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Coronavirus: New temporary division of labour scheme has entered into force

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Legal news
calendar 25 September 2020
globus Denmark

The Bill on the new temporary division of labour scheme has entered into force on 14 September. The new scheme makes it possible for companies to initiate division of labour - irrespective of any provisions in collective bargaining agreements – until 31 December 2020 at the latest, with a duration of up to 4 months. The new scheme supplements the existing scheme on division of labour.

The new division of labour scheme acts as a replacement to the salary compensation scheme, which lapsed on 29 August 2020. The main objective of the new scheme is therefore to extend the transitional period by providing support to companies to avoid redundancies as a result of the expiration of the salary compensation scheme.

The new scheme makes it possible to initiate division of labour regardless of provisions in collective agreements, agreements on pay and working hours and other legal provisions. However, provisions in collective agreements, or other agreements or laws that do not interfere with the division of labour, are still applicable.

Under the new scheme, companies can initiate divisions of labour under certain conditions, including:

  • The employees’ working hours must be reduced to minimum 20 % and maximum 50 % of the agreed working time, calculated over a 4-week period.

  • The company must notify all employees, who can be included in the new scheme, of the initiation of the division of labour. In relation to this, the company must also mention the conditions that apply under the division of labour.

  • After the announcement, employees have 24 hours to inform the company if they want to participate in the scheme. Failure to provide a response, will result in the employees being included automatically. Based on the responses, the company must again notify the individual employees that the division of labour scheme has been put in force.

  • For companies, where the cooperation agreement, or similar agreements or The Information and Consultation Act are applicable, it is also a condition, that the company informs and consults with the employee representatives in accordance with the applicable rules.

  • If an employee refuses to be included in the new scheme, companies are eligible to dismiss the employee in accordance with the general rules.

  • Companies must pay a fixed employer contribution equivalent to the amount of three G-days every month per employee included in the division of labour. The contribution will be estimated proportionally and reduced if the company does not use division of labour for a whole calendar month.

Similarly, to the current division of labour scheme, it is not possible to terminate an employee that participates in the division of labour while the scheme is active, due to the reasons that originally caused the initiation of the division of labour.

According to the scheme, agreements on temporary division of labour can be made up until 31 December 2020 with a possibility of initiated divisions of labour going into 2021. Companies must notify the Job Center about the division of labour latest at the same time of the initiation of the division of labour. Companies can apply the new scheme for up to 4 months in total.

IUNO’s opinion

The new scheme, which has replaced the salary compensation scheme, is an option for companies that are still greatly affected by the coronavirus. Companies that wish to, or consider using the division of labour, should evaluate if the scheme will fulfil all their needs, and if the scheme will help the business difficulties that the company is facing.

IUNO recommends that companies are fully aware of what the implementation of the division of labour can mean for the individual employees, for example part-time employees, posted employees, employees with working visas, employees where Social Security and taxes can be affected or other similar conditions. Companies should always seek legal advice if ever in doubt.

 [Bill on access to implementation of a temporary division of labour scheme as part of the handling of covid-19 of 10 September 2020]

The new division of labour scheme acts as a replacement to the salary compensation scheme, which lapsed on 29 August 2020. The main objective of the new scheme is therefore to extend the transitional period by providing support to companies to avoid redundancies as a result of the expiration of the salary compensation scheme.

The new scheme makes it possible to initiate division of labour regardless of provisions in collective agreements, agreements on pay and working hours and other legal provisions. However, provisions in collective agreements, or other agreements or laws that do not interfere with the division of labour, are still applicable.

Under the new scheme, companies can initiate divisions of labour under certain conditions, including:

  • The employees’ working hours must be reduced to minimum 20 % and maximum 50 % of the agreed working time, calculated over a 4-week period.

  • The company must notify all employees, who can be included in the new scheme, of the initiation of the division of labour. In relation to this, the company must also mention the conditions that apply under the division of labour.

  • After the announcement, employees have 24 hours to inform the company if they want to participate in the scheme. Failure to provide a response, will result in the employees being included automatically. Based on the responses, the company must again notify the individual employees that the division of labour scheme has been put in force.

  • For companies, where the cooperation agreement, or similar agreements or The Information and Consultation Act are applicable, it is also a condition, that the company informs and consults with the employee representatives in accordance with the applicable rules.

  • If an employee refuses to be included in the new scheme, companies are eligible to dismiss the employee in accordance with the general rules.

  • Companies must pay a fixed employer contribution equivalent to the amount of three G-days every month per employee included in the division of labour. The contribution will be estimated proportionally and reduced if the company does not use division of labour for a whole calendar month.

Similarly, to the current division of labour scheme, it is not possible to terminate an employee that participates in the division of labour while the scheme is active, due to the reasons that originally caused the initiation of the division of labour.

According to the scheme, agreements on temporary division of labour can be made up until 31 December 2020 with a possibility of initiated divisions of labour going into 2021. Companies must notify the Job Center about the division of labour latest at the same time of the initiation of the division of labour. Companies can apply the new scheme for up to 4 months in total.

IUNO’s opinion

The new scheme, which has replaced the salary compensation scheme, is an option for companies that are still greatly affected by the coronavirus. Companies that wish to, or consider using the division of labour, should evaluate if the scheme will fulfil all their needs, and if the scheme will help the business difficulties that the company is facing.

IUNO recommends that companies are fully aware of what the implementation of the division of labour can mean for the individual employees, for example part-time employees, posted employees, employees with working visas, employees where Social Security and taxes can be affected or other similar conditions. Companies should always seek legal advice if ever in doubt.

 [Bill on access to implementation of a temporary division of labour scheme as part of the handling of covid-19 of 10 September 2020]

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Anders

Etgen Reitz

Partner

Søren

Hessellund Klausen

Partner

Kirsten

Astrup

Associate

Nina

Kumari

Associate

Cecillie

Cathrine Groth Henriksen

Associate

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