The Danish Government and the social partners have just entered into a tripartite agreement setting up a temporary salary compensation scheme for COVID-19-affected undertakings in all industries. In the week to come, the Government will put the scheme before the Danish Parliament.

Updated on 16 March 2020

Having negotiated with the social partners across the weekend, the Government at noon today introduced an aid scheme for the undertakings severely affected by the COVID-19 outbreak. The object of the aid scheme is to safeguard Danish jobs and to the widest extent possible avoid termination of employees currently under the threat of dismissal.  It is expected that the aid scheme will cover approx. 70,000 employees.

Wage compensation scheme – in outline
The wage compensation scheme will extend to employees employed in the private undertakings having been affected extraordinarily hard financially by COVID-19. One of the following conditions must, however, be met: 

  • The undertaking is facing having to give notice of termination to a minimum of 30% of its employees, or  
  • The undertaking is facing having to dismiss more than 50 employees.

The wage compensation scheme is structured as follows: 

  • Salaried employees: The compensation from the Danish State amounts to 75% of the salary of the employees in question (however, with a cap of DKK 23,000 per month per full-time employee covered by the scheme)
  • Hourly-paid employees: The compensation from the Danish State amounts to 90% of the salary of the employees in question (however, with a cap of DKK 26,000 per month per full-time employee covered by the scheme) 
  • The undertakings may be covered by the aid scheme for a maximum of three months 

The individual undertakings may only use the aid scheme if they waive their right to use the existing options to send employees home without pay. In continuation thereof, obtaining salary compensation is subject to the undertaking during the salary compensation period not dismissing employees for financial reasons.

The affected employees must have been hired by the undertaking before 9 March 2020. 

In addition, the scheme stipulates that the affected undertakings must continue to pay the employees in question in full. In this connection, it is important to bear in mind that participation in the aid scheme is subject to the employees in question being sent home and not performing any work. 

Furthermore, it is a condition for obtaining compensation under the aid scheme that the individual employee for whom the undertaking applies for salary compensation must use five days of holiday and/or time off in lieu of overtime pay in connection with the compensation period. 

In cases where an employee does not have any remaining holiday, time off in lieu of overtime pay or the like, the employee in question must take time off without pay or use holiday from the new holiday year. 

The undertakings thus cannot apply for salary compensation for these days.

Temporary measure
The aid scheme is of a temporary nature, which means that it will initially apply from 9 March to 9 June 2020. 

Practical matters
The undertakings must use to apply for compensation. It is expected that the undertakings will be able to apply beginning in the middle of week 13, and that the system will be ready to pay out the first amounts in salary compensation the following week.

In this connection, the undertakings must in their applications state, among other things, the number of employees the undertaking would otherwise have given notice of termination as a consequence of COVID-19. In the application, the individual employees must be registered with their civil registration numbers. 

In addition, it is proposed that the undertakings with the assistance of their auditors must subsequently be able to document that they have in fact sent the employees in question home during the period in which the aid scheme is in force.

Comments by Bech-Bruun
The many undertakings already now facing serious financial challenges as a consequence of COVID-19 should look into the extent to which they may be covered by the aid scheme.