New rules for severance pay in accordance with Section 2a of the Danish Employers’ and Salaried Employees’ Act (Funktionaerloven)
The new rules apply to terminations of employment that take place after 1 February 2015
If notice is given terminating the employment of a salaried employee that has been in uninterrupted employment with the same company for 12 years or 17 years, then at the time the employee leaves, the employer must pay an amount corresponding to 1 month’s or 3 months’ wages, respectively.
Basis for calculation
Severance pay is calculated on the basis of the wage at the time at which employment ends, including the value of all fixed elements of remuneration, which includes: any applicable fixed supplements, the value of a company car/telephone/newspaper subscription/etc, and any fixed bonus and/or commission eligible to be included in the calculation. The employer’s pension contributions also form part of the basis for calculation.