Factsheet for measure
DK-2020-11/633
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Updated
– measures in Denmark
Tripartite agreement on wage compensation in the private sector
Trepartsaftale om lønkompensation i den private sektor
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Country
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Denmark
, applies nationwide
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Time period
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Temporary, 09 March 2020 – 30 June 2021
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Context
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COVID-19
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Type
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Tripartite agreements
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Category
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Employment protection and retention
– Income support for people in employment (e.g., short-time work)
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Author
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Carsten Jørgensen and Maria Hansen (FAOS, University of Copenhagen)
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Measure added
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15 April 2020 (updated 23 March 2022)
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Background information
The aim of the tripartite agreement is to secure employment for employees who otherwise would be dismissed as a result of the severe consequences for the companies due to COVID-19. Thus, the agreement offers a fixed wage compensation of 75% to the companies covering the employees that instead of losing their job are send home from the company with the possibility to return. The measure applies to all companies in the private sector.
Content of measure
The agreement covers all companies that due to the severe consequences of COVID-19 have to dismiss 30% of the employed or minimum 50 employees from the company. The government offers wage compensation to the companies for the employees that were to be dismissed but instead, according to the agreement, will be send home with a perspective to return. The compensation for a (monthly paid) salaried employee is 75% of the wage or maximum of DKK 30,000. For an hourly paid employee the compensation is 90% or a maximum of DKK 30,000.
This agreement was concluded on 30 March 2020 and is an amendment of a first agreement from the 12 March 2020. In the first agreement the compensation for salaried employees were 75% but maximum DKK 23,000. For hourly paid employees, the compensation were 90% with a maximum of DKK 26,000. With the amendment, the maximum amount for both is DKK 30,000. The aim of the increased amount is to make it possible for more companies to participate.
Updates
The following updates to this measure have been made after it came into effect.
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10 December 2021
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The government and the social partners agree that the wage compensation scheme for forcibly closed companies should apply as long as there are companies that are prohibited from keeping it open. The wage compensation scheme for forcibly closed companies continues. This means that nightlife, venues, etc. that are closed directly as a result of the restrictions can repatriate their employees on salary compensation.
A temporary wage compensation scheme has also been agreed for follow-up businesses and the companies that have been hit hard over Christmas and New Year. Companies that send over 30% of employees home as a consequence of the restrictions will be covered by the scheme. The scheme will apply from 10 December 2021 to 15 January 2022.
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31 August 2021
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This agreement is followed up by a
New temporary tripartite agreement on work sharing
.
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13 April 2021
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The government and the social partners agreed to adjust the wage compensation scheme giving companies the opportunity for employees covered by the scheme to prepare for reopening of the business in the last seven days of the compensation period with the company still getting full without affecting the company's ability to receive full salary compensation for those days. The option applies to both the general wage compensation scheme, that ends on 30 June 2021, and to forcibly closed companies, which continues until the companies concerned are allowed to reopen. The option may be used once for each employee who has been covered by the scheme for at least 30 days in total.
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26 March 2021
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The government and the social partners agree to extend the wage compensation scheme until 30 June 2021. The extension will follow the agreed assumptions of the tripartite agreement in January.
The extension is based on the new reopening agreement from 22 March 2021 on the gradual reopening of Danish society, where parts of the business community will continue to be affected by restrictions in the coming period.
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24 February 2021
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Due to a prolongation of the restrictions to 5 April 2021, the wage compensation scheme is prolonged until 12 April 2021.
In the agreement from 14 January 2021, the Government agreed that the wage compensation scheme will be in effect as long as the stricter restrictions are applied with a conversion period of of seven calendar days.
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02 February 2021
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Employers have by law (LOV nr 158) gained the right to require home sent employees on the wage compensation scheme to take one day of leave per paid compensation period.
The first period from 18 January 2021 consists of 21 days, thereafter the periods will consist of 28 days. Employers can insist up to five days of leave in total.
The scheme is similar to a scheme that ran over the spring and summer during the first period of the wage compensation scheme.
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14 January 2021
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Due to an expected rise in the numbers of persons contaminated with COVID-19 because of the spread of the so-called British corona virus variant B.1.1.7., the government and the social partners behind the tripartite agreement decided to prolong the period of wage compensation for the companies regarding the furloughed employees until 7 February 2021.
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09 December 2020
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During the autumn of 2020 the number of contaminated with COVID-19 started to increase again and at the beginning of December the numbers increased alarmingly. The government announced another lockdown of societal and economic activities almost as far reaching as the lock down in March. In this perspective the government had recently started a few regional support packages where the contamination were particularly. For instance, in Northern Jutland where a virus found at all mink farms in the region in the end resulted in a killing of all minks. However, shortly after the whole country were locked. In this perspective, the government and the social partners on 9 December decided to revive the wage compensation support measure in full. The criteria and the extent of compensation are the same as in the first tripartite agreement about wage compensation. The scheme was in place set to end 3 January 2021, but was right after Christmas prolonged until 15 January. It is expected - as of the first week of January - that this end date will be further postponed.
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29 August 2020
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On 7 June 2020, the period of the wage compensation measure in force was prolonged to 29 August 2020.
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Use of measure
The Danish Business Authority (Erhvervsstyrelsen) posts weekly updates of usage of the different compensation schemes. As of 28 June 2021 the latest numbers for the wage compensation schemes are:
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Number of approved applications: 96,009
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Number of companies: 36,799
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Number of compensated employees: 335,546
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Total compensation paid: DKK 17,714 million (€2,38 million)
Contents
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Employment retention
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Income protection
Target groups
Actors and funding
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Actors
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Funding
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National government
Social partners jointly
Company / Companies
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National funds
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Social partners
Social partners' role in
designing the measure
and form of involvement:
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Trade unions
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Employers' organisations
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Role
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Agreed (outcome) incl. social partner initiative
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Agreed (outcome) incl. social partner initiative
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Form
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Consultation through tripartite or bipartite social dialogue bodies
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Consultation through tripartite or bipartite social dialogue bodies
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Social partners' role in the
implementation, monitoring and assessment phase:
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Social partners jointly
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Main level of involvement: Peak or cross-sectoral level
Involvement
The government invited the social partners to tripartite discussions, as is the normal procedure for involving the social partners in decisions regarding the labour market. In this case, the social partners are involved on confederation level and active in designing, implementing and monitoring the measure. The two confederations are FH (Danish Trade Union Confederation) representing the employees, and DA (Confederation of Danish Employers) representing the private employers.
Views and reactions
Overall the views on the measure are positive and in hindsight the decisions that were made to support employees and companies are deemed to have been the correct ones for the best outcome post pandemic. DA mentions their involvement in the 2020 tripartite agreements as their most important contribution in relation to corona, and states the cooperation to have been good. The Danish Model is stated as strong and being able to deliver. A main aim of the wage compensation scheme has been to retain the workers in the companies for an efficient start up post pandemic, and this is seen as very successful by both sides. However, one of DA's aims was to ensure compensation for companies for the negative effect of the political involvement, and while it was partially successful, companies have paid great amounts in keeping their employees. This issue is also discussed by the CEO of SMVdanmark (SMEdenmark), which organises 18,000 SME. He states a lack of understanding from the government and social partners on especially SMEs, which have drained their economy during the long pandemic in keeping their employees and suggest a full coverage of wages towards the final period of the scheme (stated as the scheme was extended in March to June).
Sources
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05 June 2019: Regeringen og arbejdsmarkedets parter udfaser gradvist lønkompensationsordningen
(bm.dk)
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15 March 2020: Trepartsaftale skal hjælpe lønmodtagere
(www.fm.dk)
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30 March 2020: Trepartsaftale om midlertidig lønkompensation for fyringstruede lønmodtagere på det private arbejdsmarked
(www.fm.dk)
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07 September 2020: Statistik kompensationsordninger
(erhvervsstyrelsen.dk)
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10 December 2020: Lønkompensation bliver nu genindført i hele landet i alle brancher
(bm.dk)
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10 December 2020: Trepartsaftale om genindførsel af lønkompensationsordningen i 38 kommuner som følge af indførsel af restriktioner
(bm.dk)
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10 December 2020: Tillægsaftale til trepartsaftale om genindførsel af lønkompensationsordningen i 38 kommuner som følge af indførsel af restriktioner af 10. december 2020
(bm.dk)
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18 December 2020: DE VIGTIGSTE TING DA HAR OPNÅET I 2020
(www.da.dk)
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02 February 2021: LOV nr 158 af 02/02/2021
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01 March 2021: Wage compensation extended to 12 April 2021
(www.danskerhverv.dk)
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22 March 2021: Compensation Statistics
(erhvervsstyrelsen.dk)
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22 March 2021: Rammeaftale om plan for genåbning af Danmark (Reopening agreement)
(www.stm.dk)
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26 March 2021: Tripartite agreement on salary compensation extended to 30 June 2021
(bm.dk)
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26 March 2021: SMVdanmark: Uændret lønkompensationen efterlader virksomhederne i stikken
(via.ritzau.dk)
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13 April 2021: Trepartsaftale om tilpasning af lønkompensationsordningen i forbindelse med gradvis genåbning af Danmark
(bm.dk)
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14 April 2021: Employees on salary compensation will have the opportunity to prepare for the reopening of their businesses
(bm.dk)
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12 October 2021: Statistics for compensation schemes
(erhvervsstyrelsen.dk)
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10 December 2021: Trepartsaftale om forlængelse af midlertidig arbejdsfordelingsordning og lønkompensation
(bm.dk)
