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New tripartite agreement extends and supplements the temporary division of labour scheme

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Legal news
calendar 6 December 2020
globus Denmark

The Danish government and the social partners have agreed to extend and supplement the temporary division of labour scheme. This means that the scheme can be applied in 2021 although companies have already made use of it in 2020. The scheme was established as a substitute to the salary compensation scheme to prevent layoffs as a result of coronavirus.

The temporary division of labour scheme will be extended and adjusted with several changes and clarifications. We have previously described the key features in the new temporary division of labour here.

First and foremost, the changes will give companies the opportunity to make use of the scheme throughout 2021, regardless of whether the scheme has already been used in 2020. Moreover, the tripartite agreement includes:

  • The scheme will be more flexible by giving employer associations and unions the opportunity to agree that companies can reduce working hours within the concerned associations’ collective agreement area by up to 80 %. This is a significant increase from the current temporary scheme, in which companies can reduce the working hours by a maximum of 50 %

  • During the remainder of the working hours, employees covered by the scheme are laid off temporarily and eligible for unemployment benefit. Salaried employees covered by the scheme must be temporarily laid off for full days, unless other agreements are made in either the company or in the employees’ department. Companies that are not covered by a collective agreement, can make such an agreement with an employee representative. If there is no employee representative, the company can make an agreement with the majority of the group of employees covered by the scheme

  • It requires at least two employees to establish a temporary division of labour in a company, department or production unit

  • Terminated employees can be imposed to continue working in a company or department covered by the scheme. However, the employees' working hours must be reduced so that the hours correspond to the division of labour scheme, and the employees must receive full pay

  • If a short-term and unforeseen need for additional work occurs, companies can use replacements and reserves during the division of labour. However, it is a criterion that employees covered by the scheme, work in the same extent as before the working hours were reduced
    The tripartite agreement does not change existing rules in this area and does not apply to the existing division of labour scheme.

IUNO’s opinion

Even though the tripartite agreement will improve companies’ possibility to make use of the temporary division of labour scheme, it only allows companies covered by collective agreements to reduce working hours by up to 80 %. This means that companies that are not covered by a collective agreement are only able to reduce working hours by up to 50 %.

The fact that companies that are not covered by a collective agreement will be excluded from reducing working hours by up to 80% can have financial consequences for many of the affected companies and in worst case lead to terminations. It is unclear, and therefore cannot be excluded, that the new agreement conflicts with the so-called negative freedom of association, which will hopefully be clarified in connection with implementation of the agreement.

IUNO recommends companies to familiarize with the temporary division of labour scheme and to pay special attention to the consequences that an implementation of division of labour can have for the company and the individual employees. In case of doubt, companies should always seek legal advice.

[Tripartite agreement on the extension of the temporary division of labour scheme of 27 November 2020]

The temporary division of labour scheme will be extended and adjusted with several changes and clarifications. We have previously described the key features in the new temporary division of labour here.

First and foremost, the changes will give companies the opportunity to make use of the scheme throughout 2021, regardless of whether the scheme has already been used in 2020. Moreover, the tripartite agreement includes:

  • The scheme will be more flexible by giving employer associations and unions the opportunity to agree that companies can reduce working hours within the concerned associations’ collective agreement area by up to 80 %. This is a significant increase from the current temporary scheme, in which companies can reduce the working hours by a maximum of 50 %

  • During the remainder of the working hours, employees covered by the scheme are laid off temporarily and eligible for unemployment benefit. Salaried employees covered by the scheme must be temporarily laid off for full days, unless other agreements are made in either the company or in the employees’ department. Companies that are not covered by a collective agreement, can make such an agreement with an employee representative. If there is no employee representative, the company can make an agreement with the majority of the group of employees covered by the scheme

  • It requires at least two employees to establish a temporary division of labour in a company, department or production unit

  • Terminated employees can be imposed to continue working in a company or department covered by the scheme. However, the employees' working hours must be reduced so that the hours correspond to the division of labour scheme, and the employees must receive full pay

  • If a short-term and unforeseen need for additional work occurs, companies can use replacements and reserves during the division of labour. However, it is a criterion that employees covered by the scheme, work in the same extent as before the working hours were reduced
    The tripartite agreement does not change existing rules in this area and does not apply to the existing division of labour scheme.

IUNO’s opinion

Even though the tripartite agreement will improve companies’ possibility to make use of the temporary division of labour scheme, it only allows companies covered by collective agreements to reduce working hours by up to 80 %. This means that companies that are not covered by a collective agreement are only able to reduce working hours by up to 50 %.

The fact that companies that are not covered by a collective agreement will be excluded from reducing working hours by up to 80% can have financial consequences for many of the affected companies and in worst case lead to terminations. It is unclear, and therefore cannot be excluded, that the new agreement conflicts with the so-called negative freedom of association, which will hopefully be clarified in connection with implementation of the agreement.

IUNO recommends companies to familiarize with the temporary division of labour scheme and to pay special attention to the consequences that an implementation of division of labour can have for the company and the individual employees. In case of doubt, companies should always seek legal advice.

[Tripartite agreement on the extension of the temporary division of labour scheme of 27 November 2020]

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Anders

Etgen Reitz

Partner

Søren

Hessellund Klausen

Partner

Kirsten

Astrup

Associate

Cecillie

Groth Henriksen

Associate

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