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Overview: The Danish government’s aid package for corona-affected companies and employees

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calendar 20 March 2020
globus Denmark

Major economic consequences have already been triggered by the outbreak of coronavirus which have and will continue to result in significant declines in turnover and redundancies. In an attempt to mitigate the serious consequences currently affecting the labour market, the Danish government has – together with the social partners - introduced several measures to save companies and employees from bankruptcy and termination. 

As the outbreak of coronavirus (COVID-19) continues in Denmark and the rest of the world, the Danish government has introduced a series of measures. With the new aid package, the Danish government is attempting to shield companies and employees to the extent possible from the large-scale economic consequences triggered by the continuous spreading of the infectious disease. We are taking a closer look at the different measures here: 

Tripartite agreement: Temporary salary compensation scheme

In co-operation with the social partners, the Danish government has introduced a temporary salary compensation scheme which will apply to companies extraordinarily affected by the outbreak which would otherwise have terminated at least 30 % of its workforce or more than 50 employees. Contrary to other schemes, there is no requirement for the agreement to be introduced by collective bargaining agreement or a collective agreement. It’s expected for the scheme to be adjusted so that special terms will apply for employees in the hotel- and restaurant business. Read more to understand if your company is eligible to participate in the scheme here.

Reimbursement from the first day of sickness when sickness or quarantine is due to coronavirus

Further, the Danish government has also decided to suspend the 30-day employer period if the employee becomes sick with coronavirus or is quarantined pursuant to the decision of the Danish health authorities. To benefit from the scheme, it’s necessary to secure documentation of the employee’s sickness by obtaining a solemn declaration determining that the employee had a realistic assumption that the sickness was caused by the coronavirus. As usual, the company must also apply for reimbursement. The new scheme will apply until 1 January 2021.

Increased flexibility for agreements on division of work

The Danish government has also decided to increase the flexibility for agreements on division of labour. This will allow companies to adapt more easily to the current situation and consequently, avoid proceeding to terminations. Pursuant to the new increased flexibility, the agreement on division of labour can be initiated as soon as it’s reported to the local job center. At the same time, the Danish government will also allow the agreements to shift between the types of work being performed to adaptations to production can happen faster.

Further measures

Besides for the schemes intended to cover costs relating to employees, the Danish government has introduced several measures to help companies with covering other costs, such as:

  • Postponed payment deadlines for VAT, labour market contributions, A-income and B-income
  • Loans from banks and credit institutions
  • New guarantee schemes
  • Salary compensation scheme for self-employed
  • Compensation for small and medium-sized companies for loss of turnover

Many of these schemes do not have a direct impact on the companies’ costs to the employees but should naturally be included in the companies' overall considerations in relation to the opportunities for support.

[L 134 "Bill on the temporary postponement of payment deadlines for contained A-income and labor market contributions, as well as temporary postponement of declaration- and payment deadlines for VAT, etc." passed on 17 March 2020 and L 135 "Proposal for changing the Sickness Benefit Act” passed on 17 March 2020]

As the outbreak of coronavirus (COVID-19) continues in Denmark and the rest of the world, the Danish government has introduced a series of measures. With the new aid package, the Danish government is attempting to shield companies and employees to the extent possible from the large-scale economic consequences triggered by the continuous spreading of the infectious disease. We are taking a closer look at the different measures here: 

Tripartite agreement: Temporary salary compensation scheme

In co-operation with the social partners, the Danish government has introduced a temporary salary compensation scheme which will apply to companies extraordinarily affected by the outbreak which would otherwise have terminated at least 30 % of its workforce or more than 50 employees. Contrary to other schemes, there is no requirement for the agreement to be introduced by collective bargaining agreement or a collective agreement. It’s expected for the scheme to be adjusted so that special terms will apply for employees in the hotel- and restaurant business. Read more to understand if your company is eligible to participate in the scheme here.

Reimbursement from the first day of sickness when sickness or quarantine is due to coronavirus

Further, the Danish government has also decided to suspend the 30-day employer period if the employee becomes sick with coronavirus or is quarantined pursuant to the decision of the Danish health authorities. To benefit from the scheme, it’s necessary to secure documentation of the employee’s sickness by obtaining a solemn declaration determining that the employee had a realistic assumption that the sickness was caused by the coronavirus. As usual, the company must also apply for reimbursement. The new scheme will apply until 1 January 2021.

Increased flexibility for agreements on division of work

The Danish government has also decided to increase the flexibility for agreements on division of labour. This will allow companies to adapt more easily to the current situation and consequently, avoid proceeding to terminations. Pursuant to the new increased flexibility, the agreement on division of labour can be initiated as soon as it’s reported to the local job center. At the same time, the Danish government will also allow the agreements to shift between the types of work being performed to adaptations to production can happen faster.

Further measures

Besides for the schemes intended to cover costs relating to employees, the Danish government has introduced several measures to help companies with covering other costs, such as:

  • Postponed payment deadlines for VAT, labour market contributions, A-income and B-income
  • Loans from banks and credit institutions
  • New guarantee schemes
  • Salary compensation scheme for self-employed
  • Compensation for small and medium-sized companies for loss of turnover

Many of these schemes do not have a direct impact on the companies’ costs to the employees but should naturally be included in the companies' overall considerations in relation to the opportunities for support.

[L 134 "Bill on the temporary postponement of payment deadlines for contained A-income and labor market contributions, as well as temporary postponement of declaration- and payment deadlines for VAT, etc." passed on 17 March 2020 and L 135 "Proposal for changing the Sickness Benefit Act” passed on 17 March 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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