Retention Bonus Not Covered by § 17a of the Danish Salaried Employees Act
On 1 May 2026, the District Court of Aarhus ruled on whether an employee was entitled to a pro rata share of a bonus under Section 17a of the Danish Salaried Employees Act, even though the employee had resigned. The Court found that the bonus scheme constituted a genuine retention bonus and was therefore not covered by Section 17a of the Danish Salaried Employees Act. Consequently, the employee was not entitled to the bonus installments that had not yet fallen due to payment at the time of resignation. The judgment has now been appealed to the High Court.
The Dispute Concerned the Nature of the Bonus Scheme
The case concerned a bonus arrangement under which a salaried employee was awarded a bonus payable in several installments. Under the bonus scheme, payment was conditional upon the employee remaining employed and not having given or received notice of termination on the agreed payment dates.
The employee subsequently resigned before all bonus installments had been paid. The key issue before the Court was whether the bonus formed part of the employee's agreed remuneration and was therefore covered by Section 17a of the Danish Salaried Employees Act, or whether it constituted a genuine retention bonus that could validly be made conditional upon the employee's continued employment on the relevant payment dates.
The employee argued that Section 17a entitled the employee to a pro rata share of the bonus that otherwise would have become payable if the employment had continued until the end of the bonus period.
The Bonus Was a Genuine Retention Bonus
The Court found that the bonus scheme constituted a genuine retention bonus and therefore fell outside the scope of Section 17a of the Danish Salaried Employees Act.
In reaching its decision, the Court emphasized, among other things, that the scheme had been established for the purpose of retaining employees, that it applied to all employees, and that payment was not contingent upon the achievement of specific performance targets or any particular work effort.
The Court further held that references to employees' loyalty and previous contributions did not alter the character of the scheme. Rather, the bonus was regarded as a reward for remaining employed during the relevant period, rather than remuneration for work performed.
Accordingly, the employee was not entitled to a pro rata share of the bonus installments that had not yet become payable at the time of resignation, and the bonus scheme was therefore not subject to Section 17a of the Danish Salaried Employees Act.
Littler's Comments
As a general rule, Section 17a of the Danish Salaried Employees Act entitles a salaried employee to a pro rata share of bonuses, profit-sharing payments (tantieme), gratuities, or similar benefits that constitute remuneration for work performed if the employment relationship ends before the payment becomes due.
The distinction between bonus schemes that constitute remuneration for work performed and genuine retention bonuses frequently gives rise to uncertainty, and there is relatively limited case law recognizing that a bonus falls outside the scope of Section 17a of the Danish Salaried Employees Act.
At the time of writing, the judgment has been appealed to the High Court, and Littler Denmark will continue to monitor the case closely.
If you have any questions about retention bonuses, the design and implementation of bonus schemes, or other employment law matters, please do not hesitate to contact us.
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Reference to the judgment:
The judgment of the District Court of Aarhus dated 1 May 2026 (Case No. BS-5422/2025-ARH) has not yet been published. Accordingly, this article is based on the Supreme Court's decision referenced below and an article published by the Confederation of Danish Industry (DI).
Supreme Court decision of 10 November 2025:
Publication of the decision in the Danish public case law database (Case No. 1031/25):
Source:
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Stephan Gheysen
Attorney & Partner
+45 27 21 05 06
