As a consequence of the corona crisis, several of IDA’s members have been asked to work less hours for less pay because their employers are facing financial challenges.
Changes such as these, regardless of their scope, are always considered significant changes to your job description, and as such, you are entitled to fair warning in accordance with the conditions stated in your contract.
However, your employer may want you to accept these changes immediately in order to protect their liquidity. For such changes to be valid, if you are a member of IDA, your employer needs acceptance from you personally.
Our members are typically not given very long to either accept or reject the agreement. However, considering how accepting a pay cut may severely affect your personal situation, your employer should give you reasonable time for reflection.
You may be faced with the situation that, if you do not say yes to working less hours for less pay, you will lose your job. Unfortunately, you are seldom given the opportunity to negotiate the terms presented by your employer.
This is why, in general, IDA is not happy about such agreements, because they do not contain a guarantee that your employment will not be terminated.
Consider the situation that your employment is terminated during the period you are working less hours for less pay. In this kind of situation, it would have been in your best interest to have made a reasonable severance agreement with your employer, and then look for a new job.
If the terms of your agreement are not fair, it may end up being very expensive for you; this is why we recommend you contact IDA and your unemployment insurance fund before you accept the terms.
This will protect you in the event that your employer terminates your employment, goes bankrupt or similar.
Note that should your employer terminate your employment because you have said no to working less hours for less pay, then this may be in conflict with the Part Time Act, unless your employer can prove that your termination is in no way related to your rejection of the agreement to work less hours for less pay.
However, please note that if your employer is hemorrhaging financially, it will not be difficult for them to lift the burden of proof in this regard.
This is by no means a pleasant situation to be in; however, this is what you should try to include in your agreement:
Any agreement to work less hours for less pay should always be temporary. Your agreement should state that should your employment be terminated during the agreement period, you will return to your standard terms and conditions.
The agreement should include provisions regarding your new working hours, including when and for how long you should work every day. This may be important if you become sick. It makes no sense to agree to work less hours, but still have an all-inclusive salary.
Your new salary, which will often be reduced in accordance with your new working hours, must be stated in the agreement. You can try to retain the level of your pension contribution even though your basic salary is reduced.
With regard to paid holiday, your salary during holiday periods is based on your salary at the time of your holiday.
If your working hours are reduced by 20 per cent or less, your salary during your holiday will be calculated based on your reduced salary. This is not in your best interest if you remain on reduced working hours during the short holiday year running from 1 May 2020 to 30 September 2020.
It would be in your best interest if you and your employer agree that you will be paid your full salary during any holiday taken in the short holiday year, regardless of whether you are working less hours for less pay at the time of your holiday.
If your working hours are reduced by more than 20 per cent, special rules apply pursuant to the Holiday Act. Contact IDA for more information about this.
You should make an agreement with your employer that holiday pay at the time of termination of your employment is calculated based on your original, higher salary, and not on your reduced salary.
This will be important if your employer does not make it through the financial crisis and consequently terminates your employment.
If your contract includes a bonus scheme, you should consider how agreeing to work less hours for less pay may affect your bonus scheme. For example, if your bonus is linked to your performance, and you agree to work less hours, then your bonus should be calculated accordingly.
Moreover, note that if your employer goes bankrupt, Lønmodtagernes Garantifond (LG) will cover your salary based on your reduced salary. In addition, unless you have agreed to other terms, any extra unemployment insurance scheme you may have and any compensation related to your dismissal are calculated based on your reduced salary.
In some situations, you may be entitled to supplementary unemployment benefits from your unemployment insurance fund (A-kassen) when you work less hours for less pay. Read more about this under “arbejdsfordeling” (in Danish).
In addition to the above, you should always contact your unemployment insurance fund (A-kassen) because an agreement to work less hours for less pay will often affect your entitlement to unemployment benefits and your entitlement to voluntary early retirement pay.