Tripartite Agreements in 2020 and 2021
The corona crisis has dramatically transformed the labour market in 2020, prompting the adoption of new tripartite agreements between the Danish government and the social partners in order to protect employees
Tripartite agreement addressing labour shortage challenges, October 2021
The government, social partners, and Local Government Denmark (KL) reached a tripartite agreement addressing the problem of labour shortage. Following the Covid-19 crisis, the Danish economy has been growing to a point where 51.000 more people are employed in October 2021, than before the pandemic in February 2020. This has led to the demand of labour and challenges with recruiting qualified labour force within firms. The agreement aims to solve these challenges by allocating DKK 84,6 million throughout 2022-2023 to:
- Focus on matching unemployed better with firms
- Increase sanctions to ensure that unemployed actively apply for jobs and accept offers
- Strengthen measures that intend to reintegrate unemployed seniors into the labor market
- Improve circumstances for firms to recruit qualified European labour force
The new initiatives are applicable from 1. January 2022.
Tripartite agreement extending the wage compensation scheme in all industries, January 2021
On 14 January 2021, the government and social partners reached a tripartite agreement extending the wage compensation scheme until the tighter restrictions implemented following a surge in corona infection rates are lifted. The agreement intends to help wage earners and firms through the tough period of the general lockdown.
Along with the extension, the partners have also agreed to reintroduce the possibility for firms to use up one day of their employers accrued holiday or a day off in lieu per month of being sent home and receiving wage compensation. If the wage earner hasn’t accrued any holiday or days off in lieu, they have the possibility to take a day off in special leave without being paid per month.
Tripartite agreement on the reintroduction of the wage compensation scheme, December 2020
On 10 December 2020, the government and social partners reached a tripartite agreement on the reintroduction of the wage compensation scheme. The scheme functions in the same manner as the local wage compensation scheme of North Jutland and the general wage compensation scheme from March 2020. All firms in Denmark can apply for coverage under the scheme. Since the scheme is applicable over the Christmas holidays of 2020, there are already numerous eligible holidays. Under the agreement, firms cannot apply for compensation for the three days where most firms would have been closed regardless of the lockdown.
Tripartite agreement on the extension of the temporary distribution of work scheme, November 2020
On 27 November 2020, the government and social partners reached a tripartite agreement extending the distribution of work scheme. Thus, private firms can choose to be covered throughout 2021 regardless of if they made use of the scheme in 2020. Under the scheme, firms that continue to be challenged due to the outbreak can choose to distribute work between the employees rather than laying off workers. In this way, the employees share the work that is available while staying at home either receive wage compensation or undergo education or retraining. The tripartite agreement increases the flexibility of the scheme such that social partners agree that firms can reduce working hours by 80% instead of the current 50%. Under certain circumstances, it will be possible for firms to convene replacement workers for sudden requirements of workforce, which has been requested by the hospitality industry. Furthermore, the new rules will be easier to administer for unemployment insurance funds. Employees covered by the scheme can receive a higher unemployment benefit while not making use of their two year right to unemployment benefits.
Tripartite agreement on local wage compensation scheme as a result of the extraordinary development of the virus in North Jutland, November 2020
The government and the social partners have reached an agreement on a new wage compensation model for the seven municipalities in North Jutland, which are affected by new local restrictions to reduce the further spread of the coronavirus.
The agreement intends to prevent further redundancies of employees and support firms affected by the high infection rate in North Jutland.
The local wage compensation scheme will account for 75 pct. of total wage expenditures for salaried employees and 90 pct. of hourly workers’ monthly salary. The maximum compensation rate is 30.000 DKK for each affected employee. As part of the agreement, the social partners have agreed to introduce a new furlough scheme for commuters, enabling firms to receive wage compensation for employees who are prevented from commuting between municipalities and are unable to work from home. This is due to the government’s encouragement that citizens resident in the affected municipalities should stay within their municipal borders.
The compensation scheme for commuters will account for 75 pct. of the total wage costs for salaried employees and 90 pct. of hourly workers' monthly salary, but with a maximum rate of 45.000 DKK per affected employee. Since commuters in North Jutland are particularly affected by the new restrictions, the maximum compensation rate for them is higher than that of employees covered by the other wage compensation schemes.
The scheme is applicable until 3 December 2020.
Tripartite agreement regarding a temporary arrangement for maternity/paternity benefits for parents with children sent home due to COVID-19, September 2020
On 10 September 2020, the government and the social partners reached a tripartite agreement allowing parents with children sent home due to COVID-19, to receive childcare benefits. The benefits are in accordance with the Maternity Leave Act and will continue until the child can return to their school or institution. Wage-earners as well as self-employed workers are covered by the temporary scheme.
The parents covered by the scheme must meet the conditions of entitlement to unemployment benefit under the Maternity Leave Act, including the employment requirement. Furthermore, neither parent must have the ability to work from home or have any child care days or time off in lieu left to watch their children. If the child tests positive for COVID-19, the parents are required to have used up their child’s first and second sick day.
Following this agreement, the government and social partners agreed to urge employers to be flexible and understanding, should one of their employee's children test positive or have been sent home due to close contact with an infected individual.
The agreement has been in force since 19 September 2020 and will continue to be so until 31 December 2020.
Tripartite agreement on a temporary short-time working scheme in the private sector, August 2020
The government and the social partners reached a tripartite agreement on 31 August 2020, extending support to employees and firms after wage compensation has expired.
The tripartite agreement regarding the temporary short-time working scheme is in force until the end of 2020 and will help avoid further redundancies, following the phasing out of the wage compensation arrangement. These new possibilities, including higher benefits, will give employees a greater sense of security and support firms that have been hit hard by the decrease in exports caused by the corona crisis.
The scheme allows for the distribution of work between employees, rather than laying off workers. While the worker is sent home, they will receive wage compensation. As part of the agreement, the maximum rate of the unemployment benefits will be increased to 23.000 DKK per month, roughly 20 pct. higher than the usual maximum unemployment benefit rate. This increase is primarily financed through the employer’s contribution. As a result of the agreement, when workers are sent home, they can complete a continuing education programme while receiving unemployment benefits.
Tripartite agreement regarding exceptional help for trainees, apprentices, and firms, May 2020
The government and the social partners reached a tripartite agreement on 28 May 2020, that distributes a sum of 5,4 billion DKK from ”Arbejdgivernes Uddannelsesbidrag” (AUB), an employers’ reimbursement system. This is meant to pave the way for more apprenticeships in a time where they are created in significantly lower numbers.
With the agreement, a new subsidized employment scheme for private firms that do or wish to employ apprentices will be introduced. These firms will receive 75 pct. of their current apprentices’ wages covered until the end of the year. In addition, firms will receive a wage subsidy of 45 pct. for new apprenticeships and up to 90 pct. of ordinary training agreements. The wage subsidy scheme will be in effect from 1 May until 31 December 2020.
In order to stimulate the Danish economy and support the further development of apprenticeship programmes, the partners of the agreement have agreed to offer an exceptionally high grant of 1,4 billion DKK to all employers.
Moreover, both private and public sector employers will get their wage reimbursement increased by 20 pct. during the schooling in the second half of 2020.
Agreement on prolonging the tripartite agreement regarding a temporary wage compensation reached in March 2020
On 18 April 2020, the government and the social partners reached an agreement prolonging the temporary wage compensation scheme by one month, extending its effect until 8 July 2020.
Moreover, the wage compensation scheme has been adjusted, so the possibility to receive compensation will be the same for any flex-job worker regardless of whether they are part of the new or old flex-job scheme.
Firms are to re-apply for the extension in the period from 9 June until 8 July 2020 through the Danish Business Authority.
Agreement on strengthening the tripartite agreement on the temporary wage compensation reached in March 2020
On 20 March 2020 the government and the social partners agreed on increasing support in the existing wage compensation scheme, that was put into effect on 15 March 2020. The purpose of this extension is to ensure that more firms will make use of the scheme, so even more employees can stay in work.
The strengthened scheme means that the maximum rate of support for both salaried employees and hourly workers (with no notice period) will be raised from 23.000 and 26.000 to 30.000 DKK per month respectively for each full-time employee.
This more comprehensive temporary wage compensation scheme will be in effect from the 9 March until 9 July 2020. Firms that have already applied to receive wage compensation will also be covered by the higher rate of compensation.
Tripartite agreement about temporary wage compensation, March 2020
The government and the social partners reached a tripartite agreement on 15 March 2020 about a temporary wage compensation scheme for wage earners in the private sector. The agreement is an important contribution from the government and the social partners, to ensure that COVID-19 will affect the labour and livelihood of the Danes as little as possible.
With the agreement, the government and the social partners guarantee that firms who have experienced a decrease in orders and customers due to COVID-19 and thus cannot afford their employees will receive a partial refusion refund for their incurred expenses for three months.
By applying for the compensation scheme, firms are obliged to refrain from laying off workers due to economic reasons, during the period they receive compensation.
The temporary compensation scheme is applicable from 9 March until 9 June 2020.