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Employment in Denmark

Danish employment law is relatively straightforward and flexible. There are minimal statutory requirements with regards to contracts, termination procedures as well as employee pensions and holidays. Employer compliance requirements are therefore much lower than in other European countries. As the following only aim to act as a guide in the broadest sense, it is still recommended that professional legal advice be sought when employing in Denmark.

Key points on employment in Denmark

Historically, one key characteristic of the Danish labour market is its high unionisation rate, with esteemed Danish law firm Norborrn Vinding estimating that up to 75-80% of the Danish labour force being a member of a trade union.

Employees are categorised into three groups:

Executive officers

Salaried employees (white-collar)

Salaried workers (blue-collar).

Unlike some 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. Hence, it is important to determine the legal status of the employee in question because it determines the legal framework under which the employee is governed.

Employee Entitlements

Information Explanation
Working on Sundays ?
In Denmark there are no rules on working. Individuals can work when they choose, just as long as they have at least 1 day of rest in a 7 day period. If an individual carries out any work on a public holiday then they are entitled to receive a pay bonus of 100% of their average salary.
Time Off Work ?
Vacation is accrued in the calendar year and is to be taken between May 1 and April 30 of the following year. Employees are obligated to take at least 4 weeks of vacation each year, even if the employee has not accrued enough. In that case the employee will be deducted in gross salary with 4,8% per holiday.
 
This also means that the employee only in agreement with the employer can transfer 1 week to the following holiday year.
Medical Leave ?
The employer is obligated to pay sick-pay to the employee if the following is met:
1 .  the employee has been employed for at least 8 weeks prior
2 . and has worked for at least 74 hours.
The employer should report it to the authorities within 4 weeks after first sick day. (From week 5 the employer will get a refund from the authorities).
 
However, it may be stipulated by written agreement in the individual employment relation-ship that the salaried employee may be dismissed with one month’s notice for expiry of the employment relationship at the end of a month, if the employee has received his salary during periods of illness for a total period of 120 days during any period of twelve consecutive months.
 
After 14 days of illness, the employer can request further information as to the duration of the employee’s illness. Right to request flexible working- In Denmark flexible working was first brought into the workplace in 1998. Flexible working allows employees that, for some reason such as illness, feel that they are no longer able to work as many hours and yet wish to continue in there role, with the same pay. They may also choose to get a new job role what comes with a shorter amount of hours. The government of Denmark only grants flexible working to those individuals that are not already receiving any form of state benefits.

Employment Termination

Information Explanation
Resignation / End of Service Payment ?

Compensation would generally depend on both the type of employee and the specific clause contained in the CBA or employment contract.

  • Blue-collar workers: Only if provided for in the employment contract or the collective agreement
  • Salaried (white-collar) workers: 1-6 months depending on, inter alia, length of continuous employment according to the Salaried Employees Act – the usual level being between 1-3 months
  • Executive officers: Only if provided for in the employment contract/service agreement
Termination of Employment ?
Termination of the employment contract on the part of the employer may take place with at least:
• One month’s notice, for expiry at the end of the month, during the first six months’ employment,
• Three months’ notice, for expiry at the end of a month, after six months’ employment.
 
Termination on the part of the salaried employee shall be subject to one month’s notice to the end of a month
 

It is relatively easy to dismiss employees in Denmark compared to other countries in the EU due to a general lack of statutory termination rules in the legislation, as well as the generous and easy access to unemployment benefits. However, special rules may apply to the dismissal of:

  • Employees on maternity/paternity or parental leave
  • Employees from certain minorities or affiliated with trade unions or political parties
  • Employees elected or appointed as representatives such as shop stewards or employee board members

Notice periods would generally depend on both the type of employee and the specific notice period contained in the CBA or employment contract.

  • Blue-collar workers: Depends on the employment contract or the collective agreement
  • Salaried (white-collar) workers: 1-6 months depending on length of continuous employment according to the Salaried Employees Act
  • Executive officers: Depends on the employment contract/service agreement

Notice periods contained in the collective bargaining agreements vary a great deal, but are typically shorter than those of the Salaried Employees Act.

In some cases, the termination must be reasonably justified either by the conduct of the employee or the circumstances of the employer. Unjustified terminations may leave the employer liable to paying the employee compensation. Before effecting a notice of termination, it should be clarified whether firstly, the termination will be lawful and the possible consequences of a termination.

Outsourcing Employment Through a GEO Employer of Record Service

Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in Denmark. For companies which intend to employ their staff directly through their incorporated Danish entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in Denmark.

As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Denmark.

The Shield GEO solution is an attractive alternative where

– the company is looking to employ staff quickly
– the company doesn’t have an appropriately incorporated entity in Denmark
– the company wants to work within a defined budget
– the company wants to limit its initial commitment in Denmark
– the company needs help with tax, employment, immigration and payroll compliance in Denmark

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