Employers of Record (EORs) play a crucial role in compliantly hiring employees in Denmark. EORs have employment and recruitment specialists to help you onboard your team in Denmark. EORs ensure employment agreements are compliant with local labor regulations, mitigating legal risks for businesses. Collaborating with a Denmark-based EOR enables you to leverage their expertise in the domestic market, benefiting from streamlined HR procedures and quickly acquiring the right talent.

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To protect the rights of its exemplary talent force, Denmark has a distinct set of employment laws. These laws are built around its social welfare model, labor union recommendations, and a tradition of cooperation between employers and employees. For example, Denmark follows the "flexicurity" model, which combines labor market flexibility for employers in addition to ensuring security and rights for employees. For example, employers can hire and fire employees at-will. However, such unemployed workers are compensated by the social security system.  Secondly, a significant portion of Denmark's labor laws - wages, working hours, pension schemes, vacations -  are determined through collective bargaining agreements between trade unions and employers' organizations. 

Navigating these laws and hiring talent compliantly can be daunting for employers. Here’s where A Danish EOR/PEO can help. An Employer of Record ensures compliance with the country's complex labor laws, minimizing the risk of non-compliance and associated penalties. Tech-based EORs such as Gloroots help you with hiring processes, payroll, tax compliance, and benefits administration, on a single platform. 

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The cost of Denmark EOR/PEO services in Denmark may differ based on various factors, such as the number of employees, the extent of services needed, and the intricacy of the project. The pricing structure for Denmark EOR/PEO services usually involves a monthly fee per employee or a percentage of the employee's salary. Extra charges may apply for additional services or customization.

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Key Metrics For Foreign Employers

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Denmark's highly-educated talent pool needs no introduction. For the unaware, Denmark’s population is highly literate and the country ranks 3rd in the Global talent Competitiveness Index. The country ranks 11th for innovation output and 2nd for the number of scientific and engineering articles  per 10,000 inhabitants. 

The table below depicts key indicators from the Global Talent Competitiveness Report for employers wishing to hire from Denmark.

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Source: The Global Talent Competitiveness Index 2023

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Through the Gloroots’ Recrew platform, you can discover amazing talent in Denmark.

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The term "misclassification of employees" refers to the inaccurate classification of workers by their employers. Misclassification occurs when an employer categorizes a worker as an independent contractor or exempts them from certain employment laws and benefits, even if the worker should be classified as an employee and entitled to legal protections, benefits, and rights.

Utilizing a PEO/EOR in Denmark  helps mitigate the risks associated with misclassification by ensuring compliance with labor laws, proper employee classification, accurate payroll processing, and access to comprehensive benefits. This enables businesses to focus on their core operations while entrusting employment-related responsibilities to experienced professionals.

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Statutory legislation and collective labor agreements govern employment law in Denmark. The country has a long-standing tradition of allowing collective bargaining agreements to determine employment conditions and wages. Only a limited number of legislations are applicable to both employers and employees, including the Danish Salaried Employees Act (Funktionaerloven) and the Holiday Act (Lov om Ferie).

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Employment contracts

Most employment contracts in Denmark are subject to collective agreements. These agreements, along with Danish employment law, provide robust labor conditions and safeguards for workers, making the decision to hire individuals a significant investment and obligation.

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In Denmark, any employee working more than eight hours per week for a period exceeding one month must be given an employment contract that includes, at minimum, essential employment terms. These terms encompass the following details:

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•  Identification of both parties involved
• Start date (and duration for temporary contracts)
• Workplace location
• Job description, including duties and responsibilities
• Base salary, additional compensation, benefits, and payment particulars
• Working hours
• Total annual leave entitlement
• Notice periods for terminating employment
• Reference to collective agreements, if applicable

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It's important for employers to understand the intricacies of these programs before making a hire. This might sound overwhelming, but it doesn't have to be. A solution like Gloroots eliminates the barriers for you. With Gloroots' Employer of Record offering, hiring and managing employees globally is a piece of cake.

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Get an overview of what you need to know when hiring in Denmark. Contact us.

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Overtime

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In specific industries and job sectors, working overtime is a frequent occurrence. Nevertheless, Danish labor laws stipulate that employees should not exceed 48 hours of work per week, including any overtime.

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Extra hours worked can be compensated by either receiving additional pay along with the regular salary or by granting the employee compensatory time off. If overtime regulations apply, they must be explicitly outlined in the employment contract.

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Public holidays

There are eleven public holidays in Denmark. 

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Minimum wage

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Denmark does not have a national minimum wage. Minimum pay rates are determined by collective agreements specific to each industry.

Annual leave

The Holiday Act allows employees to take 5 weeks (25 days) of holidays every year. Annual leaves accumulate at 2.08 days for every month worked, totalling 25 days per year. 

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Out of the five weeks, employees have the right to take three weeks of continuous holiday during the main holiday period, which is between May and September. The remaining two weeks can be taken as "free" days throughout the leave year.

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Employees can either receive holiday pay or a holiday allowance, depending on their employment contract and the agreements in place. The holiday pay is usually 12.5% of the total salary earned during the accrual period.

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Maternity and paternity leave

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Mothers can take 4 weeks before childbirth and 14 weeks after. 

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Fathers are entitled to 2 weeks within the first 14 weeks post-childbirth. Following this, parents can split a collective 32 weeks of leave. This can be extended by up to 14 additional weeks, under certain conditions. 

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Most of this leave is paid, with amounts typically based on the salary, up to a ceiling, and often funded by a combination of the employer and the Danish state's parental leave fund. 

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Sick pay

In Denmark, sick leave and sick pay are governed by both collective agreements and individual employment contracts. As a general rule, employees are entitled to receive their full wages for a period of five weeks, which can be extended by an additional four weeks.

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For employees not covered by a collective agreement, sick leave is regulated by the Act on Sickness Benefit. According to this legislation, employers are required to pay their employees their regular salary for the first 30 days of their absence from work due to sickness. Social security benefits cover any additional sick days for up to 22 weeks.

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Employee Income Tax

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Local Tax 

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Payroll Contribution

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Termination process

Termination of the employment relationship in Denmark requires written notice with proof of receipt. Employees with at least one year of employment are protected against dismissal without just cause, while collective bargaining agreements offer similar protection after 9 months. Valid reasons for termination include changes in the employer's financial situation, company restructuring, issues with employee cooperation or trust, employee incompetence, or breach of contract, such as serious misconduct or theft.

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Notice period

The notice period for employers depends on the duration of employment:

• Less than 6 months: 1 month
• Between 6 months and 3 years: 3 months
• Between 3 and 6 years: 4 months
• Between 6 and 9 years: 5 months
• More than 9 years: 6 months

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Probation periods

For salaried employees, probationary periods of up to three months are allowed. During this time, both parties can agree to terminate the employment with 14 days' notice.

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For non-salaried employees, there is no set minimum or maximum probationary period unless specified in a collective agreement.

When hiring globally, ensuring compliance comes with its own set of battles. Employers must ensure all hiring and onboarding activities adhere to employment laws, payroll procedures, DE&I compliance, GDPR and similar data protection, etc. If you think it is hard to set up local entities and start hiring, keeping up with a dynamic compliance landscape is far harder. 

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Gloroots helps you minimize all these efforts by providing a single window to manage all these tasks. Our in-house experts fully shield you from cross-border employment and payroll compliance risks. We do this by helping you with generating employment contracts, on-time payments, compliant benefits, while you focus only on screening talent. 

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Our promise is a stress-free global employment experience for both you and your employee.

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Contact our experts today to kickstart your global hiring campaign.

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Growing a team means hiring the right employees at the right time and for the appropriate positions. Employers in Denmark must have a local legal organization and utilize local resources to handle compliance, payroll, tax, and benefits management. The complexity of employment regulations in Denmark makes compliance with employment laws demanding.

With Gloroots' global Employer of Record (EoR) service, you can let Gloroots handle the heavy lifting of payroll, tax, benefits, and compliance, allowing you to concentrate on what matters most: your employees and company growth.

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