Danish Health Authority releases guidelines for employers promoting self-quarantine
The eyes of the world are currently fixed at the pandemic that COVID-19 (the new corona virus) has developed into.
COVID-19’s effects on employment matters
On the basis of the Danish government’s decision on 11th of March to close down large parts of the country for a period of 14 days (so far) in an attempt to hamper the spread of the coronavirus there are a number of considerations employers need to make. By this newsletter we aim to provide our assessment of how employers and corporations are positioned and should act in this current, unknown and difficult situation.
Ministry of Foreign Affairs’ travelling guidance as per 13th of March 2020
Advice against all travelling to:
- China: Hubei province.
- Italy: The regions Piemonte, Lombardia, Emilia-Romagna, the Aosta valley, Veneto and Marche.
- South Korea: The city Daegu and the province Gyeongbuk.
- Austria: The federal state Tyrol.
The National Health Service recommends that one stay at home for two weeks if one after 2nd of March returns to Denmark from the countries and zones listed above.
Advice against all unnecessary travelling to:
- In the rest of the world.
At 12 noon on 14th of March 2020 the Danish borders closed for all travellers, who do not have a creditable purpose. Goods will continue to be allowed access to the country. The borders will (so far) remain closed until 13th of April 2020.
The Danish government has in an effort as to alleviate the consequences of COVID-19 and thereby avoid an overload of the Danish hospital sector in the period 11. To 13. March issued a number of recommendations, orders and had new temporary legislation adopted. These initiatives are in headlines the following:
- Pupils and students at all educational institutions are sent home.
- All employees in the public-sector who do not perform critical functions are sent home.
- All schools and day-care institutions are closed.
- All employers in the private sector are urged to ensure that as many as possible are working from home, are counterbalancing overtime or utilising holiday entitlements, however with due consideration to the maintenance of contractual obligations, e.g. export and performing deliveries.
- Limited use of public transport.
- Restrictions in relation to visiting nursery homes and hospitals.
- Banning indoor gatherings of more than 100 persons.
- Additional restrictions when crossing the borders to Denmark.
- Temporary changes to the Act on Epidemics (with a sunset clause until March 2021):
- Measures against individuals.
- Banning public events, currently (13 March) for more than 100 participants.
- Prohibition against the use of public transport.
- A duty to inform the police about suspicions of virus infected citizens.
Sending employees home
All employees in the public-sector who dos not perform critical functions are being sent home ASAP and no later than on 13th of March for two weeks, so far. The concerned shall to the extent possible work from home. If this is not possible then the concerned is sent home on leave with full pay. Employees in the public-sector who have not been sent home and do not work from home shall still be readily available for the employer and can be ordered to assist with the performance of necessary public services. By critical functions is meant the personnel in the health sector, the nursery sector, the police, the prison system, the rescue service, meat control and the support for socially vulnerable people.
Employees in the private-sector
The Danish government urge all to ensure that as many as possible work from home, are counterbalancing overtime or utilising holiday entitlements, however with due consideration to the maintenance of contractual obligations, e.g. export and performing deliveries. Furthermore, it is encouraged that physical meetings are held only if it is absolutely necessary and all relevant measures are taken to ensure an appropriate behaviour in the workplace. It is assumed that the maintenance of the necessary utility sector is ensured, including e.g. the markets for food, groceries, pharmaceuticals, energy, drinking water, waste management, telecom and IT infrastructure and the financial infrastructure.
Pursuant the Danish Salaried Employees Act (section 4) staying home from work is cause for immediate dismissal of the employee, which is exempted only in case of special circumstances. Special circumstances would be illness, which by the way the employee is compelled to notify the employer about. In this connection it is worthwhile noting that it is still the employer who has the right to manage and direct the work. This has not been changed.
The Danish Employee and Competences Authority is of the opinion that if an employee is put into preventive quarantine by the health authorities or own doctor then it will be regarded as permissible absence and the employee will have right to full pay during the quarantine. The same is assumed to be the case if the health authorities or the employee’s own GPD recommend preventive quarantine.
If the employee “puts himself in quarantine” then the employer should enter into a dialogue with the employee about the reason for this and ensure himself that the employee’s behaviour does not build on misunderstandings of comments from health-related persons. Based on the information from the employee the employer shall make an assessment as whether the employee’s absence shall be regarded as permittable absence which would entitle the employee to full salary during the absence. If an employee where special circumstances do not apply (e.g. that the employee has a weakened immune system and therefore will risk his/her life and health) refuses to assume work, then it will de regarded as illegal absence and the employee can be dismissed immediately.
If the employer decides to comply with the government’s recommendation – which we view as is advisable – then the employees sent home will in most cases be entitled to salary as under sick-leave.
Employees covered by a collective bargaining agreement
For employees covered by a collective bargaining agreement (“CBA”) it is the rules in the applicable CBA that is decisive as to what extent the employee having been sent home is entitled to receive wages during the absence period.
Other relevant regulation
With reference to the rules in the Working Environment Act an employer can demand that employees who have returned from one of the above listed risk zones stays home as can otherwise potentially expose the other employees for transmission of COVID-19.
Even if an employee is not able to get his/her child in childcare the employee is compelled to meet at work. In other words: it is not an excusable absence that one cannot get a child babysit.
An employee is obligated to do any business travelling to destinations that is not covered by the Ministry of Foreign Affairs’ recommendations not to visit. If the employee refuses to do so it may have consequences for the employment. It is recommended that both the employer and the employee keep themselves updated about the Ministry of Foreign Affairs’ travelling guidance.
An employee who cannot return home from a business travel has a right to receive full salary, because it is the employer who is liable for the delay of the business travel. If a business travel drags out as a consequence of the coronavirus, then the employee is entitled to salary during the entire duration of the journey.
An employer neither can nor is allowed to decide where an employee goes on holiday, irrespective of whether it is to a risk zone or not. Many employers do however discourage their employees to travel to destinations that according to the Danish authorities poses a high-risk area/zone. When the travel has ended the employer can send the employee home into quarantine if the management deems that the employee in question poses a risk of contagion towards the other employees at the workplace. If an employee disregards warnings of travelling to certain risk zones and therefore is to be in 14 days quarantine when arriving home, the employer can then consider the employee’s absence as unjustified and dismiss the employee with immediate effect.
If an employee has not been infected by the virus and the employee does not work, then he/she shall not receive salary. Whereas, if an employee has been contracted by the virus or there is a reason for suspecting that employee has been contracted, the employee will have a right to receive payment as under sick leave. It is the employment contract or the CBA that decides whether the employee has a right to payment during sick leave.
In order to be able to introduce relevant precautions at the workplace it is necessary that the employer has knowledge about the travelling activity of the employees.
Gathering and storing of such personal data shall of course be carried out in compliance with the rules for personal data protection.
It shall amongst other be ensured that the processing of data is in compliance with the principles set out in the EU GDPR regulation, including the principles of legitimacy, reasonableness and transparency. Only personal data that are necessary for the employer to prevent transmission of virus shall be processed by the employer.
The purpose of gathering personal data shall be legitimate and impartial.
The processing of sensitive personal data including the health of the employees in relation to potential or actual transmission of COVID-19 virus will in the outset require the express consent of the employee. In certain situations, the processing can be carried out on another basis, e.g. that the employer’s duties under the working environmental rules.
An employer can be requested to or have an own legitimate interest in disclosing the information about employees contracted with virus to third parties. It could be to colleagues, customers, partners, authorities or others. In such case it must be assessed whether such disclosure is impartial, legitimate and necessary and on the basis of which legislative rules such disclosure is legal. In case of disclosure the employees concerned shall receive information about the disclosure, the recipients or categories of recipients of the personal data.
Bail-out package to private businesses
The payment of VAT and withheld income tax has temporary been postponed 3 months.
Sickness benefit may be paid out from the first day of leave.
The general provision in the Epidemics Act about full compensation to private businesses for losses suffered due to measures enacted in order to hamper transfer of viruses has been changed to a right to confiscation against full compensation. This means that the government is no longer liable to compensate private businesses for the losses they incur due to the restrictions enacted in relation to the current COVID-19 outbreak.
In order to secure liquidity in the market the contra cyclic capital buffer has been released whereby the banks will be able to lend up to DKK 200 billion to businesses. Currently, the government will guarantee loans for an aggregated amount of DKK 1 billion to small and middle-sized companies.
The Danish government will give salary/wage compensation to employees that are threatened by redundancy. For salaried employees the salary compensation will monthly amount to 75 % of the aggregated salary of the employees threatened by redundancy, however maximum DKK 23,000 per month per FTE.
For hourly paid employees the wage compensation will amount to 90 %, however maximum DKK 26,000 per month per FTE.
This applies to businesses that are faced with having to reduce the labour force by 30 % or 50 employees.
The businesses can as a maximum be covered by this scheme for a period of three month and it is a prerequisite for using it that the business omit laying off employees or use other schemes that makes it possible for the business to send employees home without pay.
Insurances against consequential loss does not cover losses derived from the measures imposed by the public authorities with an aim to hamper the spread of COVID-19.
Redundancy due to bad financial performance
In the event an employer experiences a significant drop in sales, order intake or profit it may justify termination of employees without being considered unjustified dismissals. In the event it concerns a larger number of employees the special notification rules regarding termination of a larger number of employees must be complied with. The employees are still entitled to their individual notice period set out in the Salaried Employees Act or the relevant CBA.
Denmark is an export nation and many businesses are therefore performing active cross border trading. Already now the COVID-19 has affected the international trade in various areas.
A very pertinent question is thus whether a seller or buyer – as the case may be – can escape liability for delay of delivery or receiving goods or services on the basis of force majeure principles.
Non-performance of agreements with customers carries a non-neglectable risk of being met with a demand for damages for the loss which the customer suffers. This applies in on-going trading relationships as in one-time transactions.
Under Danish law the possibility to demand damages for non-delivery of goods or services takes its outset in the agreement between the parties, i.e. what has been regulated in the contract between the parties.
Has nothing been agreed regarding this – which sometimes may be the case – then under Danish law there is a possibility for release of liability according to a general force majeure principle which can be derived from Section 24 of the Danish Sales of Goods Act (“DSGA”) either directly or analogical.
Force majeure is when a party in an agreement due to events of circumstances beyond his control makes it impossible for that party to perform under the contract. This would typically be the destruction of the goods as a result of an unexpected natural disaster, suddenly Imposed restrictions such as a ban on import or export, suddenly emerged warfare, civil revolts or national strikes. The common denominator for these events to be designated as force majeure is that they shall have emerged suddenly and that the seller (or buyer in situations of sudden currency restrictions or international sanctions) could not foresee these and thereby take preventive actions.
In Denmark it is very difficult to prevail in a matter regarding release of liability on the basis of force majeure considerations, as Danish case law is very restrictive regarding the concrete use of force majeure. If one desires to claim force majeure one will have to lift the burden of proof that it is impossible to perform under the contract due to the current force majeure situation.
In cases where the parties have included a force majeure clause in their contract and does this clause not exhaust the concrete events that can lead to force majeure then it is down to a concrete interpretation as whether an epidemic outburst of illness can be characterised as force majeure that makes it impossible to honour the contract. In this connection emphasis will be on the announcements made by the public authorities or international organisations including but not limited to the Danish Health Authority, the Serum Institute and WHO.
As mentioned above it is a paramount prerequisite in order to claim force majeure that the force majeure event is impossible to predict. The swift spreading of COVID-19 inside as well as outside the borders of China (Europe is now the new epi centre for transmission of the virus) means that the unpredictability requirements no longer is fulfilled for agreements that are made now or going forward. Magnusson recommend therefore that businesses in agreements that are formed now and going forward considers possible delivery problems, logistic problems, cancellations etc. as a result of the COVID-19 virus. Other epidemics can arise and a force majeure clause should take this into account. Thereby, the business covers a risk to the effect that liability can be shaken off if the COVID-19 (or other epidemics) might prevent the performance under the contract.
At Magnusson we have an inter-Scandinavian team that has already reviewed and advised about concrete agreement related problems that the outbreak of COVID-19 has caused. We are on short notice ready do a review of the agreements of other businesses and provide advice of how the business should act and how it secures itself the best way going forward.
Managing Partner / Advokat, Head of Corporate & M&A, Head of Capital Markets and Head of Middle East Desk
Corporate and M&A, Banking and Finance, Capital Markets, Commercial, Dispute Resolution, Industrials, Life sciences, Media, Sports and Entertainment, Middle East Group, TechnologySend me an email +45 82 51 51 00 +45 27 74 05 04
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