The social partners and the government have agreed on a new work division scheme that improves the existing scheme in a number of areas. The new scheme will allow a temporary reduction of working hours and wages without having to terminate the affected employees, and the employees may enjoy (partial) compensation for the loss of wages in the form of supplementary unemployment benefits. The scheme is to be instrumental in avoiding terminations in connection with the expiry of the wage compensation scheme on 29 August 2020.
Adjustment of the work division scheme
On 27 May 2020 a group of experts recommended various measures to be taken in connection with the expiry of the COVID-19 aid schemes. The group suggested that the current division of work scheme, which is based on the availability of supplementary unemployment benefits while sent home, in various areas could be more appropriate when it comes to handling the economic situation that Denmark is currently in.
Now an agreement has been concluded on just such an adjustment of the work division scheme.
According to the agreement, the scheme will be established by law and then implemented as soon as possible. Initially, the scheme will apply for the rest of the year and will include areas covered by collective agreements as well as uncovered areas, which includes wage earners as well as salaried employees in the private sector.
Increased rate of unemployment benefits and fixed employers' contributions
As part of the agreement, the maximum rate of unemployment benefits will be increased to DKK 23,000 per month. That is just over 20 percent above the ordinary maximum rate of unemployment benefits. The increase is primarily financed by an employers' contribution corresponding to an amount covering three days of unemployment per month per employee under the scheme.
During periods when the employee is home on work division, he or she may complete supplementary training while receiving unemployment benefits. Further, employees involved in work division will not be spending their rights to benefits.
Non-ensured persons will also have access to the scheme, provided they join an unemployment insurance fund and pay their membership fees in arrears.
Application of the scheme
Enterprises wanting to apply the scheme must inform and consult with their employees about this in accordance with the rules applying to co-operation agreements, similar agreements or the Danish Information and Consultation of Employees Act (lov om information og høring).
When the scheme expires, the employees that were covered by the scheme will return completely to the rights by which they were covered before. Employees will remain employed and earn seniority in the usual manner in the period of work division. If an employee does not want to be involved in work division under this scheme, the enterprise will decide whether the employee is to be terminated.
Undoubtedly, the new work division scheme will be a sound alternative to termination of employment for more employees than before, as the rate of unemployment benefits has been increased.
The many enterprises that are financially challenged because of COVID-19 should thus consider whether exercising these measures will contribute to improve the situation now that the wage compensation scheme has expired.