Employment 2020

Last Updated September 08, 2020

Denmark

Law and Practice

Authors



KPMG Law Firm is an independent Danish law firm within the KPMG network, specialising in tax dispute prevention and resolution, employment law and mobility. With its Global Legal Services Network, KPMG Law is also part of a worldwide network in the legal sphere. This enables its experts to draw on the legal advisory services of over 2,400 colleagues in 80 countries and co-operate with leading foreign law firms. KPMG Law was established in 2020 and is based in Copenhagen and Aarhus.

There have been no major changes in Danish employment law during the last 12 months.

However, on 1 September 2020, a new Danish Holiday Act enters into force; see 2.5 Other Terms of Employment.

The Danish government has enacted several measures to secure the Danish labour market during the COVID-19 crisis.

All of these measures are temporary and will lapse during 2020.

The most relevant measures entail that:

  • employers can receive reimbursement for the employees’ salary from 9 March 2020 until 29 August 2020, if certain criteria are fulfilled;
  • employers can receive compensation for paying salary during leave due to illness in a wider extent than normal; and
  • the possibility for employers and employees to enter into work force agreements – under which the employees' working hours and salary are reduced – has been extended.

Employees are normally subject to the Danish Salaried Employees Act (white-collar), a collective bargaining agreement (collective agreement) or an individual agreement (white-collar or blue-collar). 

A salaried employee (white-collar) performs, for example, office work, purchase or sales work, technical assistance or clinical assistance or management. If the employee performs such work for eight hours or more per week on average, the employee is subject to the Danish Salaried Employees Act. The Danish Salaried Employees Act contains the main regulation of the employment, including notice periods, severance pay, compensation in case of unreasonable termination, etc. If the salaried employee is not subject to the Danish Salaried Employees Act, the employee’s employment is regulated by the individual employment agreement. 

A blue-collar employee performs manual work. Often (but not always), blue-collar employees are subject to a collective agreement. Collective agreements contain the main regulation of the employment and vary depending on the area of work which the collective agreement covers. If a blue-collar employee is not subject to a collective agreement, the employment is regulated by the individual employment agreement only.

Fixed-Term Employments

An employee can be employed on a non-fixed-term employment agreement (indefinite) or fixed-term (definite) employment agreement.

A fixed-term employment agreement can be based on a specific date on which the employment lapses or on a specific project in which case the employment lapses upon completion of the project.

If an employee is employed on a fixed-term employment agreement, the employment is subject to the Danish Act on Temporary Employment. This act entails that employers are obligated to treat fixed-term employees equally to non-fixed-term employees and that an extension of a fixed-term employment must be based on objective reasons. Such objective reasons can be seasonal work, a substitute for employees on leave, an extension of a project, etc.

If the employer does not comply with the Act, the employer may be subject to paying a compensation to the employee.

Requirement in Connection to Employment Agreements

An employee, who performs work for more than eight hours per week, and who is employed for more than one month, is subject to the Danish Employment Contract Act.

This act entails that the employer must provide the employee with the following information in writing:

  • the name and address of the employer and the employee;
  • the expected workplace/s;
  • a description of the work assignments or the employee’s title;
  • the commencement date of the employment;
  • the duration of the employment (if fixed-term);
  • the employee’s holiday rights;
  • the parties' notice periods;
  • the employee’s salary;
  • the employee’s daily or weekly working hours; and
  • whether the employment is subject to a collective agreement and, if so, the parties that have entered into the collective agreement.

If the employee does not receive the above-mentioned information in writing within a month from the commencement of the employment or from the implementation of changes to the employment agreement, the employee will be entitled to a compensation between DKK1,000 to DKK25,000, depending on the severity of the breach. 

In Denmark, there is no general regulation of the employees working time.

However, the Danish Work Time Act entails that employees are not entitled to perform work for more than 48 hours per week on average over a four-month period and that employees – as a main rule – must have a break of 11 hours between each work shift. If the employer does not comply with this, the employees can be entitled to a compensation, which varies depending on the severity of the breach. 

Normally, a full-time employee performs work for 37 hours per week in Denmark.

An employer and employee are, however, entitled to agree that the employee performs work for less (part-time) or more than 37 hours per week. The parties can also agree on flexible working hours, overtime payments and the payments in regard to such work. Further, collective agreements – when applicable – contain regulation of the employees’ working hours, including flexible working hours, overtime pay, part-time working hours, etc, which the parties are obligated to comply with.

In Denmark, there is no statutory minimum wage. Therefore, an employer and employee are entitled to agree freely on the employee’s salary.

Collective agreements – when applicable – often contain minimum wages and minimum additional allowances.

An employer and employee are entitled to enter into a bonus agreement on a free basis. The parties are not obligated and there is no mandatory 13th month bonus/salary in Denmark. 

If a salaried employee, who is subject to the Danish Salaried Employees Act, has a bonus agreement and the employee resigns during a financial year, the employee is entitled to a proportional bonus based on how long the employee was employed during the financial year. The same can be stipulated in a collective agreement or an individual agreement between the parties.

The Employee's Right to Holidays

In 2018, the Danish Parliament enacted a new Danish Holiday Act, which enters into force on 1 September 2020. Under the new Danish Holiday Act, employees accrue 2.08 holidays each month of employment from 1 September until 31 August the following year. These accrued holidays can be taken the month after they are accrued and until 31 December the following year. For example, employees accrue 2.08 holidays:

  • in September 2020, which can be taken from October 2020 until 31 December 2021;
  • in July 2021, which can be taken from August 2021 until 31 December 2021; and
  • in September 2021, which can be taken from 1 October 2021 until 31 December 2022.

The Employee's Right to Leave

Employees are entitled to pregnancy leave, maternity leave, paternity leave and parental leave under the Danish Act on Leave in connection with childbirth (barselsloven). This act entails that:

  • the mother is entitled to four weeks of pregnancy leave prior to the expected due date and 14 weeks of maternity leave after given birth, during which the mother is entitled to public benefits; 
  • the father or a co-mother is entitled to paternity/co-mother leave the first two weeks after the birth, during which the father/co-mother is entitled to public benefits; and
  • both parents are entitled to 32 weeks of parental leave (ie, collectively 64 weeks) during which the parents collectively are entitled to 32 weeks of public benefits.

In addition to this, the Danish Salaried Employees Act entails that the mother is entitled to half of the employee’s salary during the pregnancy leave (four weeks prior to the expected birth date) and during the maternity leave (14 weeks after the birth date).

Usually, collective agreements also contain additional regulation in connection with leave due to childbirth.

Further, it is not unusual that an employer and employee enter into agreement with additional pay during leave due to childbirth.

Sick Leave

Leave due to illness is considered as a legal leave. If an employee is subject to the Danish Salaried Employees Act, the employee is entitled to salary during the leave. This can also be agreed in collective agreements or individual agreements.

If the employee is not entitled to salary during leave due to illness, the employee is usually entitled to illness benefits (sygedagpenge).

The Employee's Liability During the Employment

If an employer must pay damages as a consequence of an employee’s negligent actions, the employer is only entitled to claim damages from the employee if it is reasonable in regard to the employee’s negligent action, the employee’s position and the surrounding circumstances. The employer bears the burden of proof in this regard and it is a heavy burden.

Under the Danish Employment Clause Act, the parties can enter into restrictive covenants, including non-competition clauses and non-solicitation clauses. Such clauses restrict employees from performing competing work or working for the employer’s customers after the employment has lapsed.

A non-compete clause is valid if:

  • the employee holds a position of trust or has signed an agreement with the employer about a process/device invented by the employee;
  • the employer has informed the employee of the circumstances, which makes it necessary for the employee to be subject to a non-compete clause;
  • the employee has been employed on a continuous base for at least six months when the employment lapses;
  • the employee receives a compensation for the duration of when the employee is restricted from carrying out competing work (at least 40% of the employee’ salary if the clause is applicable for less than six months, or at least 60% of the employee’s salary if the clause is applicable between six months and 12 months);
  • the duration of the clause is a period of maximum 12 months; and
  • the employee has received information of the above-mentioned conditions in writing.

A non-solicitation clause is valid if: 

  • the clause concerns customers which the employee has been in commercial contact with for the last 12 months of the employment; 
  • the employee has been employed on a continuous base for at least six months when the employment lapses;
  • the employee receives a compensation during the duration of when the employee is restricted from carrying out work for customers (at least 40% of the employee’s salary if the clause is applicable for less than six months, or at least 60% of the employee’s salary if the clause is applicable between six months and 12 months);
  • the duration of the clause is a period of a maximum of 12 months; and
  • the employee has received information of the above-mentioned conditions in writing.

Further, the parties can also enter into a combined non-compete and non-solicitation clause, which is valid if the above-mentioned conditions are met with the following adjustments:

  • the employee receives a compensation of 60% of the employee’s salary for the duration of when the employee is restricted from carrying out competing work and work for customers; and
  • the duration of the clause is a period of a maximum of six months.

If any of the above-mentioned conditions are not fulfilled, the clauses will not be valid and, therefore, not applicable.

If the restrictive covenant is valid and the employee breaches the restrictive covenant, the employee can be obligated to pay damages to the employer for the employer’s loss in connective with the breach. Further, restrictive covenants usually contain a clause entailing that the employee is obligated to pay a pre-fixed compensation to the employer if the employee breaches the restrictive covenant.

See 3.1 Non-competition Clauses.

Employers are obligated to comply with the European General Data Protection Regulation and the Danish Personal Data Act (Persondataloven). 

Further, the Danish Data Protection Agency (Datatilsynet) has issued several guidelines, which contain the Danish interpretation of the European General Data Protection Regulation.

Foreign employees, who perform work in Denmark, are subject to the Danish Aliens Act (Udlændingeloven) and the Danish Act on Posted Workers (Udstationeringsloven).

Under the Danish Aliens Act, foreign employees can apply for a residence permit and work permit if specific criteria are fulfilled.

Under the Danish Act on Posted Workers, employers who employee foreign employees must ensure that certain terms and conditions under the employment comply with Danish legislation, regardless of whether the employment is governed by Danish legislation.

The employer must report foreign employees performing work in Denmark to an official register – the RUT – under the Danish Act on Posted Workers. The employer must report the following information to the RUT prior to when the employees commence work in Denmark:

  • the workplace;
  • the period; and
  • the employee(s) performing the work.

If the employer does not report the above-mentioned information in time, or if any of the information is incorrect or inadequate, the employer might be penalised with a fine.

In Denmark, labour unions and employers’ organisations play a substantial role in the regulation of the Danish labour market, particularly in regard to the blue-collar employees’ terms and conditions under the employment.

An employer can freely choose to be a member of an employers’ organisation and, thus, become subject to collective agreements entered into by the employers’ organisation. 

Further, an employer can also enter into a collective agreement with a labour union or a unity of employees without being a member of an employers’ organisation.

An employee can choose to be a member of a labour union. The Danish labour market is highly unionised – close to 70% of the labour force are part of a union.

In Denmark, there are no legal requirements to have employee representatives.

However, collective agreements often contain regulations concerning employees’ representatives. See 7.5 Protected Employees.

In Denmark, collective agreements regulate a substantial part of the labour market. However, in the private sector in Denmark there are no collective agreements, which are mandatorily applicable to employers.

A collective agreement is usually entered into between a labour union and an employer's organisation. However, a collective agreement can also be entered into between a labour union and a specific employer (ie, not through membership of an employer's organisation).

An employer is obligated to comply with a collective agreement if the employer has entered into the collective agreement, and the employee performs work within the collective agreement's area of practice.

If an employer does not comply with a collective agreement, the employer can be obligated to pay compensation to the affected employee and a (punitive) compensation to the labour union.

Collective agreements (when they apply) regulate the employees' terms and conditions and can contain terms concerning minimum salary, allowances, working time, holidays, parental leave, terminations etc.

General Grounds

If an employee is not subject to the Danish Salaried Employees Act or a collective agreement under which the employees are protected against unfair dismissals, employers are, in general, free to terminate the employment (barring reasons of discrimination).

If an employee, who is subject to the Danish Salaried Employees Act, has been employed for at least one year when notice of termination is given, the termination must be based on fair reasons.

If the employee is subject to a collective agreement, the same usually applies. However, the seniority requirements in the collective agreement (before the protection applies) is normally less than a year (ie, six to nine months).

Under the Danish Salaried Employees Act and collective agreements, a lawful termination must be based on fair reasons such as the employer’s circumstances or the employee’s behaviour.

Employer’s circumstances can, for example, be shortage of work, financial difficulties, restructuring, etc. In these situations, the employer is generally entitled to terminate the employee.

Employee’s behaviour can, for example, be poor performance, lack of co-operation, disloyalty, etc. As a main rule, the employer is obligated to give the employee a warning prior to terminating the employee due to their behaviour. Such warning must contain a description of the unwanted behaviour and the consequences, if the employee does not change the unwanted behaviour. If the employee continues with the unwanted behaviour after he or she has received a warning, the employer is (as a main rule) entitled to terminate the employment.

In certain cases (eg, in case of gross negligence – assessed on a case-by-case basis), the employment may be terminated without the employer giving the employee a warning prior to the termination.

If the employer cannot document that a termination is based on the employer’s circumstances or that the employee – if necessary – has received a warning prior to the termination, the termination will be considered as unlawful.

Further, some collective agreements also regulate which reasons are considered as fair and unfair and, thus, affects whether a termination is lawful.

If a termination – directly or indirectly – is based on the employee’s gender, age, nationality, race, parental leave, disability, skin colour, sexual orientation, political orientation, religious orientation, fixed-term and part-time employment, etc, it is unlawful under the Danish Non-Discrimination Act or Equal Opportunities Act.

Procedural Requirements

There are no general procedural requirements under Danish legislation when terminating employees. However, see below concerning mass redundancies.

Some collective agreements also contain procedural requirements when terminating an employee – for example, having joint meetings, meetings in front an appointed board, etc – before the employer proceeds to terminate the employee.

Further, individual agreements can also contain procedural requirements when terminating an employee.

The consequences of breaching such procedural requirements are determined in the specific collective or the individual agreement. Normally, a breach of procedural requirements entails that the employee is entitled to a compensation.

Mass Redundancies

The Danish Mass Redundancies Act contains additional procedural requirements if the employer within 30 days:

  • terminates ten employees or more and employs between 20 and 99 employees;
  • terminates 10% of the employees or more and employs between 100 and 299 employees; or
  • terminates 30 employees or more and employs 300 or more employees.

If these conditions are fulfilled, the employer is obligated to initiate negotiations with the employees or the employees’ representatives to mitigate the number of terminations and/or the terms of the terminations.

Prior to commencing negotiations, the employer is obligated to inform the employees or the employees’ representatives of:

  • the cause of the mass redundancy;
  • the number of the employees that may be terminated due to the mass redundancy, which category of employees might be terminated and when the mass redundancy is expected to occur;
  • the overall number of the employees employed by the employer and the categories of employees within the company;
  • the criteria that the employer will use to decide which employees will be terminated under the mass redundancy; and
  • if any of the affected employees are entitled to a severance payment under legislation, a collective agreement or an individual agreement.

When the employer informs the employees or the employees’ representatives of the above-mentioned, the employer is also obligated to forward the above-mentioned information (the "first letter") to the Danish Regional Labour Market Council (the “Council”).

If, after completing the negotiations, the employer still intends to terminate employees and fulfils the above-mentioned conditions, the employer is obligated to inform the Council thereof in a letter (the “second letter”). If the employer intends to terminate 50% or more of the employed employees, the second letter cannot be forwarded to the Council prior to 21 days after the negotiations commenced.

The second letter must contain information of relevance to the expected terminations, including the reason for the termination, the overall number of the employees employed by the employer and when the terminations are expected to take place. 

When the employer has forwarded the second letter, the employer is obligated to – as soon as possible and at the latest within ten days – inform the Council in a letter (the "third letter") which employees are going to be terminated. At the same time, these employees must be informed of the terminations.

Lastly, the employer is obligated to inform the Council of the result of the terminations in a fourth letter (the “fourth letter”) as soon as possible after finalising the terminations.

If the employer does not comply with the above-mentioned and terminates less than 50% of the employees, the employees who are terminated in connection with the mass redundancy are entitled to a compensation amounting to 30 days’ salary. If 50% of the employees or more are terminated, the compensation amounts to eight weeks’ salary per employee. 

Further, the employer can also be fined as a consequence of the breach.

General Information Concerning Notice Periods

There are no general requirements under Danish legislation regarding minimum notice periods.

The notice periods are regulated in the Danish Salaried Employees Act, collective agreements and individual agreements.

If an employee is subject to the Danish Salaried Employees Act, the employers and the employees (the parties) are entitled to enter into an employment agreement with a trial period under which the parties separately can terminate the employment agreement with a 14-day notice period during the first three months of the employment.

After the employee has been employed for more than three months or if the parties have not agreed on a trial period, the employee can terminate the employment agreement with one month’s notice. The employer can terminate the employment agreement in accordance with the overview below: 

Seniority when giving notice of the termination:

  • maximum of five months – one month;
  • between six months and two years and nine months – three months;
  • between two years and ten months and five years and eight months – four months;
  • between five years and nine months and eight years and seven months – five months;
  • above eight years and seven months – six months.

Collective agreements also regulate notice periods. The notice periods in collective agreements differ from collective agreement to collective agreement, depending on the applicable work and area of practice. 

If an employee is not subject to the Danish Salaried Employees Act or a collective agreement, the parties are entitled to enter into an individual agreement regulating the notice period. However, Danish case law has determined that such notice periods must be reasonable under the specific circumstances of the employment – for example, the employee’s seniority, area of practice and the circumstances of the termination.

Compensations

Employees are entitled to their normal salary during the notice period.

Further, under the Danish Salaried Employees Act, employees who have been employed for more than 12 years are entitled to a compensation amounting to one month's salary. Employees who have been employed for more than 17 years are entitled to a compensation amounting to three months' salary. Collective agreements usually contain the same regulation; the same can also be agreed in individual agreements.

If a termination is unlawful, employees who are subject to:

  • the Danish Salaried Employees Act are entitled to a compensation of one to six months’ salary, depending on the employees’ seniority and the circumstances of the termination; or
  • collective agreements and individual agreements are entitled to a compensation, if this is stipulated in the collective agreement or individual agreement. 

Further, see 7.1 Grounds for Termination and 8.2 Anti-discrimination Issues concerning terminations that are a breach of the Danish Non-Discrimination Act or the Equal Opportunities Act.

If an employee is entitled to a compensation under both the Danish Salaried Employees Act and the Danish Non-Discrimination Act or the Equal Opportunities Acts, the employee will only be entitled to one of the compensations – the highest, effectively. 

Payment in Lieu

Payment in lieu of notice is generally accepted under Danish law, unless the employment is subject to a collective agreement or an individual agreement that stipulates otherwise.

If an employee substantially breaches the obligations under the employment agreement, the employer is entitled to terminate the employee without any notice. This entails that the employment lapses on the day of termination and that the employee’s salary lapses on the same day.

The employer bears the burden of proof in regard to whether a termination without notice is reasonable. If the termination without notice is unreasonable, the employee will be entitled to the employee’s salary during the notice period. Further, if a termination with notice would have been unreasonable under the same circumstances, the employee might also – in some cases – be entitled to a compensation for unreasonable termination.

As a main rule there are no specific procedural requirements in connection with a termination without any notice. However, collective agreements and individual agreements can have procedural requirements that employers must comply with when conducting termination of an employee without notice. 

An employer and employee can freely enter into a severance agreement under which the consequences of the termination are regulated. In practice, such severance agreements normally contain additional compensation to the employee under the condition that the employee waives the right to commence a case against the employer concerning an unlawful termination.

Severance agreements must, however, be reasonable and can be held invalid if the terms are not reasonable.

See 7.1 Grounds for Termination and 7.2 Notice Periods/Severance.

Further, an employee who has been elected as a shop steward under a collective agreement is normally subject to specific protection.

In this case, the shop steward may be entitled to an extended notice period compared to employees who are subject to the same collective agreement.

Also, a termination of the shop steward is unlawful:

  • if the termination is based on the shop steward’s duties as a shop steward; or
  • if the employer does not choose the shop steward as the last employee to be terminated among peers in connection with a reduction of the staff.

If a termination of a shop steward is unlawful, the shop steward will be entitled to a compensation as stipulated in the specific collective agreement, which differs from collective agreement to collective agreement.

Safety representatives are subject to the above-mentioned on the same basis as a shop steward within the same area of practice. This entails that a safety representative – who performs work within an area of practice where shop stewards are not subject to any special protection – is also not subject to any special protection and vice versa.

See 7.1 Grounds for Termination

See 7.1 Grounds for Termination and 7.2 Notice Periods/Severance.

The Danish Non-Discrimination Act and the Equal Opportunities Act regulate the burden of proof under which the burden of proof depends on the specific case. In cases such as termination during pregnancy, maternity leave, etc, the employer will have the burden of proof. In cases concerning termination after the maternity leave has lapsed, etc, the burden of proof will be shared between the employer and the employee. 

If a termination is a breach of the Danish Non-Discrimination Act or the Equal Opportunities Act, the employee will be entitled to a compensation, which depends on the severity of the case. Normally, the compensation is set between six and 12 months of salary in addition to the employee's notice.

If a dispute is based on legislation, the dispute shall – as a main rule – be tried in front of the Danish Civil Courts. However, an employer and employee are entitled to agree that such disputes shall be tried in front of an arbitrational court.

If a dispute is based on a collective agreement and concerns a breach of the collective agreement, the dispute shall – as a main rule – be tried in front of the Danish Labour Court (Arbejdsretten). 

If a dispute is based on a collective agreement and concerns the interpretation of the collective agreement, the dispute shall – as a main rule – be tried in front of a Danish Industrial Arbitration (Faglig voldgift).

See 9.1 Judicial Procedures.

In Denmark, the prevailing party of a dispute is usually awarded legal costs from the opponent in accordance with a pre-fixed schedule decided by the Danish High Court. The pre-fixed schedule entails that the awarded legal costs are set based on the size of the claim, the complexity of the case and the processing time of the dispute. The awarded legal costs do not – as a main rule – cover all of the prevailing party’s legal costs to the attorney. Therefore, the prevailing party will have additional costs to the attorney.

If the employee is a member of a labour union, the labour union often bear the employee’s legal cost.

Further, if the employee’s yearly salary is below a certain economical threshold, the employee can apply for legal aid from the government.

KPMG Law Firm

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Frederik.brocks@kpmg-law.com www.kpmglaw.dk
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Trends and Developments


Authors



Mette Klingsten Law Firm was established by Mette Klingsten, who was previously a partner in one of Denmark’s largest law firms. The firm is a labour law boutique based in Copenhagen with a strong international network in relevant areas of expertise, including membership of ELLint, a network of international lawyers specialising in employment and labour law. The main focus is employment and labour law, including as pertains to recruitment, employment contracts, assistance in connection with the transfer of undertakings, dispute resolution and arbitration, collective bargaining agreements, bonus programmes, work permits, senior employee contracts, discrimination cases, and GDPR advisory. Mette Klingsten Law Firm has frequent experience in court and industrial tribunal representations and often deals with cases with an international dimension. The firm provides legal services primarily to medium-sized companies (with deviations in both upward and downward direction), public authorities and cultural institutions subject to government regulation.

There is no doubt that 2020 has been an unusual and challenging year. COVID-19 has had, and will continue to have, a significant impact on businesses. We have seen businesses thrive as a result of the markets they operate in, but, unfortunately, there are more companies which are facing turbulent times and are likely to continue to do so.

Denmark has attempted to mitigate the financial impact of the COVID-19 pandemic and has implemented a number of initiatives to support companies, workers, the self-employed, freelancers, etc. In this article we have set out the main initiatives taken by the Danish government and, in addition, we have also selected several other noteworthy employment law developments in Denmark for 2020 outside of COVID-19.

COVID-19

In an attempt to mitigate the financial impact of the COVID-19 pandemic the Danish government and its social partners concluded a tripartite agreement in March 2020 for a temporary wage compensation scheme for private sector employees.

The initiatives have been somewhat successful and – despite unemployment rates increasing in Denmark – results from Eurofound's Living, working and COVID-19 online survey provide early indications that people in Denmark have been some of the least impacted by the crisis. The pan-European survey reveals that respondents in Denmark report some of the lowest levels of job loss and financial insecurity in the EU. However, over a third of respondents have reported a decrease in working hours which follows the trend that we have seen in employers looking to reduce hours and salary in an attempt to mitigate the financial impact of COVID-19.

In Denmark, as a rule, changes in the terms of a salaried employee that may lead to a decrease in salary and/or hours, can only occur upon serving notice to which the salaried employee is entitled in the event of termination. As an alternative, such changes can be made with agreement from the salaried employee. Therefore, if the company cannot agree a reduction in hours and/or pay with the individual employee then the change can only take place if the employee is notified with the same notice period given for termination. Material adverse changes cannot be imposed unilaterally without risk of a constructive dismissal claim or breach of contract claim. In this regard, we understand that a number of employers have sought to agree a reduction in hours with employees in an attempt to avoid redundancies.

We consider that this trend is likely to continue given the economic uncertainty that still remains in respect of COVID-19. For employers that have agreed such temporary reductions, it is important that the reductions are kept under review to ensure that they are only kept in place for as long as necessary and that the reviews are clearly communicated to employees.

The payment of hourly paid workers and any reductions to such will be governed by the rules of the relevant collective bargaining agreement; some agreements will provide that workers can be sent home without salary. For employees covered by a collective bargaining agreement, there are limitations to the changes that can be agreed with the individual employee and therefore more restrictions on the flexibility employers  have to make changes.

Eurofound’s Living, working and COVID-19 online survey also shows an increase in home-working arrangements in Denmark, with over half of the respondents to the survey reporting working from home during COVID-19; this is the fifth-highest percentage in the EU and well above the EU27 average of 36.8%. These flexible working arrangements appear to have been a mainly positive experience for the majority of respondents in Denmark and this supports the evidence that we have observed.

Following COVID-19, there has been much more flexibility regarding working arrangements. Many organisations within Denmark are still operating a work-at-home policy with rotations in the office, with employees splitting time between the office and the workplace. We understand that many organisations are reviewing their office space and considering a reduction in this in order to save costs going forward.

Whilst these flexible working arrangements have generally worked well, there are a number of considerations for employers in the context of employees working from home. Firstly, consideration should be given to the employee’s well-being. Employers have an obligation under the Working Environment Act to ensure employees' safety and well-being whilst at work. This obligation obviously extends to the working-from-home context and, in light of these obligations, employers will need to ensure employees have the necessary equipment to carry out their roles and that home workstations are set up are ergonomically correct. In addition, it is also important that employers working from home have regular check-ins and updates with their employees to ensure their mental well-being.

Another crucial issue is the security of information when employees work for home. Some employees working from home may be sharing their living space with other people who do not work for the same company – and may even work for a competitor. In this context, there is a risk that confidential information is accessible to third parties, the use of which could give rise to liability against the employer, particularly in the context of GDPR. Pursuant to Danish law, an employer will generally be liable for an employee’s wrongdoing if it is closely connected to what the employee is required to do as part of their role. If there is no close connection with the employee’s actions and their role, or if the employee has acted intentionally or with gross negligence, there will be no liability.

Employers wthat adopt such flexible working patterns need to explore ways in which this risk can be minimised, with guidelines being drawn up regarding how company information should be used and protected whilst working from home, and these should be clearly communicated to the employee.

Collective Bargaining

Industry sectors have traditionally been the area where social partners have first reached an agreement on employment terms – and the result of the negotiations in the industrial arena have often had a consequent disruptive effect on the remaining collective bargaining system. This has certainly been the case in 2020, where more than 600,000 employees’ terms and conditions in the private labour market have been negotiated in addition to some major agreements.

On 9 February 2020, the Confederation of Danish Industry (Dansk Industri, DI) and CO Industri agreed on a three-year renewal of the Industry Agreements, which covers 230,000 employees in industry. Since then, Dansk Industri and 3F Transport have also reached an agreement to renew the agreements in the transport area, which applies to 40,000 truck drivers, storage workers and port workers. In addition to this, an agreement was signed between HK Handel and Dansk Erhverv on 25 February 2020 comprising 150,000 store employees.

While several of the major agreements have successful negotiations in place, collective bargaining between a number of employers’ organisations and unions continues. However, from an analysis of the agreements already concluded in 2020, a number of trends within the agreements are clearly identifiable – notably, increases in the contribution to the "free choice account" and earmarked parental leave.

The free choice account is an account with the employer that the employee has at their disposal. The new agreements give the individual employee more flexibility in choosing how to use this free choice account. Employees will be able to choose between using the account for time off, pay or higher pension contributions. At the same time, the parties have agreed on ensuring modernisation and greater awareness in the individual businesses about the free choice account and the choices available. It is also the intention to use the terms of the collective agreement to make the free choice account easier to manage for employees and employers alike.

Payments into the free choice account will be increased from 4% to 7% over the term of the agreements; payments will increase by 1% per year, so that in 2023 the free choice account payment will be 7% of salary.

Another main point of the three agreements is the extension of the period in which the employer pays full salary during parental leave, which has increased from 13 to 16 weeks and which must be taken within 52 weeks after birth. Eight of the weeks are earmarked for the father and five of the weeks are earmarked for the mother. The remaining three weeks’ leave is granted to either parent. If the leave reserved for the individual parent is not taken, the payment will lapse.

The collective agreements and agreements entered into in the private labour market often have an impact on organisations without such agreements, particularly in relation to pay and freedom and rights to parental leave. This is due, among other things, to the need for organisations to be competitive in relation to terms and conditions in both contracts and policies for the retention and recruitment of employees. Therefore, employers should be aware of these trends when considering employee terms and benefits.

Holiday Act

On 1 September 2020, the widely anticipated new Danish Holiday Act comes into force. The new Holiday Act is a result of the EU Commission concluding that the current Danish holiday rules did not comply with the working time directive. Under the old holiday provisions, a newly hired employee would have to wait up to 16 months before being able to take his or her paid holiday. If a newly hired employee was hired from 1 January, the holiday that the employee accrued would not be available to the employee until after 1 May the year after. The EU commission found that this was incompatible with the EU's Working Time Directive.

Under the new Holiday Act, the employee accrues and spends his or her holiday at the same time over a period of 12 months (the holiday year). The holidays are accrued from 1 September to 31 August the year after (12 months). This means that holidays accrued in June will be available to the employee in July the same year. However, the employee has the possibility of taking his or her holiday during an additional period of four months, which provides the employee with 16 months to take his or her holiday (the vacationing period) – ie, until 31 December.

The two current types of holiday pay still apply: (i) paid holiday with holiday allowance, or (ii) holiday with holiday pay. As is the case under the old provisions with the new Holiday Act, an employee will accrue 2.08 days holidays per month.

GDPR

The GDPR continues to be a focus of debate in Denmark. The Danish Data Protection Authority (DPA) recommended its first fine in 2019 for a breach of the GDPR and this is an area where we expect to see more challenges, particularly in the employment context.

Already in 2020, the Danish DPA has made a decision on an employee’s right to be forgotten.

The Danish DPA had to decide a matter regarding an ex-employee of a consulting firm whose image had been used in a number of promotional videos used on the firm’s website and YouTube. During the course of employment, the image had been used with the employee’s consent, but after he left he asked for his image to be removed from the promotional activity and the company confirmed that they would do this.

Subsequently, the employee was advised that he had been removed from the promotional video on YouTube but that the company would not be removing him from the other promotional videos as he had given his consent for the image to be used. The company continued to use images of the employee, following which the employee made a complaint to the Danish DPA.

The Danish DPA concluded that whilst the initial use of the employees image had been used with consent (a valid reason for using the image ) they found that, at the point in time the employee asked to be removed from the footage, such consent had been effectively withdrawn.

The Data Protection Agency were highly critical of the consulting firm’s failure to delete the footage of the employee without undue delay, as the employee was still appearing in the video three months after he requested the deletion.

The use of an employee’s images in promotional content is not uncommon in Denmark and, whilst consent can be used for the processing of images in the employment relationship, employers should consider how they will deal with such consent being withdrawn. If an employer does not meet a request to have an image deleted, this could lead to further sanctions, particularly if an employer does not have another lawful reason for processing the data. In the context of the use of an image, an employer is unlikely to have a lawful reason without consent for the use.

We expect further challenges under the GDPR going forward.

Mette Klingsten Law Firm

Østerfælled Torv 3
DK-2100
Copenhagen

+45 31 44 01 00

mk@mklaw.dk www.mklaw.dk
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Law and Practice

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KPMG Law Firm is an independent Danish law firm within the KPMG network, specialising in tax dispute prevention and resolution, employment law and mobility. With its Global Legal Services Network, KPMG Law is also part of a worldwide network in the legal sphere. This enables its experts to draw on the legal advisory services of over 2,400 colleagues in 80 countries and co-operate with leading foreign law firms. KPMG Law was established in 2020 and is based in Copenhagen and Aarhus.

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Mette Klingsten Law Firm was established by Mette Klingsten, who was previously a partner in one of Denmark’s largest law firms. The firm is a labour law boutique based in Copenhagen with a strong international network in relevant areas of expertise, including membership of ELLint, a network of international lawyers specialising in employment and labour law. The main focus is employment and labour law, including as pertains to recruitment, employment contracts, assistance in connection with the transfer of undertakings, dispute resolution and arbitration, collective bargaining agreements, bonus programmes, work permits, senior employee contracts, discrimination cases, and GDPR advisory. Mette Klingsten Law Firm has frequent experience in court and industrial tribunal representations and often deals with cases with an international dimension. The firm provides legal services primarily to medium-sized companies (with deviations in both upward and downward direction), public authorities and cultural institutions subject to government regulation.

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