The Supreme Court has established the principles for determining compensation amounts pursuant to the Act on Employment Contracts, while at the same time dismissing the practice followed by the high courts in a number of cases of awarding larger compensation amounts than those outlined in the new guidelines.
In its December 17 2010 judgment the Supreme Court established the following clear guidelines for determining compensation amounts under the act:
- Compensation of up to Dkr1,000 may be awarded for excusable deficiencies in the employment contract that are of no specific importance;
- Compensation of between Dkr1,000 and Dkr5,000 (or fixed at Dkr2,500) may be awarded for deficiencies of no specific importance;
- Compensation of between Dkr5,000 and Dkr10,000 (or fixed at Dkr7,500) may be awarded for disputes over deficiencies (or the concrete risk thereof);
- Compensation of Dkr25,000 may be awarded in aggravating circumstances (eg, in case of deliberate circumvention or continued and persistent inaction); and
- Up to 20 weeks' salary may be awarded for particularly gross negligence (eg, if there is a risk that the employee will suffer a considerable loss).
The governing principles in this regard were outlined in the court's grounds of judgment as follows.
If an employment contract is deficient in one or several respects that are excusable and of no specific importance to the employee, the triviality limit set forth in Section 6(2) of the act will apply, with compensation to be fixed at up to Dkr1,000.
In the event of any deficiencies in the employment contract (or if no employment contract has been drafted), which are of no specific importance to the employee, compensation should be fixed at an amount of up to Dkr5,000, depending on the nature of the case. In the absence of any basis for increasing or reducing the amount, compensation should be fixed at Dkr2,500. A reason to reduce the amount - or even, depending on the circumstances, to award no compensation - might be that the employer remedied the deficiency immediately after it was pointed out. On the other hand, a decisive factor for increasing the amount might be that the employer had failed to remedy the deficiency.
In cases involving a dispute over the employment relationship (or a concrete risk thereof) that could have been avoided by correctly complying with the duty of information, compensation should be fixed at an amount of up to Dkr10,000, depending on the nature and importance of the case. In the absence of any basis for increasing or reducing the amount, compensation should be fixed at Dkr7,500. Reasons for increasing the amount include the following:
- The employment contract contains terms and conditions that are misleading in relation to the employee's legal status pursuant to law or a collective bargaining agreement;
- Such neglect of duty has entailed a risk of loss of rights, including a loss of considerable remuneration amounts;
- It is not an isolated occurrence; or
- The employer failed to remedy the deficiency after it was pointed out.
On the other hand, the amount might be reduced because the matter is of minor importance or excusable, or is an isolated occurrence.
In the event of aggravating circumstances, such as the employer's deliberate attempts to circumvent the employee's rights or continued and persistent inaction with regard to requests to issue an employment contract, compensation may be fixed at an amount of up to 20 weeks' salary, depending on the nature and importance of the deficiency or deficiencies. However, compensation of more than Dkr25,000 should be awarded only in particularly serious cases, which at the same time have exposed the employee to a risk of suffering considerable loss.
In the event of several successive violations of the act (eg, where an employee has received various deficient employment contracts), a specific overall assessment must be made.
For further information on this topic please contact Tina Reissmann at Plesner by telephone (+45 33 12 11 33), fax (+45 33 12 00 14) or email ([email protected]).