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Last updated at June 16, 2022
beautiful scenery in the country of denmark

Currency

Danish Krone (DKK)

Capital

Copenhagen

Time Zone

GMT

Key Country Facts

Introduction

Denmark is a small European country of approximately 5.8 million inhabitants known for its high standard of living and high global ranking in comparison metrics such as population happiness, health care, civil liberties and low perception of corruption.

Area

Denmark itself consists of 3 major areas, the peninsula of Jutland, the small island of Funen and the larger island of Sealand which is by far the most densely populated area. There are many additional smaller islands. Greenland and the Faroe Islands also constitute The Kingdom of Denmark but are governed mostly autonomously.

Climate

Denmark has a temperate climate. Due to is northerly location in winter days are short but in summer the sun rises as early as 4am and may not set until as late as 10pm.

Culture

Denmark is a prosperous European nation with close cultural ties to its Scandinavian neighbors Sweden and Norway. Social equality, modesty and equal behavior (Janteloven) are important elements of Danish culture.

Religion

Mostly Christian (Lutheran), although over 70% of the population are members of the Church of Denmark, only 3% regularly attend church services. Danish Muslims make up approximately 5% of the population.

Official Language

Danish. Many Danes are also able to converse in Swedish and Norwegian as the languages are related and in the south of Jutland German is recognized as a minority language. Most Danes speak English fluently as a second language.

Denmark HR at a Glance

Employment Law

Unlike many other European countries, Denmark does not have a general labour statute conferring certain minimum rights on employees. Instead, legislation is fragmented in the sense that many individual statutes are applicable depending on the type of employment relationship involved. For example, the Danish Salaried Employees Act only applies to salaried employees (white-collar workers), and there are specific statutes which apply to seamen, vocational trainees, civil servants and employees in the agricultural sector.

The main sources of Danish Employment legislation are; the above Salaried Employees Act (and other alternatives); collective bargaining agreements and individual employment contract – in that order of precedence.

Employment Contract

Danish employers are obligated by law to provide employees with an employment contract. It is not an obligation for the contract to be written in Danish.

The employment contract must at least contain information on the following:

  • Employer’s and employee’s name and address.
  • The location of the workplace and the employer’s main office or address.
  • Job description or employee’s job title, rank or job category.
  • Employment commencement date.
  • Expected duration of employment, if not permanent employment.
  • The employee’s rights regarding holidays, including whether salary will be paid while the employee is on holiday.
  • Employee’s and employer’s terms of notice.
  • The applicable or agreed salary and allowances or other forms of remuneration that are not included herein, e.g. pension contributions, lodging and meals. The frequency of salary payments must also be included in the contract.
  • The standard daily or weekly working hours.
  • Information on which collective agreements or other agreements regulate the employment and working conditions.

Contract Terms

The terms of the employment contract may not provide for lesser conditions than any minimum legal entitlements established in employment legislation or by applicable collective agreement.

Probation Period/ Trial Period

Probation Periods are commonplace. There is a legislated maximum period of 3 months. This period may not be extended. During the probation period both parties are entitled to terminate the employment contract by giving 14 days’ notice.

Working Hours

The full-time working week in Denmark is typically 37 hours, distributed over 5 days. Working hours are most typically considered between 06.00 and 18.00. The Danish workplace culture reflects strongly on a positive work-life balance. It is therefore fairly unusual for these hours to be often or continuously exceeded except in exceptional circumstances. The working hours should be stated in the employment contract.

Overtime

Denmark has no specific legislation governing the regulation of overtime. Many contracts (for salaried but not hourly paid workers) state that the salary includes payment for overtime. Most often rules governing overtime payment will be stated in the applicable collective bargaining agreement. The most typical model is 50% for the first 3 hours and 100% for subsequent hours and Sundays or public holidays.

In any event, according to EU’s Working Time Directive implemented in Denmark by the Working Environment Act, an employee is not allowed to work more than 48 hours per week on average during a 4 months’ reference period.

Bonus

Bonuses are fairly common in Denmark, although not mandatory. Bonus terms and amounts will differ widely depending on seniority, function and industry. It is good practice to outline bonus terms in writing. The Danish Salaried Employees Act guarantees that upon an employee’s resignation, they are entitled to a proportional share of any bonus payment they would have received if the employment had continued until the time of disbursement of such bonus

Termination

Termination is permissible on fair grounds. There is no specific legislation regulating disciplinary procedures however in most instances any dismissal due to the employee’s circumstances (performance issues etc.) will be deemed unfair if the employee has not previously been issued with a prior written warning.

During a notice period the employer has the right to place the employee on garden leave however there is no statutory right for the employer to pay in lieu of notice.

Danish legislation governing employer/employee relationships is typically more liberal than in many other EU countries and tends to be more favorable towards the employer. However, certain categories of employees are specially protected in respect of termination, these include; pregnant employees or those on maternity/paternity leave, health and safety representatives and trade union representatives amongst others.

Employees who have been employed for less than 12 months and are therefore not covered by the Salaried Employees Act or those who are not covered by a collective agreement do not have an automatic legal protection against unfair dismissal.

Notice Period

Length of Employment Length of Notice
0 – 3 months 14 days
3 – 6 months 1 month
6 months – 3 years 3 months
3 – 6 years 4 months
6 – 9 years 5 months
More than 9 years 6 months

Post-Termination Restraints/ Restrictive Covenants

In Denmark, post-employment obligation clauses are governed by the Danish Act on Restrictive Covenants. The Act includes quite rigid and specific requirements in terms of how the post-employment obligation clause must be drafted in order to be enforceable.

Under the act, there are three types of post-employment obligation clauses; 1) a non-competition clause which may remain in force for either 6 or 12 months post-employment, 2) a non-solicitation of customers clause which may remain in force for either 6 or 12 months post-employment and 3) a combined clause which may only remain in force for 6 months post-employment.

An employee can only be asked to sign a non-competition clause or a combined clause if the employee holds a particularly trusted position or if the employee has made an invention. A non-solicitation clause may only apply to customers with whom the employee has had a “significant” relationship and the employee must be given a list of applicable customers on termination of employment.

The employee is entitled to compensation during the restricted period of a non-competition clause. Depending on the length of the restricted period, whether it is 6 or 12 months, the compensation must correspond to either 40 % or 60 % of the employee’s monthly salary.

In the event of a termination initiated by the employer, the non-competition clause becomes unenforceable.

Redundancy/ Severance Pay

Severance pay may be due in addition to the contractual notice period payment. In case of a dismissed employee having worked continuously for the same employer for 12-17 years the employer shall pay a sum corresponding to, respectively, 1-3-months’ salary. There is no severance pay for those having worked less than 12 years with the same employer.

Economic dismissals are covered by severance pay rules. There is no specific statutory redundancy payment for collective dismissal

Timesheets

In 2019, the European Court of Justice stated that companies must set up a system to record the working time of their employees. Thus, employers are obliged to implement an objective, reliable and accessible system that allows recording of the daily workday performed by each employee.

Trade Unions

Membership of trade unions in Denmark is quite high compared to many other European countries although it has fallen considerably in recent years. It is estimated that around two-thirds of the workforce are union members currently. Trade union membership is voluntary in Denmark and should not be influenced by the employer.

Fixed Term Contracts

Fixed term contracts are allowed for specified periods of time and/or for specific tasks. There are no regulated minimum or maximum terms for a fixed term contract, but the time limit must be grounded in a specific circumstance for that employment. Repeated renewal of a temporary employment contract must be based on objective reasons. Temporary workers are entitled to the same rights and benefits as those applicable to a comparable full-time employee unless any different treatment is based on objective reasons.

In practice a cumulated duration of two years is considered to be the maximum and three or more renewals may be considered suspicious and in breach of the Salaried Employees Act by a court.

Tax and Social Security

Personal Income Tax

Income is divided into three categories:

1. Personal income (salary and employment benefits, self-employment income, profit from renting out real estate, etc.).

2. Income from capital (interest income, etc.).

3. Share income (dividend, profit/loss from shares, etc.).

All personal income is subject to AM (Labour Market Contribution) tax of 8%. This tax is deducted from the income before the other taxes are calculated.

The income tax rates are progressive and comprise state, municipality and church taxes. The lowest tax rate is approx. 36% up to a marginal income tax rate of 51%.

Individuals are entitled to an annual personal allowance of DKK 46,500, i.e. the first DKK 46,500 of taxable income (after payment of 8% AM-tax) is tax free. Unused personal allowance is transferable between spouses.

Most common allowable deductions are:

  • Employee contributions to approved pension schemes.
  • Travel between home and work.
  • Unemployment insurance and union membership subscription.
  • Interest expenses (on mortgage and other debt).
  • Double household.
  • Charity contributions.
  • Travel expenses connected to work and not covered by employer (maximum DKK 28,600).

Taxation of Earned Income (Salary, Company car, Stock Options etc.)

Taxable Base (DKK) Tax Rate %
0 – 50,543 8
50,543 – 577,174 41*
>577,174 5 – 56*

Employers must deduct tax and social security contributions from employees’ salary, at the rate indicated by the tax authorities on the employees’ tax card.

Social Security

In Denmark social security contributions are collected through the tax system. In addition to the above-mentioned Labour Market Contribution of 8% on all income, social security contributions are mandatory for all employed citizens.

Danish employers must – like employers in most other European countries – pay social security contributions for their employees. However, compared to most other countries, the Danish contributions are quite modest with average contributions of approximately DKK 10,000 per year per full-time employee.

The rates per employee for 2022 are:

Headings Quarterly (DKK) Annually (DKK)
AUB (Employers’ Reimbursement System) 803.25 3213.00
AES (Labour Market Insurance) 99.00 396.00
Barsel.dk (Maternity/Paternity) 337.50 1350.00
Finansierings bidrag (Employees’ Guarantee Fund) 142.75 571.00
Danish Labour Market Fund 1.75 7.00
Lønmodtagernes feriemidler (accrued holiday pay) 4.75 19.00
Total per full time employee 1389.00 5556.00

*The above table serves as a broad guideline. Actual rates charged will differ.

Employees

Salary Payment

Salary is generally calculated monthly in arrears and paid on or around the last working day of the month.

Payslip

In Denmark, payslips or advices are a legal requirement.

Annual Leave

  • Employees in Denmark are entitled to paid annual leave from their first day of employment, earning and using concurrently. With a minimum allowance of 25 days per year, employees accrue 2.08 days of holiday every month, which can be used whenever they want. The holiday will be accrued from 1 September to 31 August (12 months) and can be used between 1 September and 31 December (16 months). This gives both employee and employer more flexibility.
  • As of 31 December each year, employees with unused balances may roll over a maximum of 5 days to the new year. Anything above this will be paid out to the Danish Vacation Fund, Feriekonto. The payment of unused days to the Feriekonto is 12.5% of the monthly salary per day.
  • It is often common that employees receive an additional 5 days of vacation, known as feriefridage. These days are given on a use-or-lose basis. They cannot be saved nor will any unused days be paid to the Feriekonto.
  • There is a holiday bonus of 1% of base salary, which is paid out twice a year. It can be disbursed with pay for May (for the 1st 9 months) and pay for August (remaining 3 months).

Sick Leave

  • Salaried employees are entitled to absence during sickness. The Salaried Employees Act and most collective agreements provide that employees are generally entitled to at least 90% of full salary during sickness. Generally, for the first 30 days of sickness the employer is obliged to pay compensation. After that period, the authorities will continue to fund the sickness benefit. In such cases the employer will most often pay the compensation and then be refunded by the authorities. As a general rule, employees will receive sickness benefits for a maximum of 22 weeks in a nine-month period.
  • As a rule, sickness is a lawful absence and consequently is not in itself a fair reason for dismissal. There are exceptions though; e.g. in connection with long-term sickness where the employer cannot determine when the employee will be able to resume work and the works tasks cannot be completed by other colleagues.

Compassionate & Bereavement Leave

  • Parents are granted paid leave of absence to care for a sick, minor, child on its first and second day of illness.
  • In June 2020 the Danish parliament introduced regulation that allows all parents who lose a child under the age of 18 the right to take six months of bereavement leave.
  • Employees are entitled to absence from work if they experience “compelling family reasons” in the event of illness or accident, including death in the family. In the event of such a force majeure situation, the employer may not deny the employee the right to leave. However, the absence is without pay. In practice most employers will have a policy for paid leave in the event of close family bereavement.

Maternity & Parental Leave

  • Pregnant women have the right to 4 weeks of leave prior to delivery and thereafter 14 weeks of maternity leave. Fathers have the right to 2 weeks of paternity leave, which must be taken within 14 weeks of the birth of the child.
  • Following the first 14 weeks of maternity leave, each parent has the right to parental leave of up to 32 weeks. Fathers may commence their leave within the first 14 weeks after delivery of the child should they choose.
  • Each parent is entitled to extend their parental leave by 8 weeks. However, parents who are in employment may alternatively extend their leave by up to 14 weeks. If the leave is extended the daily allowance will be decreased during the period of leave, as the 32 weeks of daily allowances is the maximum sum that may be paid out.
  • Either parent is allowed to defer some of the 32 weeks parental leave until any point before the child turns nine years old. However, the leave cannot be deferred if the option to extend has been taken.
  • The same rights apply for adoptive parents as for biological parents.

Public Holidays

Employees are entitled to full pay on public holidays. It is highly unusual for an employer to require a white-collar employee to work on a public holiday. If that happens the overtime rate is typically 200%. Generally, public holidays that fall on a weekend are not carried over to the following working day.

Benefits to the Employee in Denmark

Statutory Benefits

Denmark’s social security program includes excellent state health insurance and provision, unemployment insurance, child allowance, excellent parental benefits, disability benefits, state pension and more.

Other Benefits

Private Health Insurance schemes are available; however, this is not considered as such an important benefit as is may be in other countries due to the Danish state health system being widely acknowledged as an excellent provision.

Most fringe benefits are subject to tax.

Danish employers are seen as leaders in the provision of well-being and flexible working environments.

Visas and Foreign Workers

General Information

Citizens from the Nordic countries, the European Union (EU), the European Economic Area (EEA) and Switzerland are entitled to live and work in Denmark. However, if you are an EU/EEA or Swiss citizen and intend to reside in Denmark for more than three months, you must apply for a residence document.

If you are a citizen from a country outside the EU/EEA or Switzerland, you must apply for a residence and work permit before you enter Denmark. You do not need a work permit to take on employment in Denmark if you hold a residence permit through family reunification, asylum or on humanitarian grounds.

There are various schemes in place to allow highly skilled professionals to obtain residence and work permits in Denmark quickly and easily. Work permits are issued on the basis of an individual’s qualifications and to some degree Danish labour market considerations. Particularly relevant examples of these schemes are:

  • Fast Track Scheme – The Fast Track Scheme makes it faster and easier for certified companies to recruit foreign employees with special qualifications to work in Denmark.
  • Pay Limit Scheme – Is designed for recruitment of foreign employees who will be earning a salary of at least DKK 436,000 p.a.
  • The Positive List – The Positive List is a list of skilled professions experiencing a shortage of qualified professionals in Denmark. Foreign employees that have been offered a job included in the Positive List can apply for a Danish residence and work permit based on this scheme.

Getting a Tax Number

All new residents to Denmark must notify the municipal authorities (Folkeregistret).

In Denmark each person has a personal registration number, which is called a CPR (Central Person Register) number. The CPR number is essential in relation to any contact with the Danish authorities and especially in connection to tax and social security issues.

Public Holidays in 2022

S.No Occasion Date
1. New Year’s Day January 1st
2. Maundy Thursday April 14th
3. Good Friday April 15th
4. Easter Monday April 18th
5. May Day May 1st
6. General Prayer Day May 13th
7. Ascension Day May 26th
8. Whit Monday June 6th
9. Christmas Day December 25th
10. Boxing Day December

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