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LEGAL NEWS - New bill about employment clauses

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15. June 2015

In April 2015 the Danish Parliament has drafted a bill on employment clauses. The main purpose of the bill is to limit the use of employment clauses, including competition and customer clauses, and thus increase the mobility of employees.

The main purpose of the bill is to limit the use of employment clauses, including competition and customer clauses, and thus increase the mobility of employees. If the bill is adopted, it will provide significant changes.  

The most important changes compared to the present situation are the following:

  • The Act about Employment Clauses will apply to all kinds of clauses.
 
  • The law covers all employees, and it is thus no longer a condition that the employee is employed under the conditions of the Salaried-Employees Act for being entitled to compensation under the provisions of the new bill.
 
  • The use of employment clauses presupposes that the employee holds a particularly trusted position. 
 
  • The duration of competition and customer clauses is restricted to a maximum of 6 months from the time of resignation if the employee is covered by both kinds of clauses. For employees covered by either a competition or a customer clause the maximum duration of the clause is 12 months from the time of resignation.
 
  • The compensation to be paid to the employee is a monthly salary. If the term of validity of the clause is 6 months, the compensation must be 40 % of the employee’s salary at the time of resignation. In the case of combined clauses and clauses with a duration of 6 – 12 months, the compensation must be 60 % at the time of resignation.
 
  • The employer must pay the compensation for the first 2 months as a lump sum at the time of resignation. Even though the employee finds another job during the termination period, the employee is entitled to receive the lump sum. 

If the Danish Parliament adopts the bill, it will come into force on 1 July 2015 and will thus be applicable to all employment contracts concluded after that date. NJORD Law Firm recommends that all employers pay attention to the changes. NJRD Law Firm can assist with individual questions and with the drafting of employment contracts.

For further information, please contact lawyer Niels Gade-Jacobsen at ngj@njordlaw.com .




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