Article

LBK nr 208 af 26/02/2024 – Bekendtgørelse af lov om arbejdsløshedsforsikring m.v.

Description

The Danish Act on Unemployment Insurance establishes the legal framework for the unemployment benefit system (dagpenge), which provides financial support to individuals who become unemployed. The system is based on voluntary insurance, meaning that employees must be members of an unemployment insurance fund (a-kasse) in order to be eligible for benefits. These funds are state-recognised organisations responsible for administering unemployment benefits and related labour market measures.

In the context of restructuring, the legislation is particularly relevant for employees who are made redundant. Workers who lose their jobs due to organisational changes may be entitled to public support in the form of unemployment benefits. However, this entitlement is not automatic. It depends on prior membership of an unemployment insurance fund, as well as on meeting specific eligibility criteria related to income and employment history. This reflects the insurance-based nature of the Danish system, where access to benefits is linked to previous labour market participation and contributions.

To qualify for benefits, individuals must fulfil minimum income or employment requirements and have been members of an unemployment insurance fund for a qualifying period. In addition, beneficiaries must register as unemployed, be available for the labour market, and actively seek employment. Continued entitlement is therefore conditional on both meeting these criteria and complying with activation requirements.

The level of unemployment benefits is based on the individual’s previous income, subject to a maximum ceiling, and is paid for a limited period. The system is designed to provide partial income replacement while encouraging a return to employment through activation policies and engagement with public employment services.

Although the legislation applies broadly to all unemployed individuals, it is highly relevant in restructuring situations. By providing conditional income support to redundant employees, it helps mitigate the financial consequences of job loss and supports labour market transitions. In this way, it constitutes a key element of the Danish flexicurity model, combining labour market flexibility with income protection.

In practice, the implementation of the Act relies on cooperation between unemployment insurance funds (a-kasser) and public employment services (job centres). A-kasser are responsible for administering unemployment benefits and assessing eligibility, while job centres monitor whether individuals are available for work and actively seeking employment. Beneficiaries must comply with requirements such as registering as unemployed, participating in meetings, and engaging in activation measures.

The Act on Unemployment Insurance (LBK nr. 208 of 26/02/2024) should be considered in conjunction with the Act on Active Labour Market Policies (LBK nr. 548 of 07/05/2019). While the unemployment insurance system provides income support, the latter regulates activation measures and the role of job centres in supporting unemployed individuals. In particular, § 3 of the Act on Active Labour Market Policies establishes that unemployment insurance funds (a-kasser) are involved in the employment efforts for their members, creating a direct link between the two systems.

Commentary

From a social partner perspective, the Act does not explicitly regulate the role of trade unions. However, the unemployment insurance system is closely linked to the broader Danish labour market model. Unemployment insurance funds are recognised associations under the Act and are often organised along occupational or sectoral lines. Trade unions play an indirect role by advising members on their rights and obligations, particularly in situations involving dismissal or restructuring. This reflects the Danish flexicurity model, where cooperation between social partners and public authorities supports both labour market flexibility and income security.

The unemployment insurance system is a well-established element of the Danish labour market model and is widely implemented. It operates within the broader flexicurity framework, with indirect involvement of social partners.

Additional metadata

Cost covered by

National government

Involved actors other than national government

National government Public employment service Other

Involvement (others)

Unemployment insurance funds (a-kasser). The unemployment insurance system is financed primarily through contributions paid by insured members and public funding. Unemployment benefits are administered and paid by the unemployment insurance funds (a-kasser), while the Danish State reimburses the funds for unemployment benefit expenditure. Employers do not directly finance unemployment benefits for redundant employees, except for a limited contribution through G-days, which constitutes only a minor part of the overall financing. The State is therefore the principal contributor to the unemployment insurance system.

Thresholds

Affected employees: No, applicable in all circumstances
Company size: No, applicable in all circumstances
Additional information: No, applicable in all circumstances

Sources

• Bekendtgørelse af lov om arbejdsløshedsforsikring m.v. (LBK nr 208 af 26/02/2024)
• Lov om en aktiv beskæftigelsesindsats (LBK nr 548 af 07/05/2019)