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HR Legal

The government’s new initiatives on foreign labour

19 October 2018

The Danish government has recently presented a number of new initiatives to make it easier for Danish companies to employ foreign workers. Among other things, the new initiatives will introduce changes to the existing work permit schemes, including the Pay Limit Scheme, the Positive List and the Fast-Track Scheme.

The general purpose of the initiatives is to make the rules on employment of foreign labour clearer and more flexible. The government’s proposal consists of 21 initiatives and in this newsletter, we focus on some of the most important initiatives for companies that employ foreign workers.

Country-specific Pay Limit Scheme

First of all, the initiatives include changes to the Pay Limit Scheme. Under the current scheme, foreigners from third-party countries, meaning countries that are not members of the EU or the EEA, may apply for a residence and work permit via the Pay Limit Scheme, if they are offered a job in Denmark with an annual salary of DKK 418.000 or higher.

The Danish government wants to change this scheme, so that the threshold is reduced to DKK 330.000, if the foreigner comes from a third-party country which Denmark cooperates with in terms of investments. The government has made a list of 30 countries with the most investments in Denmark, including the US, China and Singapore, and for these countries the threshold will be lower than that for third-party countries not covered by the list. This means that the Pay Limit Scheme will be country-specific.

The purpose of this change is partly to improve Danish companies’ access to recruit foreign labour, and partly to strengthen the cooperation with the listed investment countries.

A broader Positive List

Secondly, the government wants to make it easier for Danish companies to recruit foreign employees via the Positive List. The Positive List consists of several positions within different occupational fields, where there is a shortage of skilled labour. Currently, a foreign job seeker can apply for a Danish residence and work permit, if he/she is offered a position which is included in the list.

In order to ensure a better connection between the list and the demand for labour, the government proposes that related positions should automatically be added, whenever a new position is added to the list. For example, if the position electrical engineer is added, the positions radio engineer, x-ray engineer etc. will also be added. The government also proposes that the regional labour market councils and certain unemployment funds should be able to add positions to the list.

It will still be a condition that the employment is based on usual, Danish terms of employment and salary.

More flexible Fast-Track Scheme

The government also plans to ease the conditions for using the Fast Track Scheme, which, among other things, makes it possible for certified companies to employ foreign labour without waiting for the administrative review of the employee’s residence and work permit.

Currently, a company cannot use the scheme, if the company has been convicted of violating the Danish Aliens Act (udlændingeloven) within the past two years. The current scheme is quite restrictive and there is a risk that companies become excluded due to minor errors, even though the companies try to abide by the rules. Therefore, the government proposes a shorter suspension period of one year.

According to the government’s proposal, companies should also not be denied or deprived of certification because of minor deviations from the requirements in the scheme. In the future, companies should therefore only lose their certification or be denied certification, if they have received three fines within a year or a fine of DKK 60.000 or DKK 100.000, depending on the company’s size.

Finally, the Fast-Track Scheme should not only be available to companies with 20 employees or more. The government plan that this requirement will be reduced to 5 employees for the benefit of small and newly established companies.

Other changes

The government’s proposal also includes a number of other initiatives with the purpose of making it easier for Danish companies to recruit foreign labour. Among other things, the government will simplify the rules on research workers and PhD students, remove the requirement for a Danish bank account, increase the penalty for employment of illegal labour and make it possible for foreign workers to change position within the company without applying for a new work permit.

IUNO’s opinion

If these different changes result in specific bills, it will make it easier for Danish companies to employ foreign workers, compared to the current rules.

The rules on employment of foreign labour are quite restrictive today and a lot of companies find the rules complex and rigid. Therefore, if the government manages to simplify the rules, we expect that it will benefit both the individual employer and the Danish business and industry as a whole.

According to the government’s legislative agenda, there are so far two bills on the way, which implement some of governments initiatives. The bills are expected to be introduced in February in connection with an amendment of the Danish Aliens Act.

We will follow any developments in relation to the initiatives and revert with updates.

[The Danish government’s initiatives on “Strengthened recruitment of foreign labour” of 3 October 2018]

The general purpose of the initiatives is to make the rules on employment of foreign labour clearer and more flexible. The government’s proposal consists of 21 initiatives and in this newsletter, we focus on some of the most important initiatives for companies that employ foreign workers.

Country-specific Pay Limit Scheme

First of all, the initiatives include changes to the Pay Limit Scheme. Under the current scheme, foreigners from third-party countries, meaning countries that are not members of the EU or the EEA, may apply for a residence and work permit via the Pay Limit Scheme, if they are offered a job in Denmark with an annual salary of DKK 418.000 or higher.

The Danish government wants to change this scheme, so that the threshold is reduced to DKK 330.000, if the foreigner comes from a third-party country which Denmark cooperates with in terms of investments. The government has made a list of 30 countries with the most investments in Denmark, including the US, China and Singapore, and for these countries the threshold will be lower than that for third-party countries not covered by the list. This means that the Pay Limit Scheme will be country-specific.

The purpose of this change is partly to improve Danish companies’ access to recruit foreign labour, and partly to strengthen the cooperation with the listed investment countries.

A broader Positive List

Secondly, the government wants to make it easier for Danish companies to recruit foreign employees via the Positive List. The Positive List consists of several positions within different occupational fields, where there is a shortage of skilled labour. Currently, a foreign job seeker can apply for a Danish residence and work permit, if he/she is offered a position which is included in the list.

In order to ensure a better connection between the list and the demand for labour, the government proposes that related positions should automatically be added, whenever a new position is added to the list. For example, if the position electrical engineer is added, the positions radio engineer, x-ray engineer etc. will also be added. The government also proposes that the regional labour market councils and certain unemployment funds should be able to add positions to the list.

It will still be a condition that the employment is based on usual, Danish terms of employment and salary.

More flexible Fast-Track Scheme

The government also plans to ease the conditions for using the Fast Track Scheme, which, among other things, makes it possible for certified companies to employ foreign labour without waiting for the administrative review of the employee’s residence and work permit.

Currently, a company cannot use the scheme, if the company has been convicted of violating the Danish Aliens Act (udlændingeloven) within the past two years. The current scheme is quite restrictive and there is a risk that companies become excluded due to minor errors, even though the companies try to abide by the rules. Therefore, the government proposes a shorter suspension period of one year.

According to the government’s proposal, companies should also not be denied or deprived of certification because of minor deviations from the requirements in the scheme. In the future, companies should therefore only lose their certification or be denied certification, if they have received three fines within a year or a fine of DKK 60.000 or DKK 100.000, depending on the company’s size.

Finally, the Fast-Track Scheme should not only be available to companies with 20 employees or more. The government plan that this requirement will be reduced to 5 employees for the benefit of small and newly established companies.

Other changes

The government’s proposal also includes a number of other initiatives with the purpose of making it easier for Danish companies to recruit foreign labour. Among other things, the government will simplify the rules on research workers and PhD students, remove the requirement for a Danish bank account, increase the penalty for employment of illegal labour and make it possible for foreign workers to change position within the company without applying for a new work permit.

IUNO’s opinion

If these different changes result in specific bills, it will make it easier for Danish companies to employ foreign workers, compared to the current rules.

The rules on employment of foreign labour are quite restrictive today and a lot of companies find the rules complex and rigid. Therefore, if the government manages to simplify the rules, we expect that it will benefit both the individual employer and the Danish business and industry as a whole.

According to the government’s legislative agenda, there are so far two bills on the way, which implement some of governments initiatives. The bills are expected to be introduced in February in connection with an amendment of the Danish Aliens Act.

We will follow any developments in relation to the initiatives and revert with updates.

[The Danish government’s initiatives on “Strengthened recruitment of foreign labour” of 3 October 2018]

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Anders

Etgen Reitz

Partner

Søren

Hessellund Klausen

Partner

Kathrine

Skøtt Jespersen

Senior associate

Kirsten

Astrup

Associate

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