Employment Laws in Denmark

Contractual Agreements 

You must sign a contractual agreement with your employee in Denmark for at least a month, with average working hours exceeding eight hours daily. 

Here’s what the collective agreement may contain:

• Identification details of the employer and the employee     
• The workplace location/ the employer’s office address
• Job description with roles and responsibilities
• Start date and duration of employment (if it’s a temporary contract)
• Salary details such as additional compensation, benefits, and frequency
• Employee allowances like pensions, lodging, and meals
• Employee’s holiday details, including paid leave and annual leave entitlement
• Working hours, whether calculated daily or weekly
• Notice periods terms of both the employer and the employee
• Reference to any other by-party, such as EOR firms

Additionally, you may sign data processing agreements for General Data Protection Regulation (GDPR) compliance while processing employee data. 

Types of employment contracts in Denmark 

Before hiring talent, make sure to know these four primary types of employment contracts in Denmark:

• Permanent employment contracts: Apply to full-time employees working 37 hours per week with five weeks of annual leave.

• Part-time employment contracts: Employees are offered to work part-time with fewer weekly work hours below 37.

• Temporary employment contracts: You can hire an employee to work for a fixed term, for which you must mention the duration of the work in the agreement.

• Freelancing/consulting: You may hire independent contractors for a particular project or period. However, no statutory obligations exist for hiring independent workers under any contract employment law in Denmark. 

Obligations and rights for both parties

• Provide a work contract for your employees even if your company is outside Denmark.

• As an employer, you must comply with the Danish Working Environment Act, which aims to prevent accidents and illness for your employees in the workplace. 

• You have a legal obligation to extend occupational accident insurance. 

• Be in contact with the trade unions to fix minimum wages and other work conditions.

Working Hours and Overtime

As per the agreement laid out by the employment laws in Denmark, the regular working hours of every employee are 37 hours per week. 

Regular working hours

• You can offer work to your employees for a weekly average of 37 hours between 6:00 AM and 6:00 PM. 
• You must offer a 30-minute break and a daily rest period of 11 consecutive hours. 
• Typically, a 24-hour week off is offered to the employees.
• Further, the new labor law in Denmark requires you to document daily working hours using a time registration system for up to five years. 

Overtime regulations and compensation 

• Employees are allowed to work overtime only for a maximum of 48 hours a week. The night shifts are typically limited to 8 hours. 
• While white-collar overtime is often included in base salary, blue-collar overtime compensation is usually paid, with details in specific collective agreements.

Minimum Wage and Compensation 

No labor law in Denmark prescribes a minimum wage, which may vary according to the collective agreement. You may also refer to the annual wage statistics published by the trade unions.  

The minimum wage rate in 2024

• While no statutory minimum wage rate is set in 2024, the average wage rate is DKK 46,972 per month before taxes.  

Factors affecting wage determination

• Nearly two-thirds of the Danish workforce is unionized, and trade unions determine the wages in most cases. 
• While these agreements set the baseline, individual negotiations can vary employee wages depending on skills, experience, and the market's demand. 
• Government tax incentives and other market forces may influence wage levels in a particular industry.

Employee Benefits and Social Security

The workplace eco-system in Denmark is designed to offer the following employee benefits and social security features: 

Statutory benefits 

• Both employees and employers must make regular contributions to the pension schemes (ATP) 

• ‘Dagpenge’ is the unemployment benefit offered to employees and is covered by unemployment insurance in Denmark. 
• You must contribute to other social security schemes that fund paternal leave, maternity leave, free public healthcare, and sickness benefits. 

Additional perks and benefits

Social Security contributions and requirements

Vacations and Paid time off 

The reformed Danish Holiday Act changed the way paid time off is calculated. This is a significant shift from the previous system where employees had to wait until the following "holiday year" (May 1st to April 30th).

Apart from this, there are certain circumstances where employees take unpaid leave.

Annual leave entitlement

• You can offer an annual paid leave entitlement of five weeks. This means that for every month your employees work, they earn 2.08 days of holidays.
• For this, you must pay 12.5% of the employee's salary as holiday allowance annually. 

Public holidays and special leaves

Termination and Severance

Here are a few points to consider before you initiate a termination under the employment laws in Denmark.

Grounds for termination

Notice period and severance pay

• You may ask employees to serve one month’s notice period before resignation. 
• The employer's notice period is based on the employment period. Here’s the breakdown:

Severance pay

• If an employee works with you for 12-17 years of continuous service, you must offer one month's salary as severance pay.

• For employees with over 17 years of service with your company, you must offer three months' salary. 
• With a collective bargaining agreement, you might offer additional severance pay based on seniority.

Discrimination and Equal Opportunity

The employment laws in Denmark regulate workplace discrimination and offer equal work opportunities. Alternatively, you may partner with a reputed Employer-Of-Record solution to stay compliant.  

Prohibitions against workplace discrimination

• The Act on Prohibition of Differences of Treatment in the Labor Market strictly prohibits you from discriminating against employees based on race, religion or belief, color of skin, political affiliation, sexual orientation, age, and ethnic origin.
• Further, the labor laws in Denmark require you to ensure equal pay for men and women of similar roles performing the same tasks.

Health and Safety Regulations

Employers in Denmark must set up a safe and secure workplace for employees, including -

• Conduct risk assessments, provide training, and maintain work timings per the Working Environment Act. 
• Follow specific regulations applicable to your industry and address general safety standards like ergonomics and accident prevention.
• Equip workers with personal protective equipment and address reported hazards promptly.

• Report any workplace accident to the Arbejdsmarkedets Erhvervssikring (AES), an insurance body for the labor market. 
• If you have more than 35 employees at the temporary workplace for over four weeks, you must set up a Health and Safety group and a Health and Safety committee.

If it’s an injury at the workplace, your insurance company will pay the compensation.

Stay Compliant with Skuad 

Now that you know all about employment laws in Denmark, here’s what you can do next. 

From employee onboarding to labor law compliance in over 160 countries, Skuad can make it all simple without setting up a local entity.

As a global service provider and a leading Employer of Record (EOR) platform, Skuad can make your remote hiring in Denmark easier and more effective. Skuad handles the legal and administrative complexities, ensuring compliance with Danish employment laws, payroll processing, taxes, and social security contributions.

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FAQs

Q1. What is the 11-hour rule in Denmark?

A1. The Danish Working Environment Act formulated Denmark's 11-hour rule. As an employer, you must offer 11 consecutive hours of rest from the end of one working day to the start of the next day. 

Q2. What are the working conditions in Denmark?

A2. Denmark's work culture focuses on ‘flexicurity’ (a blend of flexibility and security), work-life balance, and equal pay. The weekly average working hours is 37 hours, and employees enjoy five weeks of annual vacation and flexible hours. Also, employers must offer generous maternity and paternity leave policies and paid sick leave. 

Q3. What are the rights of workers in Denmark?

A3. In Denmark, employee rights stand strong. You must provide formal employment contracts within a week of starting. Equal pay and anti-discrimination measures create a fair and inclusive environment. Additionally, generous benefits like five weeks' paid annual leave and parental leave provisions support work-life balance and empower families. 

Q4. What are the termination laws in Denmark?

A4. As per the Salaried Employees Act, the employer and the employee must sign a collective agreement on the termination policies. When employers want to terminate an employee, they must warn in advance and give a valid reason for the termination.