1 December 2014

Pension contribution, flexible payroll account and days off are covered by the pay concept of the Vocational Training Act

The Supreme Court ruled in favour of an apprentice claiming payment of pension contributions and payments to the flexible payroll account as these claims were covered by the pay concept of the Vocational Training Act.

SALARY CLAIM UNDER THE ACT

According to the Act, an apprentice must receive the salary laid down in the collective agreement of the relevant area of education even if the employment is not directly covered by the collective agreement.

NON-PAYMENT OF PENSION CONTRIBUTION

An apprentice was employed with a law firm under a training agreement covered by the Vocational Training Act. The employment was not covered by a collective agreement, but she received the minimum pay according to the Landsoverenskomst for Kontor og Lager (Collective Agreement for Retail and Wholesale Trade) between Dansk Erhverv Arbejdsgiver (the Danish Chamber of Commerce) and HK Handel and HK Privat (the Union of Commercial and Clerical Employees in Denmark) being the referencing agreement according to the pay requirements of the Act.

The employer had failed to pay pension contributions to the apprentice, and also no flexible payroll account had been established, which are all requirements according to the collective agreement.

After the expiry of the training agreement, the apprentice brought legal action against the employer claiming pension contributions and payments to the flexible payroll account as these were covered by the pay concept of the Act.

THE PAY CONCEPT DOES NOT ONLY INCLUDE BASIC PAY

This ruling is the third this year by the Supreme Court concerning the employment of apprentices.

The pay concept of section 55(2) of the Act should be construed to cover transfer of money or services of a financial value to an employee as payment in an employment relationship. The concept does not only include the basic pay, but also other pay elements and terms, see the Supreme Court ruling of 6 December 2010 (UfR 2011.763).

On 20 August 2014, the Supreme Court ruled (case 337/2012) that section 55(2) of the Act also covers the relevant collective agreement's pension scheme terms, and that an employer can generally not in full discharge fulfil its obligation to pay pension contributions by paying the contributions to the employee as pay. The employer was therefore obligated to pay the lacking contributions.

On 3 November 2014, the Supreme Court ruled that the employer was to pay any amounts relating to pension contributions, flexible payroll account and compensation for days off not taken as these amounts are also covered by the pay concept of the Act. The pay concept does therefore not only include the basic pay, but also other pay elements and terms. It is decisive whether services of a financial value have been transferred to an employee as pay in an employment relationship.

The Supreme Court therefore ruled on 24 November 2014 that both pension contributions and payment to the flexible payroll account are pay elements under the pay concept of the Act. The Supreme Court therefore ruled in favour of the apprentice.

The apprentice was also awarded compensation of DKK 10,000 for an insufficient contract of employment. The size of compensation was justified by the fact that the insufficiency had resulted in a specific dispute.

REMEMBER TO PAY PENSION CONTRIBUTIONS ETC. TO APPRENTICES

The Supreme Court establishes that the employer's pension contribution is a pay element under the pay concept of the Act, and that it is therefore important that pension contributions etc. are paid to apprentices in accordance with relevant comparable collective agreements.

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Gift policy

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Time barring of industrial injury claims

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Update Employment Law

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No age discrimination

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