Denmark Employer of Record

If a lack of speed or local expertise are among your top concerns when expanding to or employing workers in Denmark, an employer of record may be the best option for achieving your global growth objectives.

An employer of record, sometimes known as an international PEO, enables you to quickly hire and onboard workers in Denmark―often in as little as two weeks―without having to take on the cost and risk of establishing a local entity.

Learn about the hiring, employment, payroll and benefits requirements for workers in Denmark and how our employer of record service, Global Employment Outsourcing (GEO), and local HR experts can help you manage your international employment needs.

Hiring in Denmark

Despite the lack of a minimum wage, Danish employees enjoy some of the highest pay in the world, as well as a very high level of salary equity. Danes prefer letting the market economy reign versus implementing for a lot of government protections. As a result, there are fewer protections for workers than in other EU member countries.

Even so, employment in Denmark is highly regulated, so compliant employment contracts are an essential business need. As your employer of record and PEO in Denmark, we can ensure that every contract, for every worker, meets all requirements. We can also provide you with guidance about cultural norms and hiring best practices and keep you up-to-date with employment regulations as they change.

Employment contracts in Denmark

As you look to hire employees in Denmark, here are some common regulations you’ll need to know to create a compliant contract, as well as how an employer of record and PEO can provide support for your unique HR needs.

Working hours
The Danish Act on Working Hours states that the average working hours over a period of seven days, when calculated over a period of four months, cannot exceed 48 hours per week, including overtime.

Employees are entitled to one day off per a week, which should be Sunday if possible.

Compensation
As you consider the appropriate salary to offer new employees, keep in mind:

There is no required minimum wage in Denmark.
There is no required overtime pay.
Collective agreements regulate the minimum wage or salary range.
Most minimum wages hover around 110 DKK per hour.
As of late 2020, Denmark was fighting a proposal by the EU to institute a minimum wage for the EU as a whole.

As your employer of record in Denmark, we can provide you with resources and insights about employee compensation, so you are better equipped to make a competitive employment offer.

Bonuses
Bonuses are not mandatory in Denmark.

Probationary period
A probationary period of up to three months may be agreed upon in an employment contract. During that time, employers and employees must give two weeks’ notice in order to terminate the contract. This probationary period cannot be extended.

Termination and severance
An employer is required to give notice for termination ranging from one to six months depending on the length of employment. Collective bargaining agreements may require as little as no notice at all or as many as 70 days. Employees over the age of 50 are entitled to 90 days’ notice after nine years of employment, and 120 days’ notice after 12 years.

An employee must give one month’s notice unless dictated by a collective agreement, which may require anywhere from no notice up to 28 days.

A salaried employee may request a written explanation of the reasons for termination. In some cases, the employee is entitled to a written warning before they are dismissed.

Salaried employees who have been terminated for cause are entitled to the following:

If they have worked for the same employer for at least 12 years: One month’s pay
If they have worked for the same employer for at least 17 years: Three months’ pay

Salaried employees terminated without cause who have been employed for at least one year are also entitled to compensation. Generally, the maximum payout is equivalent to the salary of half of the notice period. Depending on the employee’s age and seniority, this may be increased to as much as six months’ salary.

Employees who are pregnant, on parental leave or acting as a shop steward or safety representative are typically entitled to substantial compensation if terminated.

As your employer of record in Denmark, we can work with you to quickly handle the unforeseen event of an employee termination, providing legal guidance and a personalized process that ensures you stay out of labor court.

Employee benefits and paid leave in Denmark

When negotiating terms of an employment contract with a candidate in Denmark, here are some of the statutory benefits and paid leave requirements to keep in mind, as well as how an employer of record can support your company’s benefits strategy.

Maternity leave
Employees must have been employed for at least 13 weeks and 120 hours to be eligible for maternity benefits.

There are multiple kinds of leave that apply during and after pregnancy:

Pregnancy and childbirth leave beginning four weeks before the due date
Maternity leave lasting until 14 weeks after childbirth
Parental leave of 32 weeks following the 14^th week after childbirth

Beginning four weeks before the due date and lasting until 14 weeks after childbirth, pregnant employees are entitled to 50% of their salary. Individual contracts or collective bargaining agreements may extend that to full pay for part of maternity leave.

Employees who are not entitled to maternity pay from their employer may be entitled to maternity pay from the government.

Vacation
Employees earn 2.08 days of paid vacation for each month of employment per holiday year, which is defined as beginning September 1 and ending August 31. Vacation can be taken as it is accrued and for four months after, e.g., between September 1 and December 31 of the following year. Up to one week of vacation may be carried over to the following year.

Employees are entitled to 25 days of vacation a year, either paid (if eligible) or unpaid. Employees who are eligible for paid vacation are those who are also entitled to one month’s notice or more upon termination as well as paid sick leave and paid holidays. These employees are also entitled to an annual vacation bonus equal to 1% of their salary.

Employees paid on an hourly basis are entitled to a vacation allowance equal to 12.5% of their salary. Employers must pay the vacation allowance to the Danish Vacation Pay Fund on a quarterly basis, and employees receive their allowance when they take their vacation.

Employees are entitled to three consecutive weeks of vacation during the holiday year. Employers generally must accommodate an employee’s wish to take the bulk of vacation during their child’s school vacation.

Some employment agreements and most collective bargaining agreements provide for an additional five days off.

Holidays
There are 11 public holidays in Denmark:

New Year’s Day
Maundy Thursday
Good Friday
Easter Sunday
Easter Monday
General Prayer Day
Ascension
Whitsun
Whit Monday/Pentecost
Christmas Day
Boxing Day

Employees generally do not work on public holidays. Salaried employees receive full pay for these days off. Whether other employees are compensated for holidays depends on the terms of individual or collective employment contracts. A public holiday that falls on a weekend is not moved to another date.

Sick leave
Employee contracts or collective bargaining agreements determine whether an employee qualifies for paid sick leave and, if so, how much. Salaried employees are often entitled to full salary, including bonuses, during sick leave.

If an employee does not qualify for paid sick leave through their contract, they may be entitled to sickness benefits under the Danish Act on Sickness Benefits at rates set by the government. Sickness benefits are paid by the employer for the first 30 days, after which they are entitled to reimbursement from the local government.

Sick leave benefits generally are not available for more than 52 weeks during a period of 18 months.

Health coverage
All Danish residents are covered by universal health care financed by the government. A little under half of the population (42%) purchase complementary health insurance to cover co-payments, mainly for prescriptions and dental care as well as for services not covered by the state. Additionally, 30% of Danes hold supplementary insurance that gives them expanded access to healthcare providers. These supplementary insurance policies are provided primarily through employers as a benefit, though it is not a legal requirement to do so.

As your employer of record in Denmark, we may be able to provide optional supplementary medical insurance coverage for professionals and their dependents at a more cost-effective rate.

Pension
Danish citizens with permanent residence are entitled to old age pensions funded by the government as follows:

Starting at the age of 65 for those born before January 1, 1954
Starting at 65½ for those born from January 1, 1954, to June 30, 1954
Starting at 66 for those born from July 1, 1954, to December 31, 1954
Starting at 66½ for those born from January 1, 1955, to June 30, 1955
Starting at 67 for those born after June 30, 1955

The Danish Act on Labor Market Supplementary Pensions requires all employers and employees to contribute to a supplementary pension, which is in addition to the old age pension funded by the government. Monthly employer and employee contributions depend on the hours worked per month and whether the employee is paid hourly, weekly or monthly.

Employers are not legally obligated to provide pension schemes, but many collective bargaining agreements include them. In the large majority of cases, these pensions are defined contribution plans.

In the absence of a collective bargaining agreement, a private pension scheme, financed through contributions from the employer and the employee, may be established. Usually employers contribute two-thirds of it and employees contribute one-third.

Workers’ compensation
Under Danish law, employers are obligated to contribute a fixed amount per year per employee to the Labor Market Industrial Disease Insurance plan. The amount varies depending on the number of industrial diseases in their line of business.

Employers are also required to take out insurance that covers “industrial injuries.” “Temporary” injuries may be recognized as “industrial injuries,” even though they do not necessarily require treatment. Such injuries qualify as industrial as long as they have psychological or physical consequences that affect the injured person either temporarily or permanently.

Employer social costs will cover a large portion of employee benefits in Denmark, but we can consult with you about supplemental coverage options, such as additional pension contributions or life insurance, if needed.

Employee onboarding with an employer of record in Denmark

We write and validate all local employment contracts, streamlining the onboarding process for you and your Denmark employees—all you have to do is provide relevant information and review and approve the employment agreement.

As your employer of record in Denmark, we will:

Schedule a welcome call to discuss HR and employment information for Denmark, as well as answer any questions
Prepare a customized employment contract in English and in Danish (or other local language)
Share the employment contract and benefits information with the new employee for signature and review
Gather tax and banking information from the employee to set up payroll
Provide a local point of contact to the employee to answer any questions regarding their employment, local HR or payroll

The entire onboarding process for the employee is often completed in as little as two weeks.

Partner with Safeguard Global as your employer of record and PEO in Denmark

With over a decade of service, we are the longest-serving employer of record and PEO provider in the international market. Organizations around the world rely on Global Employment Outsourcing (GEO) to expand and hire in over 179 countries around the world, quickly and compliantly.

We’ve seen just about every global employment circumstance imaginable—and with our extensive knowledge of local law and culture, we know what it takes to get employment right in Denmark. We provide written contracts in the local language, salaries in the local currency and HR support in your employees’ time zone.

Additionally, as a global payroll provider we support payroll administration—including payments, filings and other calculations—in more than 150 countries and can accommodate the payroll outsourcing needs of any size organization.

Whether you’re looking to hire as part of a strategic expansion or to meet specific talent needs, our global solutions advisors can walk you through your international hiring options so you can make the right choice for your organization. Contact us today.

The information provided on or through this website is for informational purposes only and does not constitute legal advice. Safeguard Global expressly disclaims any liability with respect to warranty or representation concerning the information contained herein, including the lost essence, interpretation, accuracy and/or completeness of the information in transit and language translation.

Learn more about Global Employment Outsourcing

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