Dear reader of Employment Law News

2011 introduced some very exciting legislation and case law of which we have regularly informed you in our newsletters (for more information, please see horten.dk/news).

Among the issues on which we have focused in 2011, we have in this Newsletter emphasised on the rulings concerning compensation for insufficient contracts of employment, personal data, sell-back of shares, mental working environment, the new holiday rules, abolition of multimedia tax and compensation in case of discrimination.

Finally, we will try gazing into the crystal ball and the issues that might attract focus in 2012.

We wish you a Happy New Year!

On behalf of the Employment Law Group
Erik Wendelboe Christensen

Compensation for insufficient contracts of employment

As stated in a previous Newsletter, the Supreme Court ruled in three case concerning compensation for insufficient contracts of employment on 17 December 2010. These rulings determined a number of principles when assessing compensation: 1) DKK 0 - 1,000 for excusable insufficiencies, 2) DKK 1,000 - 5,000 for insufficiencies of no specific importance, DKK 2,500 being the base point, and 3) DKK 5,000 - 10,000 for insufficiencies resulting in disputes, the base point being DKK 7,500.

For more information, see our Newsletter of 4 january 2011

A year has passed since these rulings, and during 2011, the Supreme Court's guidelines have been put into practice.

On 14 October 2011, the Eastern High Court fixed compensation at DKK 10,000 as a term in the contract of employment was contrary to mandatory law. The High Court found that the contract of employment was insufficient resulting in a specific dispute or risk for the employee, and the Court therefore fixed compensation at DKK 10,000. The compensation is in line with the Western High Court's ruling of 29 September 2011 where compensation was fixed at DKK 10,000, referring to the risk of a loss and also as the insufficiency had led to a specific dispute. 10.000 med henvisning til risikoen for tab og endvidere til, at manglen havde givet anledning til en konkret tvist.

For more information about the two rulings, see our Newsletter of 21 November 2011

Personal data

Employers should exercise special care when processing employees' personal data. The Personal Data Act prescribes when and how personal data is to be processed, and the employer should be aware of these rules in different situations.

For instance, the employer must pay attention to data disclosed concerning former employees. In 2011, the Supreme Court ruled in a case concerning exchange of data between a former and a potential employer. The former employer was ordered to pay compensation of DKK 25,000 for having disclosed data to a potential employer concerning the employee's suspected alcohol abuse. The Court attached importance to the fact that the employee's consent to the potential employer obtaining information from the former employer did not include a consent to sensitive data being obtained.

For more information, see our Newsletter of 8 June 2011

The Data Protection Agency provides guidelines describing how to process personal data. In 2011, the Agency published some new guidelines concerning the employer's processing of an employee's e-mail account - irrespective of whether the employee has left the employment voluntarily or not.

Sell-back of shares

On 23 June 2011, the Supreme Court set aside an employee's obligation to sell back shares acquired through an investment programme not covered by the Salaried Employees Act or the Stock Option Act. The setting aside was based on section 36 of the Danish Contracts Act.

The ruling is notable as it implies that buy-back schemes may be set aside if – taking the specific circumstances into consideration – it is unfair to maintain the scheme. The Supreme Court attached significant importance to the fact whether the employer or the employee had terminated the employment, and whether there was just cause for the termination.

Mental working environment

On 15 November 2011, the Supreme Court ruled in a case concerning mental working environment where the Court had to decide whether the employee could claim damages from her municipal employer after having developed a mental injury. Once again, the ruling is notable as it is the first ruling in favour of the employee where a confronting course of events resulting in a mental injury results in a claim for damages against the employer.

The employee was employed as a kindergarten teacher on specific terms due to a back injury. In connection with a staff weekend, the collaborative environment at the kindergarten was discussed, including the employee's situation. These discussions escalated, and the head and deputy head of the kindergarten then informed the employee - in front of everybody - that the management had decided to terminate her employment. After this episode, the employee reported sick for mental reasons claiming compensation for pain and suffering due to the irresponsible handling of the staff weekend resulting in a mental injury.

The Court found that the handling of the staff weekend gave rise to liability on the part of the employer and, consequently, the employee was entitled to damages.

New holiday rules

In 2011, the Danish Parliament adopted a number of amendments to the Holiday Act. These amendments came into force on 1 May 2011. The new rules concern, inter alia, limitations of the employer's access to order an employee to take holiday in the period when the employee is released from the duty to work, an extended possibility for the employee to agree on transfer of remaining holiday to the next holiday year and an extended period of limitation and increased control in case the employer does not pay holiday allowance to the employee.

Abolition of multimedia tax

2011 was also the year when a new Government was formed in Denmark, meaning that a number of amendments will be made in certain areas. By now, the Government has already introduced a Bill abolishing the exemption for employer-paid health insurance, the tax privilege concerning employee shares and the multimedia tax.

Instead, the Government re-introduces the tax on free phones.

As soon as the Bill is adopted, we will give you a detailed description of the challenges for both the employer and the employee.

Compensation under the Non-Discrimination Act

The Non-Discrimination Act prohibits direct and indirect discrimination in the labour market due to race, colour, religion or belief, political opinion, sexual orientation, age, handicap or national, social or ethnic origin. The prohibition applies when offering a person a vacancy, when terminating, transferring or promoting employees or when giving salary increases.

If an employee is subject to discrimination, he/she is entitled to compensation. According to case law, the size of the compensation depends on whether the discriminated party is not offered a job or whether he is dismissed.

So far, compensation in case of a candidate not being offered a vacancy due to discrimination has amounted to DKK 25,000.

Compensation in case of an employee being dismissed contrary to the Non-Discrimination Act amounts to three to ten months' salary.

Discrimination due to handicap

In June 2011, the Eastern High Court awarded compensation of five months' salary to an employee with a length of service of 2½ years due to dismissal based on the employee's handicap.

In August 2011, the Maritime and Commercial Court awarded four months' salary to an employee due to the employer's dismissal. After only four days' employment, the employee was dismissed because he suffered from ADHD. When assessing the compensation, the Court attached importance to the length of service.

Discrimination due to age

In two cases, the Eastern High Court has decided on dismissal due to age contrary to the Non-Discrimination Act. In the first case, the employer was ordered to pay compensation of DKK 300,000 to a single employee.

In the other case, the employer had terminated a number of elderly employees due to restructuring. The Court stated: "Subsequently, and based on the fact that they had all worked for the company for more than 25 years, compensation could appropriately be fixed at DKK 200,000."

This compensation was equivalent to seven and ten months' salary.

Conclusion

According to case law concerning discrimination, importance is attached to the length of service of the employee when assessing compensation, but also to the fact that a very short employment may result in significant compensation.

A gaze into the crystal ball - what will have primary focus in 2012?

It is difficult to make predictions, especially about the future! Notwithstanding this significant reservation, there seems to be two areas that will attract focus in 2012.

The mental working environment

With the Supreme Court ruling of 15 November 2011, see above, concerning the mental working environment, an employee succeeded for the first time in claiming that a confronting course of events resulting in a mental injury justified damages from the employer.

As a consequences of the ruling, the press wrote that "finally, things are beginning to move" referring to the court's reluctance to recognise claims for damages based on mental injuries. Whether "things are actually beginning to move", is probably too soon to say, but the ruling has undoubtedly put focus on the consequences under the law of damages of a poor mental working environment. It is natural to assume that especially the employees' organisations will follow up on this in relation to the law of damages, but also in relation to the part of the mental working environment relating to employment law, e.g. equal treatment (sexual harassment) and non-discrimination (ethnic origin, age, handicap, etc.).

HK and DJØF have proposed a special act concerning bullying corresponding to a French proposal containing, inter alia, a shared burden of proof and compensation in the event of bullying/harassment. The proposal seems to break with the basic law of damages in relation to industrial injuries - both with regard to the shared burden of proof and the possibility of compensation - without a financial loss having been suffered.

Whether the proposal - perhaps in an amended version - will one day become legislation is too early to say, but the ruling of the Supreme Court and the proposal indicate a continued focus on the mental working environment in 2012.

Non-Discrimination Act

For many years, the Non-Discrimination Act, including its level of compensation, has been an important subject. As mentioned above, case law gradually seems to emerge.

Prejudicial questions are being submitted to the European Court of Justice concerning e.g.

  • handicap, the construction of the rules concerning 120 sick days, see section 5 (2) of the Salaried Employees Act,
  • whether reduced working hours is a measure which the employer may be obligated to implement under section 2a of the Non-Discrimination Act and article 5 of the Working Directive, and
  • whether an employee, who has a functional impairment, but whose need for compensation consists of reduced working hours, is to be considered handicapped within the meaning of the directive and Act?

There is no doubt that the ruling of the European Court of Justice may be of importance to the Danish construction of the questions raised as was the case concerning claims for severance pay when having been employed for 12, 15 and 18 years under section 2a of the Salaried Employees Act.

It is therefore to be expected that the future will also focus specifically on the construction of the prohibition against discrimination due to handicap and age.

Renewal of collective agreements within the private labour market

Most collective agreements within the private labour market expiring on 29 February are to be renewed in the spring of 2012. The "major settlements" within the industry and transport sector are expected to take place mid-February, while the aggregate negotiations and the proposal of the Conciliation Board are expected at the end of March. We will follow the negotiations and inform you when the results are available. 

contact

Erik Wendelboe Christiansen

Partner