Coronavirus - Temporary scheme on salary compensation for private companies

On Saturday, March 14, 2020, the government and the labour market parties entered into a new tripartite scheme on temporary salary compensation for employees in the private labour market who are under threat of dismissal. The scheme aims to protect Danish workplaces and to secure employees' livelihoods by providing normal salaries and retaining the relevant employees in the labour market.

(Updated 30 march)

The scheme

The new compensation scheme applies to private companies in all sectors that are extremely financially stretched as a result of COVID-19, and therefore face either having to notify large redundancies for at least 30 per cent of the total staff or more than 50 employees.

It appears from the scheme that the state grants salary compensation to private companies for the number of employees the company chooses to repatriate rather than dismiss. The state contribution for the employees concerned is:

• 75 per cent (maximum DKK 30,000) per monthly paid employed person.

• 90 per cent (maximum DKK 30,000) per hourly paid employed person.

The companies can receive partial reimbursement for salaries paid to repatriated employees during the period from March 9 to June 9, 2020. The scheme includes both full-time and part-time employees, if the employees concerned have been employed before the start date of the assistance package on 9 March 2020.

Obligations of the parties

As a contribution to applying the scheme, companies must commit not to notify redundancies and to dismiss employees for financial reasons during the salary-compensating period. In addition, it is a condition that the companies repatriate the affected employees with full salary and that the employees do not perform work during the repatriation period. In addition, it is a condition that the participating companies choose not to make use of existing remuneration options without salary.

The repatriated employees must, in response, use holidays and/or lieu days for a total of five days in connection with the compensation period. If the employee does not have holidays and/or lieu days corresponding to five days, the person must instead take leave without pay or use days from the new holiday year. The company does not receive compensation for these days.

Further process of the tripartite scheme

This week, the government will seek endorsement for the subsidy in the Danish Parliament, but this is expected to be a formality. Furthermore, it is considered that the scheme is classified as state aid, which must therefore be notified to and approved by the European Commission in accordance with EU state aid rules.

You can read the scheme here (in Danish):

"Trepartsaftale om midlertidig lønkompensation for lønmodtagere på det private arbejdsmarked"

Read read the Danish Business Authority's guidance on using the scheme
(in Danish).

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