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Denmark

January 15, 2021

By Anders Egten Reitz and Kirsten Astrup

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Denmark

KEY DEVELOPMENTS FOR 2021


 

Implementation of the EU Directive for posted workers

In Denmark, a draft bill for the implementation of the revised EU directive for posted workers was due to enter into force on 1 January 2021.

Pursuant to the draft bill, significant changes will be introduced to posted workers' conditions by amending the current Act. This includes, first and foremost, that the list of "hard core" conditions will be expanded to include accommodation and allowances or reimbursement of expenses to cover travel, accommodation, and food as well as an appropriate advance for such expenses. The new draft bill proposes to introduce a new maximum time period whereby employees posted for longer than 12 months (with a possibility of prolongation to 18 months) will be entitled to additional protection as they will be covered by additional working conditions. Prolongation can be made by notifying RUT on the day the employee has been posted for 12 months, at the latest. In this context, companies must be aware that these time periods cannot be circumvented by replacing one posted worker with another to perform the same work at the same place, as the posting will be calculated as one collective period. Moreover, the wording "minimum wage" was changed to "pay" to increase equal treatment for posted workers. To ensure that companies are aware of what should be considered as "pay," more detailed information will be published on workplacedenmark.dk.

The deadline for implementation was 30 July 2020. The rules will have retroactive effect and so, postings from 30 July 2020 and onwards will count in the collective posting period, if the posted employee carries out the same tasks at the same place when the rules enter into force.


 

New tripartite agreement extends the temporary division of labour scheme for 2021

The Danish Government and the social partners agreed to extend and supplement the temporary division of labour scheme, which was originally established as a substitute to the salary compensation scheme to prevent layoffs as a result of Coronavirus.

To initiate division of labour, companies must notify all affected employees. Following announcement, employees have 24 hours to inform the company if they want to participate in the scheme. Failure to respond will result in automatic inclusion. When applying the scheme, working hours can be reduced with minimum 20% and maximum 50% (or 80% for companies covered by a collective agreement) of the agreed working time, calculated over a four-week period. It requires at least two employees to establish a temporary division of labour in a company, department, or production unit.

Terminated employees can be required to continue working in a company or department covered by the scheme but working hours must be reduced so that the hours correspond to the division of labour scheme, and the employees must receive full pay. Companies could make use of the scheme throughout 2021, irrespective of whether the scheme has already been used in 2020.


 

New Act allows companies to test employees for COVID-19

The Danish Parliament recently adopted a new Act that will enable companies to test employees for COVID-19 and to receive the test result. With the new Act, former options to require employees to be tested for COVID-19 are thereby significantly expanded.

Before companies consider issuing requirements for testing, it is important to be aware that the Act contains several requirements and procedures. First of all, companies can only require employees to be tested for COVID-19 if it is objectively justified in order to limit the spread of the virus, including working environment considerations or significant operational considerations. Accordingly, testing could be considered as objectively justified if the reason is based on requirements from customers of the company's products that special precautions must have been taken against COVID-19. On the other hand, testing would not necessarily be considered as objectively justified if the employee is not in contact with humans or animals during the working day.

Besides testing having to be objectively justified, companies must also satisfy some additional requirements, including compliance with information and consultation requirements in accordance with applicable legislation and collective bargaining agreements. Further, companies must also provide employees with written information, ensure that testing is performed during working hours to the extent possible, as well as ensure that testing is carried out in a safe manner.

The new rules provided for an exceptional access to test for COVID-19 until 1 July 2021. The Act does not enable companies to require testing for antibodies to COVID-19 or other diseases and health information.

With thanks to Anders Egten Reitz and Kirsten Astrup of IUNO for their invaluable collaboration on this update.

 

KEY DEVELOPMENTS FOR 2020


 

New changes to the Holiday Act

From 1 September 2020, employees can take paid leave in the same year as they accrue it, in accordance with the new Danish Holiday Act. However, a transition period began from 1 January 2019, which affects how the holiday is accrued and taken until 1 September 2020. Amongst others, the transition period includes holiday accrued from 1 September 2019 to 31 August 2020, and is frozen in a new special fund until the employee leaves the labour market, in order to prevent employees from accruing double the amount of holiday in the transition period. However, due to the COVID-19 pandemic, three out of five weeks of frozen holiday must be paid out no later than October 2020.


 

Changes to parental leave

The new EU directive on work-life balance recently came into force and introduces various new rules that significantly change the existing framework in Denmark. Pursuant to the new rules, fathers will obtain the right to at least 10 working days' of paternity leave around the time of the birth of their child, compensated at the level of sick pay as a minimum. Secondly, each parent will have an individual right to four months of parental leave, of which two months is offered exclusively to that parent and must be paid and will be non-transferable to the other parent. Under the previous law, parents could freely share paid parental leave between them. This often resulted in female employees taking all of the paid parental leave. Denmark and the other member states have three years to adopt the laws and administrative provisions necessary to comply with the directive. However, parental leave reflecting the new rules can already be seen in several collective bargaining agreements.


 

Revision of the Posting of Workers Directive

The revised Posted Workers Directive aims to enhance working conditions, combat social dumping, ensure equal pay, avoid the exploitation of cheap foreign labour and ensure fair competition. One of the main changes under the directive is that posted workers will only be subject to certain minimum labour rules in the host member state to the extent that they are in favour of the posted workers, for a period of up to 12 months (although it is possible to extend this to 18 months). If the period exceeds 12 (or 18) months, all mandatory labour rules of the host member state will apply (with the exception of the rules relating to termination), including those relating to non-competition clauses and supplementary occupational retirement pension schemes. Denmark and other member states have until 30 July 2020 to implement the directive.

 

KEY DEVELOPMENTS FOR 2019


 

New holiday Act to come into force

Pursuant to the new Danish Holiday Act, from 1 September 2020, employees will be able to take paid leave in the same year that they accrue it. However, a transitional period began on 1 January 2019. During the transitional period, holiday accrued from 1 September 2019 to 31 August 2020 will be frozen in a new special “fund” until the employee leaves the labour market. This is to prevent employees from accruing double holiday. The new Act includes deadlines on the determination, reporting and payment of the amount into the new special “fund”, so companies will need to start preparing for the new system.


 

Increased focus on prohibition against sexual harassment on the workplace

Amendments to the Danish Equal Treatment Act came into force on 1 January 2019. The Act now expressly includes a prohibition against sexual harassment which was previously forbidden under case law. The courts can no longer focus on the culture of the workplace when assessing whether sexual harassment has occurred. The Act is likely to improve a harassed employee’s chances of succeeding in a claim against the employer.


 

New changes to the Stock Option Act

Amendments to the Danish Stock Option Act came into force on 1 January 2019. The amendments introduce substantial changes to the Act, including an increased freedom of contract in stock option plans. Previously, under the Act “good leavers” could maintain options and warrants, which have been granted, but not yet exercised, while “bad leavers” do not. “Good leavers” also had the right to a proportional share of the grant if they had been employed at the end of the fiscal year or at the time of the grant. The amendments provides that parties can agree that “good leavers” will forfeit the right to options and warrants, which have been granted but not yet exercised. The amendments also includes regulation regarding the repurchase of stock and shares which are subject to the Act.

It should be noted that the amendments were passed unchanged with only a few clarifications in the explanatory notes, so there may still be some situations or circumstances where the law is unclear.

 

KEY DEVELOPMENTS FOR 2018


 

New Holiday Act

A new bill on The Danish Holiday Act Committee has been proposed. The main change is to introduce “concurrent holiday”, whereby all employees can take paid leave in the same year as they accrue it.

Leave will accrue from 1 September to 31 August (the holiday year). Employees will be entitled to take the leave during the period of 16 months from 1 September in the same year to 31 December in the subsequent year (the “leave period”).


 

Cases on Discrimination

As a result of the European Court of Justice’s judgment in Ring and Werge cases (C-335/11 and C-337/11) and cases before the national courts, the definition of disability has been broadened significantly. Companies with employees on long-term sickness should therefore carefully consider if the employee should be treated as having a disability.


 

Focus on Gender Inequality

The Minister of equality has recently launched a campaign which aims to make men aware of their right to take paternity and parental leave and to create a culture where paternity and parental leave are accepted. Paternity and parental leave have also been a focus area for the unions in the negotiation of collective bargaining agreements.

 

KEY DEVELOPMENTS FOR 2017


 

New Holiday Act

The EU commission has found the Danish Holiday Act is in violation of EU law. It is expected that the government will completely change the Act and the system governing holiday.


 

Data Protection Regulation

The Data Protection Regulation is expected to take up much attention during 2017 and 2018 for companies trying to prepare their compliance efforts Due to the high penalties under the Regulation, many companies need to take this much more seriously. For example, U.S. companies who have been more concerned about the SEC than the Danish Data Protection Agency (“DPA”), when doing internal investigations, whistleblower-hotlines, etc.

Even for those companies who have been compliant with current law, there are some new processes to implement such as reporting breaches within 72 hours, the use of consent and the requirement for DPA approvals, etc.


 

Making work more attractive

The Government is working on ways to make it more attractive to work. For example, there are plans to lower the income tax for top earners and efforts to lower unemployment benefits. There is also a new regime, which will make it easier to employ refugees on more basic terms of employment.

 

KEY DEVELOPMENTS FOR 2016


 

No automatic retirement

It is no longer possible to agree that the employee will automatically have to resign when the employee turns 70 years of age as this was deemed inconsistent with the general prohibition of age discrimination. In the future, a termination must be justified with the usual legal reasons such as the circumstances of the company or the conduct of the employee.


 

New rules on restrictive covenants

The law applies to employment agreements concluded on 1 January 2016 or thereafter and has introduced extensive changes to the previous system including reducing the employers’ ability to use non-compete and non-solicitation clauses. Furthermore, the new rules specify the maximum length of and minimum compensation paid for the restricted term.


 

A new law on the rules on taxation of share-based incentive plans for employees came into force in July 2016

There is a more favourable taxation of stocks received under employee stock purchase plans and rights to take up new shares in relation to share-based payment plans. If conditions are met, the employee will not be taxed at grant but instead when exercising. Furthermore, the tax will be calculated as taxation of shares instead of taxation of personal income.


 

New rules on reporting requirement for equal pay

The new law entered into force on 15 February 2016, and states that only companies with at least 35 employees, of which there are at least 10 of each sex, within the same work function shall report regarding equal pay.

With thanks to Anders Etgen Reitz and Kathrine Skøtt Jespersen of IUNO for their invaluable collaboration on this update.

Contributors

Image: Suzanne Horne
Suzanne Horne
Partner, Employment Law Department

Image: Kirsty Devine
Kirsty Devine
Associate, Employment Law Department

Image: Aashna Parekh
Aashna Parekh
Associate, Employment Law Department

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