Compensation pursuant to the Danish Employment Non-Discrimination Act must not always be measured on the basis of payroll costs

In a judgment delivered on 14 December 2022, the High Court of Eastern Denmark established that the usual principles for measuring compensation under the Danish Employment Non-Discrimination Act (forskelsbehandlingsloven) must be deviated from if, owing to the insignificance of the pay, they entail an amount of compensation so low that it will not have any "sufficiently deterrent effect".

The case pertained to the measurement of compensation under the Employment Non-Discrimination Act payable to a shop assistant who had been terminated due to reorganisation.

The shop assistant had a subsidised flexi job, working 2.5 hours a week, and received a monthly flexi-job wage from the municipality of DKK 18,489 in addition to the monthly pay from the employer of approx. DKK 1,550. At the time of termination, the shop assistant's length of employment was approx. two years.

The Danish High Court concurred that the employer had not fulfilled their duty to adapt  the workplace to the shop assistant and that the employment had consequently been terminated in violation of ss 2 and 2a of the Employment Non-Discrimination Act. The High Court also noted that the shop had hired another shop assistant who had been referred for working 30 hours a week. The High Court found that, as part of their duty to adapt the workplace, the employer could have opted to hire the referred shop assistant for less than 30 hours a week or otherwise opted to reduce the hours of one of the other shop assistants.

Next, the issue was whether the measurement of compensation under the Employment Non-Discrimination Act should be based on the wage provided for by collective agreement (i.e., the actual wage paid monthly by the employer plus the subsidised flexi-job wage) or the actual wage paid monthly by the employer without the addition of the subsidised flexi-job wage.

The High Court stated that the general basis for measuring compensation under the Employment Non-Discrimination Act is the guidelines evolving from case law applied in the event of termination of employment in violation of s. 9 of the Danish Equal Treatment Act (ligebehandlingsloven), according to which compensation is fixed at an amount corresponding to the salary for a specified number of months depending on the severity of the violation and the employee's length of employment. Accordingly, the general rule is that compensation must be measured on the basis of the wage actually paid by the employer.

However, the Employment Directive and CJEU case law require that the sanctions which may be imposed on employers must be effective, be proportionate to the violation and have a deterrent effect.

As a result, compensation in this case was assessed at a discretionary amount of DKK 30,000, which evidently was not based exclusively on the actual wage paid by the employer to the shop assistant.

Comments by Bech-Bruun

The judgment is interesting as it provides an example of deviation from the otherwise established rules for measuring compensation which, in this case, would have led to compensation corresponding to approx. nine months' pay.

Previously, in Danish Supreme Court judgments on the termination of pilots, we experienced a deviation in a downward direction, whereas in this case, the deviation from the rules has taken an upward direction having regard to the very low actual wage paid by the employer.

For more information

If you have any questions, please do not hesitate to contact Lise Lauridsen, Morten Ulrich or Sandro Ratkovic. You may also get in touch with your usual Bech-Bruun contact.