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Denmark’s executive order on wage compensation to the private sector and guidelines on the application process

Written by
Norrbom Vinding, the largest labour and employment law practice in Scandinavia and the market leader in Denmark.
The Danish Ministry of Industry, Business and Financial Affairs has issued an executive order on the wage compensation scheme for private-sector employers. In addition, the Danish Business Authority has issued guidelines via ‘Virksomhedsguiden’ on the application process, which is now open.

Last week, the Danish government enacted a bill on wage compensation that puts into practice the agreement between the government and social partners regarding wage compensation for businesses which, as a consequence of the current economic landscape, are facing redundancies.

In addition to the act, the Ministry of Industry, Business and Financial Affairs has issued an executive order on the wage compensation scheme. The executive order lays down the maximum compensation amount, conditions for receiving compensation, payment of compensation, and rules on audit and repayment. Many of the issues regulated in the executive order were also presented during the bill’s passage through Danish parliament, including in the legislative material.

The executive order specifies that the basis for calculating wage compensation is the employee’s average pay, based on the higher average for the last three or 12 months, according to the enterprise’s reporting to the E-income register (‘eIndkomsregistret’). This will be of material importance to the calculation of some employees’ pay, as in a situation where an hourly worker has worked considerably more or fewer hours than usual in the last few months.

Further, business guidelines (‘Virksomhedsguiden’) on the application process for wage compensation have been issued by the Business Authority. According to these guidelines, the application process varies, depending on whether the employer applies for wage compensation for more or fewer than 25 employees. The guidelines also list examples of situations where applications may be subject to manual review, thus incurring additional processing time, which may have a heavy impact on the employer’s cash flow.

Finally, the Business Authority has opened the application process, so employers can now apply for wage compensation. Applications can be submitted via http://www.virksomhedsguiden.dk/ (in Danish only). According to the above-mentioned executive order, the final deadline for applying for wage compensation is 30 June 2020.