Denmark: Fines for Failure to Register Foreign Employees to Double

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By Marcus Hoy

Feb. 2—Fines imposed on companies that fail to register foreign employees in Denmark's Register of Foreign Service Providers (RUT) will double, effective March 1, under amendments to the Danish Act Concerning Posting of Workers, a Copenhagen-based lawyer tells Bloomberg BNA. While the sanctions are primarily aimed at companies employing semi-skilled, seasonal and construction workers, Soren Pedersen, a partner at Bird & Bird, said that the measure could also affect foreign multinationals with employees stationed in Denmark.

Since May 1, 2008, foreign companies posting workers to Denmark have been required to report certain information to the RUT, including the address of the workplace, the activity and the exact location where the service is to be provided, as well as the company registration number in its home country. This data allows inspections to be carried out and enables trade unions to identify foreign firms that have not entered into collective agreements. Since Jan. 1, 2011, the registration obligation has been mandatory prior to the signing of any contract. Fines of approximately 10,000 kroner ($1,550) have been imposed on companies that fail to provide the required data. The new bill allows sanctions for second offenses to be doubled, although the level of fine will ultimately be decided by the courts.

“The purpose of the RUT register is, among other things, to allow the Work Environment Authority to be able to pay scheduled and unannounced visits to worksites to monitor compliance with work environment and safety regulations,” Pedersen said. “Obviously from an overall perspective this aim is worth supporting. Having said that, the registration requirements are quite extensive and are not always a hundred percent clear. In this context, doubling the fines might seem quite harsh. One can only hope that the authorities will also take into consideration any mitigating circumstances.”

Legal Uncertainty

Over a number of years, the Danish system has been the subject of legal uncertainty over its compliance with European Union rules on the freedom to provide services, so Danish politicians welcomed a Dec. 3 preliminary ruling from the European Court of Justice (C315/13) holding that a similar system in Belgium conforms to the EU's Posting of Workers Directive (96/71/EC). According to that ruling, member states are free to introduce such registries provided they further social considerations such as the prevention of “social dumping,” the undercutting of a nation's standard wages and working conditions.

“The implementation of the sanctions, including to what extent mitigating factors are also taken into account, might be relevant for the question of EU compliance,” Pedersen said. “Perhaps we might have to wait and see how the authorities and ultimately the courts will implement the new sanction regime.”

To contact the reporter on this story: Marcus Hoy in Copenhagen at correspondents@bna.com

To contact the editor of this story: Rick Vollmar at rvollmar@bna.com

Text of the Danish Act Concerning Posting of Workers is available in Danish at http://www.ft.dk/samling/20141/lovforslag/l102/html_som_fremsat.htm, Bird & Bird's analysis in English at http://www.twobirds.com/en/news/articles/2015/denmark/danish-employment-law-remember-the-duty-of-registration-in-the-rut-register-for-non-danish-companies.

For more information on Danish HR law and regulation, see the Denmark primer.