Compensation to companies for salary expenses

(Updated on 30 March 2020)

The Danish government and the labour market’s parties have agreend on salary compensation to the companies in order to retain the employees’ employment relations in the companies during the challenging coronavirus-period.

The agreement applies to employees in all private companies that are exceptionally hard hit financially as a result of COVID-19 and thus face having to notify layoffs for:

• at least 30% of the employees, or
• more than 50 employees.

Employees are defined as follows: ”Workers with a steady, contractual relation to the company, employed before 9 March 2020 with a permanent place of work in Denmark”.

When calculating whether the 30% or the 50 employees respectively are complied with, heads are counted. It is not taken into account whether the employees are full-time or part-time employees.

The companies are granted a salary compensation from the state of the salaries of the employees in question if the do not notify the layoffs and if the employee does not work in the repatriation period. The following compensation is granted:

• For full-time employees, 75% of the salary of the employee in question, however a maximum of DKK 30,000 per month.
  • For part-time employees, the amount is reduced proportionally.
• For employees paid by the hour, the compensation amounts to 90%, however a maximum of DKK 30,000 per month per full-time employee. The same applies for trainees and apprentices.

The employees must also offer a form of compensation. They must waive five days’ of holiday or time off. If they do not have any holidays or time off, then they may be salary reduced for five days or use holidays for the coming holiday period (1 May – 31 August). If the employee is repatriated for a period shorter than three months, then the period is calculated without the right to receive salary proportionally.

The temporary compensation scheme will apply from 9 March 2020 through 8 June 2020.


Application

The companies must apply for compensation on the Danish Business Authority’s (”Erhvervsstyrelsens”) company portal Virk.dk

Basically, the companies can only apply for salary compensation once in the period from 9 March 2020 through 8 June 2020. If there is a need of more repatriations than first applied for, then a new application can be made.

It is not a requirement that compensation is applied for the same period for all repatriated employees. If it is expected that some employees are going back to work before the expiry of the three month’s period, then application can be made for a shorter period of time for these employees. If compensation has been applied for three months and an employee is called back to work before the termination of the period, then repayment of the excess compensation must be made.

In relation to a possible call back to the company, you should be aware that the compensation scheme can only be maintained when the number of repatriated employees at all times are at least 30% or at least 50 employees.

If layoffs are made after entering into the compensation scheme, then withdrawal from the scheme will be made from that date and there will be requirements of repayment for salary compensation regarding the period from the notice of layoffs. Possible layoffs can be made before entering into the scheme.

Compensation cannot be obtained for the period in which an employee takes holidays or time off.

Documentation requirements in relation to the salary compensation scheme:

• Salary compensation is paid based on the company’s information about the number of employees that should have been dismissed as a consequence of the Coronavirus / COVID-19 situation, but who are repatriated instead. Among other things, the information include the employees’ employment rate, the employees’ salaries, the period of repatriation, and sworn statement of the accuracy of the filed information.
• The company must state and motivate for which period they expect lack of work, however maximum over a period of three months from 9 March through 8 June 2020.
• The employees must be registered by CPR-number in the application.
• After payment of salary compensation, the company must document the salary level of the employees, that the employee has been employed prior to 9 March 2020, and that the company has repatriated the employees in question for the mentioned period. Among other things, the documentation must include certification from the possible professional representative that the employees in question have been repatriated. If there is no such, then the relevant professional organizations make objection if they do not find the documentation to be accurate.

The salary expenses that are compensated in this scheme cannot be included in the basis for calculation of compensation in other COVID-19 support schemes.
 

Verification of documentation

It is required that subsequently and possibly with auditor assistance, the companies must document that they have repatriated the affected employees in the mentioned period during which the scheme applies. In the subsequent audit, the employees must be registered by CPR-number.

Please do not hesitate to contact us if you have any questions to the above.