Hire in Denmark

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Last updated at September 01, 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. It is well known for its high standard of living and high global ranking in comparison metrics, including population happiness, healthcare, civil liberties and low levels of corruption.

Area

Denmark itself consists of three major areas: the peninsula of Jutland, the small island of Funen and the larger island of Sealand. The latter is by far the most densely populated area of the country. 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 its northerly location, days are short in the winter. However, in summer the sun rises as early as 4 a.m. and may not set until as late as 10 p.m.

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

Denmark’s population is mostly Christian (Lutheran). Although over 70% of the population are members of the Church of Denmark, only 3% regularly attend church services. Danish Muslims comprise approximately 5% of the population.

Official Language

Danish is the official language. Many Danes are also able to communicate in Swedish and Norwegian, due to the languages being closely related to Danish. German is recognized as a minority language in the south of Jutland. 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 labor statute regulating the minimum rights for employees. Instead, many individual statutes are applicable in conferring these rights. Their application will depend on the type of employment relationship involved. For example, the Danish Salaried Employees Act only applies to salaried employees, which are primarily white-collar workers. There are specific statutes applying to seamen, vocational trainees, civil servants and employees in the agricultural sector.

The main sources of Danish Employment legislation in order of precedence are the Salaried Employees Act (and other alternatives), CBAs and individual employment contracts.

Employment Contract

Danish employers are required by law to provide employees with an employment contract. However, this contract does not have to be written in Danish. 

The employment contract must contain the following details:

  • Employer and employee names and addresses
  • 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)
  • Terms of notice for the employee and the employer
  • The applicable or agreed upon salary plus allowances or other forms of remuneration that are not included herein (e.g. pension contributions, lodging and meals)
  • The frequency of salary payments
  • The standard daily or weekly working hours
  • Information on CBAs or other agreements regulating 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 an applicable CBA.

Probation Period/ Trial Period

Probation periods are commonplace in Denmark. There is a legislated maximum period of three months. This period may not be extended. During the probation period, both parties are entitled to terminate the employment contract by providing 14 days’ notice.

Working Hours

The full-time work week in Denmark is typically 37 hours. This is distributed over five days. Working hours are most typically considered between 6.00 a.m. and 6 p.m. 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 employee’s working hours should be specified within the employment contract.

Overtime

Denmark has no specific legislation regulating overtime. Many contracts for salaried employees state the salary includes payment for overtime. This does not apply for hourly paid workers. Most often, the rules governing overtime payment will be stated in the applicable CBA. The most typical model is 50% additional for the first three hours and 100% additional for subsequent hours. This 100% additional is also offered for work performed on Sundays or public holidays.

According to the 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 four months’ reference period.

Bonus

While not mandatory, bonuses are fairly common in Denmark. Bonus terms and totals widely vary, depending on seniority, function and industry. It is considered a best practice to outline bonus terms in writing. The Danish Salaried Employees Act guarantees that upon an employee’s resignation, the employee is entitled to a proportional share of any bonus payment they would have received if the employment continued through 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 invalid if the employee has not been issued with a prior written warning.

The employer can place the employee on garden leave during a notice period. However, there is no statutory right for the employer to pay in lieu of notice.

Danish legislation regulating employer-employee relationships is typically more liberal than in many other EU countries. It tends to be more favorable towards the employer. However, certain categories of employees enjoy protections against termination. These include; pregnant employees, those on maternity or paternity leave, health and safety representatives and trade union representatives. Other categories may also enjoy protections.

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 CBA are not automatically protected 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 regulated 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. 

The Act recognizes three types of post-employment obligation clauses:

1) a non-competition clause which may remain in force for either six or 12 months post-employment

2) a non-solicitation of customers clause which may remain in force for either six or 12 months post-employment

3) a combined clause which may only remain in force for six 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. The employee must be provided with a list of applicable customers upon 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 six or 12 months, the compensation must correspond to either 40% or 60% of the employee’s monthly salary. 

A non-competition clause becomes unenforceable in the event the termination is initiated by the employer.

Redundancy/ Severance Pay

Severance pay may be due to employees, in addition to the contractual notice period payment. In case of a dismissed employee having worked continuously for the same employer for 12 to17 years, the employer shall pay a sum corresponding to, respectively, one to three months of 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 a collective dismissal.

Timesheets

The European Court of Justice stated in 2019 that companies must implement an objective, reliable and accessible system to record the working time of their employees.

Trade Unions

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

Fixed Term Contracts

Fixed-term contracts are permitted for specified periods of time or for specific tasks. There are no regulated minimum or maximum terms for a fixed-term contract. However, the time limit must be grounded in a specific circumstance for that employment.

The repeated renewal of a fixed-term employment contract must be justified by objective reasons. Temporary workers are entitled to the same rights and benefits as those offered to a comparable full-time employee. Any differential treatment must be rooted in objective reasons.

In practice, a cumulative duration of two years is considered to be the maximum term. 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 and loss from shares, etc.). 

All personal income is subject to a Labor Market Contribution (‘AM’) tax of 8%. This tax is deducted from the employee’s income before other taxes are calculated.

The income tax rates are progressive and involve state, municipality and church taxes. The lowest tax rate is approximately 36% and the rates can go up to a marginal income tax rate of 51%. 

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

The 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 the 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. This is calculated at the rate indicated by the tax authorities on the employees’ tax card.

Social Security

In Denmark, social security contributions are collected by the government through the tax system. In addition to the Labor Market Contribution of 8% on all income, social security contributions are mandatory for all employed citizens.

Danish employers must, as is the case for employers in most other European countries, pay social security contributions on behalf of their employees. However, contributions in Denmark are modest as compared to most other countries. The average contribution is 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 by GoGlobal 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 are a legal requirement.

Annual Leave

  • Employees in Denmark are entitled to paid annual leave from their first day of employment. This allows them to both earn and use paid leave time. With a minimum allowance of 25 days per year, employees accrue 2.08 days of holiday every month. This can be used whenever they want. The holiday will be accrued from September 1 to August 31 (12 months) and can be used between September 1 and December 31 (16 months). This offers flexibility to both the employee and the employer.
  • As of December 31 each year, employees with unused balances may roll over a maximum of five 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. This applies per day.
  • It is common practice for employees to receive an additional five days of vacation (feriefridage). These days are given on a use-or-lose basis. They cannot be rolled over 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 CBAs 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 required to provide the employee with this 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 are entitled to sickness benefits for a maximum of 22 weeks in a nine-month period.

As a rule, sickness is deemed a lawful absence. Therefore, it will not be deemed a fair reason for dismissal. There are exceptions though, such as the case of long-term sickness where the employer cannot determine when the employee will be able to resume work and the work 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 the 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” related to an illness or accident. This includes a 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 are entitled to four weeks of leave prior to delivery. Thereafter, they have a right to 14 weeks of maternity leave. 
  • Fathers have the right to two weeks of paternity leave, which must be taken within 14 weeks following the birth of the child. 
  • After the initial 14 weeks of maternity leave, each parent is entitled to a parental leave of up to 32 weeks. Fathers may start their leave within the first 14 weeks after delivery of the child should they choose.
  • Each parent is allowed to extend their parental leave by eight weeks. However, working parents 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 because 32 weeks of daily allowances is the maximum sum that may be paid out.
  • Either parent is entitled to defer a portion 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 already been taken.
  • The same rights for biological parents apply to adoptive parents as well.

Public Holidays

Employees are entitled to be compensated at 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 comprehensive social security program includes excellent state health insurance and provisions, unemployment insurance, child allowance, 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 it may be in other countries due to the Danish state health system being widely acknowledged as providing excellent coverage.

Most fringe benefits are subject to tax.

Danish employers are seen as leaders in promoting wellbeing and offering flexible working environments.

Visas and Foreign Workers

General Information

Citizens from the Nordic countries, Switzerland, the European Union (EU) and the European Economic Area (EEA) 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 are required to apply for a residence and work permit before entering Denmark. You do not need a work permit to gain 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. To some degree, decisions will be based on Danish labor 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: This is designed for the recruitment of foreign employees who will be earning a salary of at least DKK 436,000 p.a.
  • The Positive List: This outlines 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. This is called a CPR (Central Person Register) number. The CPR number is essential when it comes to communicating with Danish authorities. It is especially important for addressing 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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