Proposal would raise Pay Limit Scheme salaries

IMPACT – MEDIUM

What is the change? A proposal by a majority of Danish political parties would change the way gross salaries are calculated under the Pay Limit Scheme to exclude employer-paid housing, cars or other employee benefits in the base yearly amount of 408,800 kroner (about US$58,150).

What does the change mean? The proposal has not passed, but companies that use the scheme should be aware of the proposal. Last year, a majority of the political parties were able to pass a measure that increased the minimum salaries for skilled foreign workers using the Pay Limit Scheme.

• Implementation time frame: The measure is only in the proposal stage.
• Visas/permits affected: Work permits under the Pay Limit Scheme.
• Who is affected: Companies hiring foreign workers under the Pay Limit Scheme.
• Business impact: If the measure passes, companies will not be able to count accommodations and other employee benefits toward the gross salaries paid to Pay Limit Scheme workers.

Background: The gross minimum salary for foreign workers under the Pay Limit Scheme was raised this year and is currently 408,800 kroner per year. Currently, the gross salary may include accommodations and other allowances but 51 percent of the salary must be paid in cash to employees.

The new proposal would exclude allowances such as housing, automobiles and other benefits in calculating the base salary.

BAL Analysis: If the measure becomes law, employers will need to budget for the changes in base salaries for Pay Limit Scheme workers.  

This alert has been provided by the BAL Global Practice group and our network provider located in Denmark. For additional information, please contact your BAL attorney.

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