Denmark: What’s new in employment law in 2019
The new Holiday Act, #MeToo and GDPR fines are expected to be hot topics in the field of employment law in 2019. In addition, a new Stock Options Act came into effect on 1 January and the Supreme Court will deliver its judgment in a case concerning dismissal of an employee with a ‘reduced-hours job’, more specifically on the question of whether it is fair to dismiss an employee on the grounds that the employee’s ‘reduced-hours job’ arrangement ends when the employee becomes entitled to a state pension.
1. New Holiday Act
Last year, Parliament enacted a new Holiday Act. The Act was a result of the white paper issued by a commission presided over by the former Supreme Court President in 2017.
The Act will be gradually introduced in 2019, implementing a concurrent holiday system, abolishing the discrepancy between the period of holiday accrual and the actual holiday period under the previous system.
From 1 September 2020, the accrual year and the holiday year run from 1 September to 31 August. Further, employees will have the opportunity to take holiday in an additional four-month period (until 31 December), which means that the holiday period will cover 16 months.
To avoid employees being obliged to take ten weeks of holiday during the first year the new Holiday Act is in force, the holiday accrued in the year prior to the effective date (that is, from 1 September 2019 to 31 August 2020) will be ‘frozen’. This ‘frozen’ holiday will be available again when the employee retires or leaves Denmark or otherwise leaves the Danish workforce.
Employees will still accrue 2.08 days of holiday with pay per month and it will still be possible to transfer and pay out holiday beyond 20 days if the full entitlement is not taken by 31 December.
The Act is especially relevant for newly hired employees who will now also be entitled to paid holiday in their first year of employment. Further, it is possible to take holiday before it accrues if the employer and employee agree. However, the holiday must accrue in the ongoing holiday year.
#MeToo is a topic that has attracted massive attention on a global basis in the last two years. Last year in Denmark, we saw far more cases related to sexual harassment compared to previous years. As a result of the #MeToo movement, the Ministry of Employment proposed an amendment to the Act on Equal Treatment of Men and Women. The amendment was enacted shortly before Christmas 2018 and came into force on 1 January 2019.
With the amendment, the Act now specifies that employers’ obligation to provide equal employment terms for men and women includes a prohibition on sexual harassment. The prohibition was already laid down in the previous Act; however, with the amendment it is now specified even more clearly.
Further, the amendment has specified that ‘casual’, ‘informal’ or ‘bantering’ workplace behaviour or language does not mean that employees must generally put up with offensive behaviour or language that would have been regarded as unacceptable if the tone of communication or conduct at the workplace were more professional or restrictive.
The enactment of the Act will without doubt contribute to continued focus on sexual harassment in the workplace, and we expect that in 2019 employers will consider implementing or changing internal policies on workplace behaviour.
With the entry into force of the GDPR last year, data protection was a much-debated topic in 2018. We expect that trend to continue in 2019.
Across Europe, the national data protection agencies have begun issuing their first fines. In Denmark, we have not yet seen any fines, but the Data Protection Agency has stated that they have handed over the first cases to the police, who will investigate and press charges against the relevant companies. It will be interesting to follow these first cases and see the financial level of the first fines.
4. Enhanced freedom of contract in the Stock Options Act
Several amendments to the Stock Options Act came into force on 1 January 2019.
The most significant amendment was that all limitations on what can be agreed concerning employees’ rights to share options on termination have been completely repealed. This means that employers may establish a condition that unexercised share options will lapse, regardless of the reason for termination of employment.
Consequently, the difference between cash-based incentive schemes under the Salaried Employees Act and share-based incentive schemes under the Stock Options Act has become even greater than before, and we expect that employers will use stock-based incentive programmes to a greater extent in 2019.
5. Supreme Court decision on ‘reduced-hours jobs’
Employees who are incapable of performing a full-time job for health reasons may be granted a ‘reduced-hours job’ (fleksjob in Danish). Employees in a fleksjob may, for example, work 15 hours per week, but they will receive a salary equivalent to a full-time job. The employer will only be obliged to pay for the actual hours worked by the employee. The municipality where the employee resides will pay the remaining part of the salary.
Fleksjob arrangements are widely used in Denmark, and are seen as a way of keeping people with health issues on the labour market. In April, the Supreme Court will deliver its judgment on whether it is a violation of the Anti-Discrimination Act to dismiss an employee with a fleksjob on the grounds that the arrangement will end at the time when the employee becomes entitled to a state pension.
The Maritime and Commercial Court in Copenhagen delivered its judgment last year in June and came to the conclusion that the dismissal did not constitute a violation of the Anti-Discrimination Act. The Court stated that the Directive on equal treatment in employment and occupation (2000/78/EC) provides the necessary basis for upholding a fleksjob set-up such as the Danish one. It was therefore fair to dismiss the employee on the grounds that his fleksjob arrangement ended when he became entitled to a state pension.
It will be interesting to see if the Supreme Court upholds the Copenhagen Maritime and Commercial Court judgment.