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With a view to mitigating the negative financial consequences associated with COVID-19, the Danish Government has tabled an urgency bill on extended right to sickness benefits for self-employed persons and reimbursement of sickness benefits to the employers due to COVID-19. The bill proposes that the new rules are to be of a temporary nature and are to be in force until 1 January 2021. The bill is expected to be adopted on 17 March 2020.

Update on 17 March 2020. The Act has been adopted.

The current rules 
According to the current rules in the Danish Daily Cash Benefit Act (Sickness and Maternity) (sygedagpengeloven), the employer must as a main rule pay all expenses incidental to sickness benefits or sickness payments for the first 30 days of the period of sickness – also referred to as the employer's sick-pay liability period.  After the 30-day employer's sick-pay liability period, the employer is entitled to reimbursement of benefits from the employee’s municipality of residence, if the employee continues to be absent due to sickness. 

With respect to self-employed persons, it follows from the Daily Cash Benefit Act that they are entitled to sickness benefits from the municipality from the first day of absence following two weeks’ of sickness (the so-called uncovered sick-pay period).

The change - employees 
The employers may be entitled to reimbursement of benefits from the municipality as from the first day of sickness, if the following conditions have been met: 

  • the employee is incapacitated for work due to COVID-19, and 
  • the employee otherwise meets the conditions in the Daily Cash Benefit Act (e.g. the employment requirement). 

In cases where the employee is not incapacitated for work due to COVID-19, the bill proposes that the employer will still be entitled to reimbursement, if the employee is unable to perform work due to   

”… a recommendation from the health authorities for special groups to stay at home due to specific circumstances in connection with COVID-19”.

It is thus a condition that the employee belongs to one of the groups which the health authorities recommend should stay at home because of COVID-19, e.g. due to trips to specific areas in respect of which the authorities during a period recommended people to stay at home.

The employer will not be entitled to use the above arrangement, if the employer e.g. sends the employee home, because the employer believes that a risk of infection exists.

And finally, it is a condition that the employee is unable to perform his or her work due to the home stay.  

In this situation, it is also a requirement that the other conditions of the Daily Cash Benefits Act have been met (e.g. the employment requirement). 

Calculation and payment of reimbursement will be according to the general rules in the Daily Cash Benefit Act.

In case the employee works from home in full or in part, the right to sickness benefits will lapse in full or in part.

The change - self-employed persons
The tabled bill also proposes that a self-employed person is to be entitled to sickness benefits from the municipality during the first two weeks of sickness, if the self-employed person is incapacitated for work due to COVID-19. 

A self-employed person who is not incapacitated for work due to COVID-19 will still be able to get sickness benefits from the first day of absence if the person in question is unable to perform his or her work due to 

”… a recommendation from the health authorities for special groups to stay at home due to specific circumstances in connection with COVID-19”.

It is thus a condition that the self-employed person belongs to one of the groups which the health authorities recommend should stay at home because of COVID-19, e.g. due to trips to specific areas in respect of which the authorities during a period recommended people to stay at home.

And finally, it is a condition that the self-employed person is unable to perform his or her work due to the home stay.

In both situations, it is also a requirement that the other conditions of the Daily Cash Benefit Act have been met (e.g. the employment requirement). 

Calculation and payment of reimbursement will be according to the general rules in the Daily Cash Benefit Act. 

Other initiatives that could be considered by employers in order to limit the negative financial consequences associated with COVID-19

Division of work arrangements
Division of work arrangements make it possible to temporarily reduce the working hours in the collective agreement (e.g. due to a shortage of work). In such situation, the employees in question could receive supplementary unemployment benefits in the periods during which they are sent home.

It is a requirement that such division of work has been agreed in

  • a collective agreement, or
  • another collective agreement in which the undertaking and the employees in question agree to set up a division of work arrangement 

In addition, such division of work must be reported to the job centre no later than one week before taking effect.

On 12 March, the Danish Government announced that the rules on division of work arrangements would be made more flexible. 

In specific terms this means that the rules are changed so that a division of work arrangement can be put into effect as soon as it has been reported to the job centre. 

The question of notification of holiday 

It appears from the rules of the Danish Holiday Act (ferieloven) that the employer must give three months’ notice of the employee’s main holiday and one moth’s notice of the employee’s remaining days of holiday. 

The rules stipulated in the Holiday Act may, however, be derogated from in cases where special circumstances apply, e.g. in case of an event of an unforeseeable and extraordinary nature affecting the operation of the undertaking. 

It will always be subject to a specific assessment as to whether such special circumstances exist. 

In case COVID-19 has resulted in a very large and specific operational burden for the undertaking, the employees whose work is actually affected by the specific operational burden may be ordered to take holiday (subject to the employees still having days of holiday) without the employer having to observe the notification rules of the Holiday Act. 

Comments by Bech-Bruun
The many undertakings already now experiencing financial difficulties because of COVID-19 should on an ongoing basis consider whether application of the above measures and arrangements may contribute to alleviating the situation. At the same time, the employees (and possibly also works councils and collective bargaining organisations) should be included in these considerations on an ongoing basis.

As the situation involving COVID-19 develops, it certainly cannot be ruled out that the Danish Government will take further steps to mitigate the consequences for the Danish labour market.