New Rules on Severance Allowances now in force

The bill on severance allowances payable to all salaried employees having attained a seniority of 12 years is now adopted.

The bill on the amendment of Section 2a of the Danish Salaried Employee Act has now been adopted by the Danish Parliament.

The adoption of the bill implies a simplification of the rulesregarding severance allowances payable to salaried employees and introduces new time limits with regard to dismissed salaried employees being entitled to receive a severance allowance.

The new rules entail that salaried employees who havebeen employed for more than 12 years on expiry of the period of notice continue to be entitled to a severance allowance corresponding to one month's salary. Furthermore, salaried employees who have been employedfor more than 17 years on the date of expiry of the periodof notice are entitled to a severance allowance corresponding to three months' salary. The amendment thus means that the qualification period for a severance allowance of three months' salary is reduced by one year.At the same time, the previous intermediate step with a severance allowance of two months' salary after 15 years of employment has been abolished.

In future, it will no longer be relevant to take into account whether the dismissed salaried employee is entitled to receive state pension or old-age pension. The salaried employee will in any case be entitled to an allowance, provided the seniority requirements are fulfilled.

The severance allowances are still to be calculated on basisof the salaried employee's income at the time of expiry ofthe period of notice, including commission, bonus, value of company car and free telephone and the employer's pension contribution. Holiday allowance is still not to be included.

The amendment of the act entered into force on 1 February 2015 and will be applicable to terminations of employment taking place after that date.

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