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WORKING IN DENMARK

Danish government sues EU over minimum wage

Denmark’s government on Wednesday brought a case requesting annulment of the EU’s minimum wage directive.

Danish government sues EU over minimum wage
Denmark will seek to have the EU's minimum wage directive annulled by the EU Court. File photo: JOHN THYS / AFP

The Danish lawsuit was confirmed by the Ministry of Employment in a press statement.

The case was expected as it was part of the policy agreement for the coalition government, signed in December. The deadline to bring the case against the EU Court in Luxembourg was Wednesday.

An annulment suit is an attempt to have the directive revoked on the grounds that it is in breach of the EU Treaty.

An EU directive on minimum wages was adopted in October last year but Denmark and Sweden are both opposed because of the established labour models in those two countries, by which wages are set through negotiations between trade unions and employers.

The EU Commission has stated that it will respect the Danish model and will not force the country to code a minimum wage into law, but the Danish government wants the directive to be removed completely.

READ ALSO: Why is Denmark opposed to an EU minimum wage law?

“It’s important to underline that the directive does not force Denmark to introduce a minimum wage,” Employment Minister Ane Halsboe-Jørgensen said in the statement.

“But despite that, this is a case of legislation without precedent, which makes it a principal case. We insist that wages must be set in Denmark and not the EU,” she said.

“The government has therefore decided that the EU Court must rule on this case,” she said.

The ministry said the process could take up to two years. The date on which the case will be taken up by the EU Court is yet to be set.

The directive sets an EU-wide minimum wage. The intention is that workers are given a fair minimum wage either by law or through collective bargaining.

The directive includes a requirement for member countries to produce an action plan if collective bargaining agreements cover less than 80 percent of working terms in the relevant country.

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WORK PERMITS

EXPLAINED: Why Danish businesses want to scrap bank account work permit rule

The Confederation of Danish Employers is pushing for an end to a rule that means the salaries of foreign employees must be paid into a Danish bank account.

EXPLAINED: Why Danish businesses want to scrap bank account work permit rule

What is the background to the banking rule? 

The rule was first introduced in 2017 by the Liberal (Venstre) Party minority government, but was then extended by the Social Democrats to cover practically all employees working in Denmark from outside the European Union. 

When the rule was proposed, the government said requiring all payments to be made to an account in a Danish bank would “strengthen the possibilities for Danish Agency for International Recruitment and Integration (SIRI) to check if an employee is in fact receiving the salary promised in their employment contract”. 

Under the rule, a bank account needs to be set up within 90 days of the residence permit being granted or the employee entering Denmark. 

Why is it a problem? 

It can take months for a new arrival in Denmark to get a Danish bank account, as they first need to get a residency permit, then a CPR number, a Danish address, access to the MitID digital identification service, and a health insurance card. 

As a result, business organisations have argued that bureaucracy means they can sometimes go for months without a salary.

“For employers, it is extremely stressful to have highly educated and highly qualified employees they would like to retain in their new position, but they cannot pay their wages,” Rikke Wolfsen, head of the Danish immigration practice at EY, told the Politiken newspaper. “As for the employees, companies have told us that some just say, ‘well, I can’t do that, this. There are other countries in the EU where I avoid all that hassle’.” 

According to a survey by the Confederation of Danish Industry (DI), 84 percent of Danish companies said that international employees had problems getting a Danish bank account. 

Søren Kjærsgaard Høfler, a consultant at DI, argued in comments to Politiken that SIRI could check that the right salary was being paid through the Danish Tax Agency’s digital reporting system, eIndkomst, making the extra security of requiring Danish bank accounts unnecessary. 

In addition, he said he knew of no other country that had a similar requirement. 

Who wants to get rid of the bank rule? 

Denmark’s three major business organisations, DI, the Confederation of Danish Employers, and the Danish Chamber of Commerce are all calling on the new three-party coalition to remove the rule in reforms to work permits expected to be announced later this month. 

“We have set something up which is quite simply pointless,” Erik Simonsen, deputy director of the Confederation of Danish Employers told Politiken, calling on the government to “remove this sort of thing, which only serves to make life more difficult.” 

Høfler said that DI “supported the companies in saying that we do not see any sense in this rule”. 

The Liberal Party, one of the three parties in Denmark’s new ruling coalition, has given its support to scrapping, or at least reforming, the rule. 

“Of course, we must take the messages we receive from the business community seriously when it comes to the fact that they do not think this makes sense”, Christoffer Aagaard Melson, employment spokesman for the Liberals, told Politiken. 

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