The unemployment insurance system is administered by the unemployment insurance funds. These are private associations of wage or salary earners or of self-employed persons who are organised for the sole purpose of securing financial assistance for themselves in the event of unemployment.
At present there are 38 state-recognised unemployment insurance funds with 2,382,789 members (September 1996). As from 1 January 1997 the number will be reduced to 37 as two funds will be merged.
The unemployment insurance funds are closely connected with trade unions or other trade organisations, but membership of such an organisation is not required in order to become a member of an unemployment insurance fund.
The Minister of Labour will grant recognition to unemployment insurance funds which admit members from one or more specific occupations or sectors of economic activity and which have at least 5,000 members. The Minister of Labour may refuse to recognise a new unemployment insurance fund for a particular trade or occupational field if a recognised unemployment insurance fund already exists for that trade or occupational field.
1.4.1.1.1. Membership
Membership of an unemployment insurance fund is open to persons who:
- are actually residing in Denmark (except the Faroe Islands and Greenland),
- are between 18 and 65 years of age, and
- either
1. can prove that they are in waged or salaried employment, or
2. have completed vocational training of at least 18 months' duration within the occupational field covered by by the fund or basic vocational education under the Act on vocational education, provided that the fund receives a written application for membership not later than two weeks after the completion of such education/training, or
3. can show that they are working as a self-employed person as his/her main activity, or
4. can prove that they are participating in the business activities of their self-employed spouse as their main activity and more than on a temporary basis, or
5. are performing military service, or
6. hold a local government post such as mayor, town councillor or chairman of a committee or who are a member of the Danish Parliament, the Government or the European Parliament, or
7. are working as an employee and at the same time performing self-employed activities on more than a temporary basis (combination insurance).
Any person who satisfies the conditions for admission to an unemployment insurance fund may choose between full-time insurance and part-time insurance.
1.4.1.1.2. Retention of membership
A member may withdraw from an unemployment insurance fund by giving written notice of his termination of membership. Furthermore, membership may be forfeited in the case of non-payment of membership contributions due and in the case of fraud against the fund.
1.4.1.2. Conditions for entitlement to daily cash benefits
Members of unemployment insurance funds shall not be entitled to receive daily cash benefits until they have been members of a recognised unemployment insurance fund for at least 12 months.
It is also a condition (as from 1. January 1997) that the member has been employed in non-subsidised work for at least 52 weeks within the last 3 years in the case of full-time employees and for 34 weeks within the last 3 years for part-time employees.
If a member satisfies the employment requirement at the date of the start of the unemployment period, he or she may, in principle, receive unemployment benefits and offers for a total period of up to 5 years.
Members above the age of 60 years may receive unemployment benefits for a maximum period of 30 months.
Members under the age of 25 years who have not completed vocational training may, as a starting point, only receive unemployment benefits for 6 months during a period of 9 months. After this date the member has a right and duty to an offer of training or a job offer. During participation in education or training the member is entitled to an allowance corresponding to 50% of the maximum rate of unemployment benefit.
Persons who have completed vocational education or training of at least 18 months' duration will be entitled to unemployment benefits 1 month after the completion of such education or traning.
1.4.1.3.1. General provisions
Daily cash benefits are only paid to members who are unemployed and who have registered with the local public employment office as jobseekers. During the period of unemployment the member shall be available for work.
In order to be available for work, the member must be residing in Denmark and be registered here. The member must be actively seeking work and must be ready and willing to take up employment with one day's notice at the full normal working hours within his or her occupational field at the ordinary terms applying within that field. Thus there must be no actual circumstances (for instance sickness or problems with child-care facilities) or legal matters which prevent the unemployed person from taking up employment immediately. Furthermore, an unemployed person must not reserve his labour for seasonal work or for a specific workplace.
Daily cash benefits are paid in respect of 5 days per week.
1.4.1.3.2. Special provisions
In a number of cases no daily cash benefits will be payable. This applies where a member is not available for work, for instance where the member:
- is affected by a strike or lock-out;
- is ill;
- is doing military service; or
- is under confinement (prison, mental institutions, etc.);
- is not available for work for any other reason.
Moreover, no cash benefits will be payable to a member:
- who - without good cause - refuses twice within a period of 12 month to accept suitable work which is offered to him/her by the public employment service and which is not paid at a lower rate than the one applicable to similar work under the terms of a collective agreement;
- who - without good cause - twice within a period of 12 month terminates his/her employment or is dismissed for improper conduct at the place of work;
- who participates in education/training activities unless such education or training
(a) has a duration of less than 20 hours per week and does not qualify for State Educational Support (SU),
(b) takes the form of evening classes,
(c) corresponds to education at levels 8 to 10 within the compulsory school education system,
(d) takes the form of single-subject education at the preparatory secondary education stage for less than 20 hours per week, or
(e) is offered under the Act on open education and has a duration of not more than 6 hours per week.
However, daily cash benefits shall not be paid to a member who terminates his/her employment in order to undergo education/training.
- A full-time insured member may only receive supplementary benefits if the member's daily cash benefits in that particular week constitute an amount which is at least equivalent to unemployment benefits for 7.4 hours.
1.4.1.3.3. The effect of social pensions on entitlement to daily cash bene-fits
No special rules apply on availability for work in connection with social pensions. It is decided in the individual cases whether this duty to be available for work is satisfied. If the pension is paid in full or in part for health reasons, this will be a major element when evaluating whether this duty is satisfied and it will also be taken into account whether the person concerned has been working full-time at the same time as receiving the pension.
If a person is considered to satisfy the duty to be available for work while receiving at the same time a social pension, entitlement to benefits is limited to a period totalling 52 weeks within a period of 78 weeks.
1.4.1.4.1. Amount of daily cash benefits
Daily cash benefits are paid for up to 5 days per week. Unemployment benefits to an individual member may be equal to a maximum of 90% of the previous earnings of the member. The maximum absolute level of unemployment benefits amounts to DKK 2,630 per week (1997) and DKK 526 per day (1997).
For part-time insured members the maximum amount of daily cash benefits can be 2/3 of the daily cash benefits paid to full-time employees.
Persons who have completed vocational training of at least 18 months' duration and persons who have completed military service receive daily cash benefits at a special (lower) rate. This rate is fixed at 82% of the maximum rate, i.e. DKK 2,155 per week, DKK 432 per day (1997). A member who is working less than full normal working hours may receive supplementary benefits. Generally, supplementary benefits are paid at the ordinary benefit rate, but the amount is reduced proportionately.
1.4.1.4.2. Calculation of the individual rate of daily cash benefits
The first time a member submits a claim for daily cash benefits, the previous earnings are calculated on the basis of the last 3 months/12 weeks' employment. A new calculation is made after each uninterrupted period of employment of at least 12 weeks' duration. However, it is a condition that the new period of employment is concluded at least one year after conclusion of a preceding period of employment which has served as the basis for calculation
1.4.1.4.3. Effect of working and income on the amount of daily cash be-nefits
As a general rule the amount of daily cash benefits will be reduced when the member performs work, whether paid or not.
On the other hand, unearned income does not normally affect the amount of daily cash benefits. However, this does not apply to income which normally substitutes a loss of income, as for example a private pension.
1.4.1.5. Daily cash benefits in respect of holiday
A member of an unemployment insurance fund becomes entitled to holiday with holiday benefits on the basis of and in relation to payments from the unemployment insurance fund or payments from the municipal authorities in case of sickness and/or maternity in the year preceding the holiday year. Holiday benefits will only be payable, if the member qualifies for unemployment benefits immediately prior to the start of the holiday period.
1.4.1.6. Finance
The financing of the unemployment insurance system is based on labour market contributions, membership contributions and transfer payments from the State.
In 1997 the labour market contribution amounted to 8% of the wage.
The labour market contributions go into three funds: the unemployment benefit fund, the activation fund and the sickness benefit fund.
The unemployment benefit will gradually take over the financing of the share of benefits, voluntary early retirement pay and transitional allowance which is today financed by the State.
As from 1997 employers shall also contribute to the unemployment benefit fund with 0.3% of the wage bill.
In addition to this contribution calculated on the basis of the wage bill, members of unemployment insurance funds also pay a contribution. The contribution for employees in 1997 corresponds to 7.24 times the maximum rate of unemployment benefit, corresponding to DKK 3,804. For self-employed persons the annual amount is about 7.66 times the maximum rate of unemployment benefit, i.e. DKK 4,032 in 1997. In 1997 contributions are expected to amount to about 6.85 billion DKK.
In addition to the labour market contribution calculated on the basis of the wage bill employers also pay an employer contribution which is contained in the VAT of 3% which replaced the labour market contribution as per 1 January 1992. In 1997 these contributions are expected to amount to about 6.85 billion DKK.
Total expenditure on unemployment benefits, voluntary early retirement pay and transitional allowance is expected to amount to about 43.65 billion DKK in 1997.
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