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World Wide Work Permit provides employer-of-record services for customers that want to hire employees in Denmark. Your candidate is hired via World Wide Work Permit Denmark PEO in accordance with local labor laws and can be onboarded in days instead of the months it typically takes. The individual is assigned to work on your team, working on your company’s behalf exactly as if he or she were your employee to fulfill your in-country requirements.
Our comprehensive solution and Global PEO service enable customers to run payroll in Denmark while HR services, tax, and compliance management matters are lifted from their shoulders onto ours. As a Global PEO expert, we manage employment contract best practices, statutory and market norm benefits, and employee expenses, as well as severance and termination if required. We also keep you apprised of changes to local employment laws in Denmark.
Your new employee is productive sooner, has a better hiring experience, and is 100% dedicated to your team. You’ll have peace of mind knowing you have a team of dedicated employment experts assisting with every hire. World Wide Work Permit allows you to harness the talent of the brightest people in 187 countries around the world, quickly and painlessly.
Denmark is the most southern of the Nordic European countries. In addition to the mainland country, the Faroe Islands, halfway between Iceland and Norway, and Greenland make up the balance of the state. 5.8 million people reside in Denmark and enjoy the world’s highest social mobility and a very high level of income equality.
Danish companies tend to have flat management structures and there is an emphasis on teamwork and consensus building. Meetings are open and workers are encouraged to contribute their ideas to the discussion. There is also a clear division between work and social life, and flexible work hours are not uncommon as most families have both parents in the workforce. Danes value modesty and they have a great sense of humor. They tend to be informal and extroverted at work, and they are highly egalitarian. They are not accustomed to working long hours, but have a reputation for hard work and making the most of the time they are in the office.
In Denmark, the majority of employment terms and working conditions are determined by agreement between the labor market parties as opposed to statutory regulations. There are very few statutory labor and employment rules in Denmark, and those that do exist are often the result of EU legislation. Approximately 70% of the entire workforce in Denmark are members of a trade union.
Collective bargaining agreements (CBA) are a major factor in Danish employment law due to the important roles of the labor markets. CBAs with trade unions and employee representatives are very common in many industries and the majority of the Danish workforce is covered by a CBA. Therefore, employment conditions are to a wide extent regulated by CBAs, for example, hours of work, minimum pay, notice period, etc.
When negotiating terms of an employment contract and offer letter with an employee in Denmark, it may be useful to keep the following standard benefits in Denmark in mind:
While a written employment contract is not required, the best practice is to put a strong employment contract in place in Danish that spells out the terms of the employee’s compensation, benefits, and termination requirements. It is mandated by law that employees are entitled to a written contract after the commencement of their employment. Employees working at least eight hours a week on average, and whose periods of employment are intended to last at least one month, must be notified in writing of all material employment terms. An offer letter and employment contract in Denmark should always state the salary and any compensation amounts in Danish Krone rather than a foreign currency.
The average work week in Denmark should not exceed 48 hours, including overtime. However most collective bargaining agreements contain rules on standard work weeks and the typical number of working hours is 37-37.5 per week, Monday through Friday. Employees are required to be given at least on full day off throughout the week; this day is typically Sunday.
Overtime pay is governed by the CBA. Some CBAs allow employees to choose between receiving payment and time off in lieu of payment.
Denmark celebrates 11 public holidays, including:
It should be noted that there is no legislation on public holidays in Denmark. Collective bargaining agreements or individual employment agreements govern whether an employee is expected to work on such days. If an employee is entitled to the day off but is required to work, s/he is entitled to a bonus of 100%.
All employees in Denmark are entitled to 25 working days of annual leave provided that the employee has worked a whole calendar year in the year preceding the leave year. Additionally, employees receive 1% of their gross salary in the form of a lump sum every May as a holiday allowance.
If the employee has been employed for a short period, 2.08 days of vacation per month of employment will be earned. The employee is still entitled to take up to five weeks of annual leave, but this will be unpaid.
As of 1 September 2020, the holiday year is from 1st September until 31st August with a subsequent holiday period enduring until 31 December the same year. The accrual and deductible periods will be concurrent. In other words, employees will accrue leave in the same year in which they can take it, and they may take paid holiday leave before it is accrued. Professionals must take a minimum of 20 days’ holiday per year in accordance with working time regulations (unless there is a justifiable reason why they could not take the leave).
Employees are entitled to a minimum of 25 days of paid holidays. There is a carryover period where 5 days may be carried over and must be used by the end of December. Unused holidays not exceeding 20 days of the holiday are still to be paid to the ‘Holiday Fund’.
It is normal to specify in the employment contract how long an employee will receive sickness payment from their employer. It is common to specify that salary will be provided by the company for 30 days. This will apply provided an employee has worked at least 74 hours during the 8 weeks preceding the sickness absence.
After the first 30 days, sickness payments can be made by the municipality in which the employee works if they meet certain criteria, such as:
Other criteria might apply before the employee is entitled to payment by the municipality, and must be reviewed on a case-by-case basis.
There is a maximum cap on sick pay available from the municipality which is updated on an annual basis.
If an employee is absent from work as a result of illness, at the 4-week point, the employer must contact the employee to discuss possibilities and arrangements for returning to work, even if this is on a part-time basis.
The maximum weekly sickness benefits currently amount to a maximum of DKK 4,465 (2022) per week and a maximum of DKK 120,68 (2022) per hour. The sickness benefits are taxable just like your normal salary.
It should be noted that while employees are entitled to different amounts of maternity/paternity leave in the first year of a child’s life, employers are not required to pay their employees during said period of leave. The maternity/paternity leave is financed by social insurance.
Female employees are entitled to 4 weeks of maternity leave prior to the expected date of birth plus an additional 14 weeks after the birth.
Female salaried employees are entitled to 50% of their salary for a total of 18 weeks.
Men are entitled to two weeks of parental leave at 50% of their salary which must be taken within the first 14 weeks after the birth.
After the first 14 weeks of maternity leave, each of the parents is entitled to take parental leave for up to 32 weeks, which can be extended for a further 8 or 14 weeks.
Denmark has an extensive public healthcare system. See the tax section above.
Flexible work hours are common in Denmark. As stated earlier, employees who commute from home are entitled to a statutory allowance for the expense.
Generally, we recommend budgeting 20% as benefits cost on top of the gross salary to allocate the total employer’s cost including benefits in Denmark.
Incentive bonuses are becoming increasingly common in Denmark, even in the public sector. Employees who commute to the workplace from home are entitled to a statutory allowance. All other expenses and bonuses are negotiated in the employment contract.
Termination of employment in Denmark is relatively uncomplicated compared to other countries in the EU.
There is no general legislation regarding probationary periods in Denmark, however, for salaried employees, a probationary period of up to three months can be agreed upon.
The notice period is typically determined by the Salaried Employees Act, collective bargaining agreement, or employment contract. Unless the CBA states otherwise, the employees are entitled to the following notice period:
Employees are also entitled to the following severance pay per the Salaried Employees Act:
Employees can challenge a termination in court if they deem it unfair.
Income tax rates are progressive in Denmark and the income tax payable is calculated on an annual basis.
Employees are obligated to pay national tax, municipal tax, health tax, and social security tax. Church tax is an obligation only if the employee is a member of the Danish Lutheran church.
There are a number of allowances in Denmark that offset against a taxpayer’s income, reducing their overall tax burden. The most common allowances are:
Social security in Denmark is mainly funded through taxes, but also by social security contributions to a lesser extent. Social security contributions are deducted from salaries at a rate of 8%. Employer contributions can reach 8,000 DKK per year, while employee contributions can total 90 DKK per year. Social security in Denmark includes:
Registration at the Civil Registration Office, where a CPR number is issued, is a legal requirement for all residents in Denmark. The CPR number allows residents to be able to benefit from healthcare and social security benefits in Denmark.
Establishing a branch office or subsidiary in Denmark to engage a small team is time-consuming, expensive, and complex. Labor law in Denmark has strong worker protections, requiring great attention to detail and an understanding of local best practices. World Wide Work Permit makes it painless and easy to expand into Denmark. We can help you hire your candidate of choice, handle HR matters and payroll, and ensure that you’re in compliance with local laws, without the burden of setting up a foreign branch office or subsidiary. Our Denmark PEO and Employer of Record solution provides you peace of mind so that you can focus on running your company.
If you would like to discuss how World Wide Work Permit can provide a seamless employee leasing or PEO solution for hiring employees in Denmark, please contact us.