Part-time pay for corona-hit companies: here’s how Denmark’s new wage scheme works

Part-time pay for corona-hit companies: here’s how Denmark’s new wage scheme works
Photo: Henning Bagger/Ritzau Scanpix
Employers in Denmark can apply to send staff home for 20-50 percent of their normal working hours, with wages compensated by the government, under a new scheme to help firms affected by the coronavirus crisis.

The new scheme replaces a former wage compensation scheme which expired at the end of August.

READ ALSO: New scheme replaces Danish wage compensation for corona-hit firms

The government, unions and employers' representative organisations have reached a tripartite agreement on a new structure designed to enable companies to keep as many employees on their books as possible despite reduced activity.

A new arrangement termed ‘workload sharing’ (arbejdsfordelingsordning in Danish) forms the basis for the agreement.

By ‘workload sharing’, the scheme enables companies to share available work between employees when there is less to do than under normal circumstances.

That allows, say, two employees to be retained even though operations are only at 50 percent of capacity, because both employees can be sent home 50 percent of the time and receive full pay, with the government scheme covering costs.

As such, working hours can be reduced for employees without the employees losing earnings.

Unemployment insurance benefits (called dagpenge in Danish) are paid out to cover the missing hours of work. These are not the same as regular dagpenge – for which an individual must be a member of a provider and applies themselves when out of work.

Under the scheme, employers apply for their staff to be covered by the send-home pay provided by the new agreement.

The aim of the agreement – which actually expands on an existing provision – is to prevent redundancies in the private sector, DR writes.

How much must I work or not work to qualify for coverage?

In order for a company to use the scheme, an employee must be sent home for at least 20 percent of their regular hours. There is also a maximum limit of 50 percent, so the member of staff must still be working at least half of their normal hours.

If those criteria are fulfilled, the company does not have to pay wages for the ‘missing’ hours – but the employee will not be left completely out of pocket.

It will not be completely free for employers to send staff home part-time under the agreement.

Employers will have to pay some of the unemployment benefits on the days you do not work, specifically three full days of unemployment benefits during the period you are not at work.

This rule is the same as in the regular unemployment benefits system (where it is termed g-dage).

Are there limits on payouts?

Yes, although the rules are more forgiving than for regular unemployment insurance. The maximum monthly benefit under the scheme will be 23,000 kroner, significantly higher than the 19,000 kroner limit which applies for eligible unemployed people.

It’s important to note that if you are entitled to ‘regular’ unemployment insurance (through membership of a provider known as an A-kasse), then this is unaffected by the coronavirus-related scheme.

READ ALSO: Explained: Should I sign up with a Danish union and get unemployment insurance?

Normally, unemployment insurance (dagpenge) can be received for a maximum of two years within a three-year period.

But this rule does not apply under the work-sharing scheme: in other words, you will not be at a disadvantage regarding your regular A-kasse coverage if you are sent home under the work-sharing agreement.

Can anyone be covered by the scheme?

Payouts to A-kasse members, known in Danish as dagpenge, are funded in part by the state and in part by membership fees. If you are not a member, you will normally receive the more basic kontanthjælp should you become unemployed.

But the scheme for coronavirus-hit companies covers all employees, so provided you are an employee of an eligible Danish company, you can receive the wage coverage if sent home part-time.

For how long will the arrangement be in effect?

The new scheme will take effect as soon as possible and will apply until December 31st.

For workload-sharing schemes that are already in place at New Year, the granting of an extension of up to four months into 2021 will be possible.

The signatories to the agreement are scheduled to meet again in November to discuss whether an extension to those dates may be needed.


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