In a judgment of 29 March 2023 (BS-14998/2022-VLR), the High Court of Western Denmark found that the calculation of compensation for discrimination to an employee in a flexible job was to be based on the employer's actual payroll costs plus the flexible job subsidy from the municipality. The decision is not in accordance with three other high court judgments.

The judgment of 29 March 2023

The case related to termination of an employee who was hired in a flexible job according to the flexible job scheme from 2013 in force at the time. It is undisputed that the employee in question was disabled in the sense of the Danish Employment Non-Discrimination Act (forskelsbehandlingsloven). The High Court found that the employee had been discriminated against and consequently was entitled to compensation, and thus the question was how this compensation was to be calculated.

In 2012, the flexible job scheme was changed such that employees in flexible jobs in future were to be paid by the employer corresponding to their actual work effort and then compensated for the reduced working hours by means of a flexible job subsidy from the municipality. According to the previous scheme, the employer paid the employee a salary corresponding to a full-time job and received a municipal subsidy of either half or two-thirds of the salary depending on the degree of the reduction in working capacity.

In the calculation of compensation according to the Employment Non-Discrimination Act and the Danish Equal Treatment Act (ligebehandlingsloven) for employees covered by the previous flexible job scheme, the determination was based on the salary paid without deduction of the municipal salary subsidy.

In the judgment of 29 March 2023, the High Court concluded that the compensation to employees in flexible jobs according to the "new" scheme must also be calculated on the basis of the employee's total salary during the employment, such that the flexible job subsidy from the municipality is to be included in the calculation. Subsequently, the employee was awarded compensation corresponding to nine months' salary and flexible job subsidy.

As grounds for its decision, the High Court stated that this resulted in the highest level of accordance with the calculation practice applicable to compensation to employees covered by the previous flexible job scheme as well as the legislator's intention.

The decision is not in accordance with existing case law

In a case reported in Danish Weekly Law Reports 2022.3230V and in a judgment of 23 March 2023 (BS-15264/2021-VLR), the High Court of Western Denmark had reached the opposite result. In these judgments, the High Court had dismissed that the municipal flexible job subsidy was to be included in the calculation of compensation, as the basis for the calculation was to be the employers' actual payroll costs only.

In U 2023.1434 Ø, the High Court of Eastern Denmark reached a solution somewhere in between. The High Court of Eastern Denmark stated that the starting point would have to be the employer's actual payroll costs. Taking into account, however, that the compensation must be effective, reasonably proportionate to the violation and have a deterrent effect, the High Court of Eastern Denmark found that the compensation had to be set discretionarily and not exclusively on the basis of the actual size of the salary paid by the employer.

Comments by Bech-Bruun

With these three judgments, lack of clarity has arisen as to the legal position, for which reason it must be expected that the issue of the calculation of compensation to employees in flexible jobs will be brought before the Supreme Court. Until then, we recommend that the principle in the judgment of the High Court of Eastern Denmark in U 2023.1434 Ø be followed, and that the compensation be calculated on the basis of the employer's actual costs, but such that the compensation may be increased on the basis of a specific assessment, if this is necessary to ensure that the compensation meets the requirements for being effective, reasonably proportionate to the violation and having a deterrent effect.

Originally published 11 May 2023.

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