lieu will be calculated on a prorated basis taking into account the duration of the period of being sent home. Employees who have been sent home throughout the duration of the wage compensation scheme (from 9 March 2020 to 9 June 2020) must therefore take five days off on their own account, whereas employees who have been sent home only for, for example, one month, must take time off on their own account corresponding to one-third of five working days (ie, 1.67 working days). Employers decide the timing of the holidays subject to agreement with an employee. If the employer and the employee cannot reach an agreement in this regard, the days will be distributed proportionately over the entire period.
In addition, a number of questions have been raised and answered in the process, and this has helped to clarify various aspects of the wage compensation scheme. For example, even though employees' duty to work is suspended during the period of being sent home, this period must still be included when calculating their period of continuous employment. Further, employees will be entitled to terminate their employment relationship in a situation where they have been sent home and, in such case, the employees will still take part in the scheme.
Further, during the compensation period employers may require the employees to resume work subject to one day's notice and the employees will resume the duties and responsibilities applicable at the time of being sent home.
Finally, some uncertainty as to the scope of the wage compensation scheme still exists; therefore, employers should administer the scheme in such a way so as to ensure that they do not lose their entitlement to receive compensation under the scheme.
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