DK introduces new bill to improve working conditions

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The Ministry of Employment has proposed a new bill, which contains significant changes to posted employees’ working conditions in Denmark. The new bill will implement the revised Posting of Workers Directive (“PWD”) and is expected to enter into force on 1 January 2021, however with retroactive effect from 30 July 2020.

How will this affect employers?

The bill will change the existing Danish regulations significantly, increasing equal treatment for posted employees in relation to the pay and working conditions, which will apply in Denmark. The revision of PWD introduced changes in three main areas:

remuneration of Posted Workers
long-term posting
rules on temporary agency workers

If the draft bill is adopted in its current form, it will lead to several changes.

7 changes in the employment law:

The list of “the hard core” conditions that apply to posted employees (i.e. the conditions which apply regardless of which country’s law otherwise applies to the posting) will be expanded to include accommodation and allowances or reimbursement of expenses to cover travel and meals.
A new maximum time period establishes that employees posted for longer than 12 months (with possibility of prolongation to 18 months) will be subject to working conditions in addition to “the hard core” conditions.
Companies can prolong the maximum time period to 18 months by informing the Danish registry (RUT) no later than the day the employee has been posted for 12 months.
Companies that replace a posted employee with another employee to carry out the same tasks at the same place should be aware that each posting will be calculated as one continuous period.
When the effective duration of the posting exceeds 12 months, a company that is posting its workers to Denmark will be required to apply all mandatory employment conditions in force in Denmark – in addition to “the hard core” - (e.g. rules on a guaranteed salary in the event of illness for salaried employees). However, the Danish rules relating to concluding and terminating employment contracts, including non-compete clauses and the rules on complementary pensions do not apply.
The word ‘minimum wage’ is changed to “remuneration” to increase equality by ensuring the posted employees the same remuneration as locally hired employees. No mandatory minimum wage exists in Denmark, and the bill does not introduce this. This obligation for equal treatment in relation to wages therefore still only applies in relation to collective bargaining agreements that the company may have signed up to. Companies without collective bargaining agreements will consequently not be required to apply payment terms in collective bargaining agreements adopted by the most representative unions. A detailed overview of what should be included in “remuneration” will be published on workplacedenmark.dk.
And finally, user undertakings, where employees are posted through a temp agency, must notify the agency about the pay and working conditions the employee will be entitled to.

What about registrations?

Registration requirements within EU - as RUT in Denmark - in regard to the Posted Workers will not be affected by the change in the Posted Workers Directive.

What should employers do?

The proposed Danish bill implementing the amendments in the PWD will have significant impact on employers posting employees to Denmark. It is furthermore clear that the amended directive (effective from 30 July 2020) already has consequences for all employers posting employees to any EU-member state. Since the implementation of the amendments in the PWD differs from member state to member state, we recommend that companies, who post employees to perform work in any EU-member state, contact KPMG in order to clarify which steps need to be taken in order to ensure compliance.

The draft bill is currently in the hearing phase. We will follow the development closely and follow up with more information.