COVID-19: Agreement on phasing out the three-party agreement on salary compensation

WHAT DOES THE PHASEOUT MEAN?

The Government and the labour market parties have thus again agreed to extend the agreement on salary compensation. The original agreement came into force on 9 March 2020 and was applicable until 9 June 2020 but was extended until 8 July 2020 and is now extended until 29 August 2020. The parties agreed that the wage compensation will finally expire on 29 August 2020, which is why this is the last time that the scheme will be extended.

Companies must re-apply for the period after 8 July 2020 if they wish to continue being covered by the scheme. The Danish Business Authority publishes information on virksomhedsguiden.dk, where you can find information on how to apply for salary compensation.

WHAT ABOUT COMPANIES, THAT ARE STILL FORCED TO KEEP CLOSED AFTER 29 AUGUST?

It is agreed that the salary compensation scheme will continue to apply after 29 August to those companies, that are kept closed in the period after that date. The scheme will only apply to those companies that are prohibited from opening by Government order.   

The salary compensation scheme for these companies will not end, until they are allowed to be fully open again.  

SHOULD EMPLOYEES CONTRIBUTE IN THE NEW PERIOD?

Yes, employees must contribute during the period as before.

The wage compensation scheme will be spread over the industrial holiday season, where many companies are closed and where most employees spend their summer holidays. For that reason, it is a claim that employees must contribute with at least 3 weeks of employer-paid leave. The claim only applies to employees who have earned holiday in accordance with the vacation law. During this three-week period, the employer will not receive compensation.

Regardless of whether the employee has earned three weeks’ holiday, the employer will not receive compensation for the employee for a period of three weeks.  

If you need advice on the salary compensation scheme, or you have questions about other employment law matters, please do not hesitate to contact Lund Elmer Sandager’s specialists Partner, Attorney Michael Møller Nielsen, Attorney Julie Flindt Rasmussen or Assistant Attorney Marta Valgreen Knudsen.