COVID-19: New temporary three-party agreement on pay compensation and work-sharing in suffering companies

Extension of the work-sharing scheme

The temporary work-sharing scheme, which was originally scheduled to end on 31 December 2021, will be extended to 31 March 2022.

The work-sharing agreement involves that employers can share the work between its employees. The employees who do not work for the company will instead be able to receive unemployment benefits. In this way, the Government and the social partners expect that fewer companies will be forced to lay off their employees if there is not enough work because of Covid-19.

The existing rules on the temporary work-sharing scheme is therefore unchanged.

The new pay compensation agreements

Pay compensation for forcibly closed companies

The temporary pay compensation scheme for forcibly closed companies will be extended. This means that the forcibly closed company can send home employees on pay compensation without turnover.

The scheme applies to forcibly closed companies that are not allowed to stay open due to restrictions.

Temporary pay compensation scheme for afflicted companies  

As part of the three-party agreement, the parties have also agreed that companies that are severely affected can also receive pay compensation for laid off employees. This temporary scheme applies from 10 December 2021 to 15 January 2022.

To make use of this temporary scheme, it is a requirement that the company lay off at least 30% of its employees.   

It applies to both compensation schemes, that companies can not receive compensation for 3 days in the pay compensation period. This has been agreed as the compensation scheme period extends over the Christmas holidays.

There is no requirement for employees to take holidays, but holidays agreed before 10 December 2021 must be held as planned.

It is a condition that the company must pay full salary to the employees during the compensation period. The compensation constitutes 75% of the total pay costs for the salaries of covered salaried employees monthly pay, while the compensation constitutes 90% of the total monthly wage costs of covered non-salaried employees. However, the compensation can amount to a maximum of DKK 30,000.00 per month for each full-time employee.

It is a further condition for receiving pay compensation that the company does not dismiss employees who are financially justified during the pay compensation period. However, this does not mean that the company cannot dismiss the employee due to other circumstances, e.g., the employee’s breach of the employment conditions.

The cut-off date for when companies may last lay off employees is 9 December 2021. Companies can receive pay compensation for employees who were hired before 8 December 2021.

Read the entire three-party agreement on extension of temporary work-sharing scheme and pay compensation here.

If you have questions regarding the three-party agreement on the extension of the temporary work-sharing scheme and the pay compensation schemes, please do not hesitate to contact our employment law specialists Partner, Attorney Michael Møller Nielsen; Attorney Julie Flindt Rasmussen or Assistant Attorney Mina Faiz.