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Factsheet for measure DK-2020-36/1251 Updated – measures in Denmark

New temporary tripartite agreement on work sharing

Ny midlertidig trepartsaftale om arbejdsfordeling

Country Denmark , applies nationwide
Time period Temporary, 31 August 2020 – 31 December 2021
Context COVID-19
Type Tripartite agreements
Category Employment protection and retention
– Income support for people in employment (e.g., short-time work)
Author Carsten Jørgensen (FAOS, University of Copenhagen), Anders Randrup (Oxford Research) and Eurofound
Measure added 06 October 2020 (updated 19 July 2021)
Related ERM support instrument

Background information

On 29 August 2020, a Tripartite agreement on wage compensation in the private sector that had been in function since March expired. It was replaced on the 31 August by a new tripartite agreement on work sharing, which on one hand is less cost-intensive for the state than wage compensation, but on the other it is a helping hand to the unemployed and the companies since the periods not at work will be supported by a higher remuneration than the existing.

Legal reference :

  • LOV nr 1336 af 11/09/2020.
  • Lov om adgang til iværksættelse af midlertidig arbejdsfordeling som led i håndteringen af COVID-19.
  • Act no 1336 of 11 September 2020.
  • Act on access to effectuate temporary work sharing as part of handling COVID-19.

Due to a significant increase in the number of persons contaminated with coronavirus at the end of November 2020, the social partners and the government agreed to prolong the tripartite agreement on work sharing until the end of 2021.

Content of measure

The purpose of the new tripartite agreement of 31 August on work sharing is to mitigate a possible wave of redundancies on the private labour market, which is still affected by the corona crisis, after phasing out the wage compensation measure. The agreement implies that employees in the companies that chose to make use of the measure will work between 50% and 80% of the time. The rest of the working time, they are furloughed. They will receive full pay when at work and receive unemployment benefit for the time at home.

The normal unemployment benefit rate is increased 20%, that is, to maximum DKK 23,000 (€3,087). In addition, non-insured, i.e. employees not member of an unemployment benefit fund will receive the same benefit rate. An employers’ contribution will primarily finance the increased unemployment benefit rate. According to the original work-sharing scheme, the time not at work is deducted in the allowed number of unemployment hours while still receiving a benefit rate. In the new temporary work-sharing agreement, this mechanism is set on hold, so that time not at work does not count as unemployment time.

Companies that are already using the existing work-sharing agreement that in an easier accessible form was agreed in March 2020 as a support measure against the effects of the corona crisis can choose to change to this work-sharing scheme containing an enhanced benefit rate. Applications are still sent to the local job centre but is merely a formality. The new work-sharing scheme is so far valid for the rest of this year. It will be evaluated and re-negotiated in the end of November.

Updates

The following updates to this measure have been made after it came into effect.

26 November 2020

On 26 November, the parties to the agreement chose to prolong the possibility for companies to let two employees share the same job for the whole year of 2021, because the work sharing support scheme has proven effective in keeping jobs and preventing significant redundancy rounds. Besides, even if the spread of the corona virus will decrease during the next year due to the effects of the vaccination program (starting 27 December), the rationale behind the long period is that many companies in the private sector will not be able to regain former strength until late in 2021. The criteria are still the same, and the payment in the period when the employee is at home will still be paid with 120% more than usual, or a maximum of DKK 23,000 (€3,067). The agreement is settled by law so that it covers the whole private sector and not only where a collective agreement is in force. Collective agreements cover around 80% of the private labour market.

Use of measure

The parties to the agreement, the government and the Danish Trade Union Confederation, FH, the Confederation of Professional Associations in Denmark, AC, and the Confederation of Danish Employers, DA, estimate that around 30,000 workplaces will have been encompassed by the work-sharing scheme during the first period in force, i.e. until the end of 2020.

According to FH, 7,000 employees were in work sharing as of November 2020.

The Danish Agency for Labour Market and Recruitment (STAR) registered new cases of work sharing every month in 2020, which were:

  • Aug 2020: 1,537 persons
  • Sept 2020: 1,604 persons
  • Oct 2020: 908 persons
  • Nov 2020: 815 persons
  • Dec 2020: 219 persons

The Danish Ministry of Employment has a graph with the weekly number of total people (not just new as the previous numbers) using the temporary work sharing scheme. The graph shows the newest 20 weeks (weeks 6-25, 2021), and the highest weekly number was in week 8 2021 with a total of 11,080 people using the scheme. The last week available, which is week 25 and the last week of June, has the lowest number in the graph with 5,204 people.

Contents

  • Basic working time
  • Employment retention

Target groups

Workers Businesses Citizens
Employees in standard employment
Applies to all businesses Does not apply to citizens

Actors and funding

Actors Funding
National government
Social partners jointly
Employer

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role Agreed (outcome) incl. social partner initiative Agreed (outcome) incl. social partner initiative
Form Consultation through tripartite or bipartite social dialogue bodies Consultation through tripartite or bipartite social dialogue bodies

Social partners' role in the implementation, monitoring and assessment phase:

  • Social partners jointly
  • Main level of involvement: Peak or cross-sectoral level

Involvement

The social partners was, as it is normal practice in Denmark, invited by the government to tripartite discussions about the design and implementation of an enhanced work sharing instrument with the aim to prevent a significant high number of redundancies connected to company closures in the phasing-out of the (first) wage compensation scheme, of which the social partners were also involved. Usually the social partners avoid legislation in their respective areas, but due to the abnormal situation that COVID-19 brought about, work sharing was introduced by law to cover the entire private labour market regardless of collective and local agreements. All employees of companies that decide to use the scheme, can be covered.

Views and reactions

The social partners express their high satisfaction with their involvement in the design and implementation of the work sharing scheme. A main aim for the social partners was to continue to keep the workers in the companies in the phasing-out of the (first) wage compensations scheme in order for the start up post pandemic to be as great and efficient as possible, and it is deemed a significant success. The leader of FH states that the temporary work sharing scheme has helped to create a greater security among many Danish private employees, which can be seen in the large number of people involved (at that in November 2020, the number was around 7,000).

Sources

  • 31 August 2020: Ny trepartaftale skal forebygge fyringer (bm.dk)
  • 26 November 2020: Trepartsaftale om forlængelse af midlertidig arbejdsfordelingsordning
  • 26 November 2020: Lønmodtagerne kan fortsat deles omarbejdet i det nye år
  • 27 June 2021: Beskæftigelsesministeriets COVID-19 beredskab, arbejdsfordelinger efter midlertidig ordning (app.powerbi.com)

Citation

Eurofound (2020), New temporary tripartite agreement on work sharing , measure DK-2020-36/1251 (measures in Denmark), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/DK-2020-36_1251.html

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