Professional Employer Organization (PEO) in Denmark

What Is a Professional Employer Organization (PEO)?

Professional Employer Organizations or PEOs can perform every HR management or administration task required by companies to outsource employees. They do so under a co-employment arrangement with clients where there is shared responsibility to perform functions such as:

  • Recruitment, hiring, and onboarding
  • Developing compensation packages and administering payroll
  • Providing statutory and supplementary benefits
  • Ensuring compliance with local employment regulations

These joint agreements between PEOs and clients mean that both parties are liable and responsible for the management of the remote roles they hire. The key competitive advantage of signing on with PEOs is that their clients can easily and compliantly hire, onboard, manage, and pay outsourced workers without needing an in-house compliance team to perform due diligence. Clients essentially offload the significant compliance burden to in-country experts who then co-employ remote workers, making it fast and simple to build globally distributed teams.

A PEO in Denmark, for example, will ensure that you can hire, manage, and compensate remote employees in the country without inadvertently breaking any statutory guidelines set by local labor laws. That same PEO can extend the same services in many other countries.

The Kingdom of Denmark is the 36th largest country in the world, scoring an impressive 78.0 in the economic freedom score and ranking as the 10th freest economy in 2021. Furthermore, in 2022, the country’s economy is forecasted to grow with G DP rising by 3.4%, bouncing back from a lull mostly triggered by the pandemic. The Danish government is also eager to continue to foster entrepreneurship and business in the country, providing ongoing support for initiatives driving the growth of infrastructure, financing, and even mentoring and low-cost legal aid.

Throughout all this, Denmark prides itself in offering employees flexibility and security, and these are guaranteed by local labor laws that entitle workers to rights and benefits. To successfully unlock access to Denmark’s highly skilled workforce, you need the key of strict compliance to their local labor laws. You need a reliable PEO to assist in your outsourcing.

What Are the Benefits of Using a PEO in Denmark?

Offloading tedious and time-consuming HR administration and management to a reliable PEO in Denmark will grant many of the same inherent benefits when outsourcing any other business or creative process. Of course, the standout benefits of partnering with a PEO in Denmark boil down to compliance:

  • Ensuring compliance with the employment laws. Employment laws in Denmark govern nearly every aspect of labor practice. Think of background checks for recruitment and protections for IP transfer. PEOs allow their clients to seamlessly stay compliant with all of these statutory components without needing to invest significantly into an in-house compliance team.
  • Payroll processing and tax management. As some of the most crucial and strictly governed areas of business, running payroll and tax management requires not only careful consideration, but qualified accounting. A PEO in Denmark not only ensures clients pay their remote employees on time and in accurate amounts, they also ensure compliance with local labor laws every step of the way. They guarantee mandatory requirements are met in terms of benefits administration, taxation specifics, leave policy, and other critical financial aspects.
  • Risk mitigation. Because a PEO in Denmark guarantees compliance to local labor laws, it effectively shields clients from a lot of the risk inherent in employing remote employees. PEOs can also provide assistance in building additional HR processes to make sure those too adhere to standards set out by local employment legislation.
  • Provision of competitive benefits. Aside from the crucial task of meeting mandated expectations set by local labor laws in Denmark, PEOs also assist their clients in giving remote workers access to competitive supplementary benefits to round out their compensation packages.
  • Employment cost mitigation. The overhead costs to handle all of the above, when handled in-house, can easily snowball into significant amounts that can hinder business growth. When clients offload these responsibilities to their partner PEOs, they free up a lot of in-house resources to focus on other areas of business and continue to scale.

Signing on with Skuad’s services in Denmark enables you to focus primarily on scaling your business while your partner ensures you stay completely compliant with local labor laws.

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What Are the Differences Between an EOR and a PEO?

PEOs also have an alternative called Employers of Record (EORs). These essentially let foreign companies authorize their EOR partners to perform HR functions on their behalf, though of course with key differences from PEOs. Some important key differences are highlighted below:

EOR PEO
An EOR is the legal employer for any hired workers — not its client. PEOs and their clients are co-employers, flexibly splitting and sharing liabilities and responsibilities between them.
As the sole legal employer, EORs handle all the HR processes and functions required for ongoing engagement with hired workers from onboarding to payroll. PEOs can flexibly extend what HR functions and processes they handle as they essentially share these with their clients. In effect, clients can dictate a PEO’s involvement in HR management.
EORs hire on behalf of their clients, so the clients themselves do not need to register a local entity for HR purposes. PEOs are co-employer, so clients need to establish a local legal entity that can legally hire employees.
Performs all contract and agreement drafting on behalf of their clients. Clients perform contract and agreement drafting with assistance, where required.

Hiring in Denmark with a PEO

Denmark is a key remote employment destination in Europe due to the combination of factors mentioned previously. It has been a member state of the International Labor Organization (ILO) since 1919, and a key partner promoting the organization’s standards regarding decent labor practices all over the world. As such, Denmark labor laws are crafted to safeguard employee rights and always put their interests first, closely adhering to ILO standards while also implementing locally suitable addendums where necessary.

Denmark’s labor laws are not codified under one act. They stem from several sources, including collective agreements, including:

  • The Salaried Employees’ Act
  • The Holiday Act
  • The Act on Restrictive Covenants
  • The Discrimination Act

Hiring remote workers in Denmark means navigating the local labor laws you need to comply with in the country. Leverage Skuad’s services in Denmark as your launchpad for building a globally distributed team in the country that’s 100% compliant to local labor laws.

Payroll in Denmark Is Challenging. It’s Easy When You Use a PEO.

Many components of payroll are governed by local labor laws in Denmark. A lot of the benefits and protections extended to employees in the country make up portions of payroll processing—leaves, work hours and overtime, taxation, and contributions to social insurance, to name a few. To implement payroll processing in Denmark efficiently, you need to understand which parts of income are taxable, how to handle social insurance contributions, and what data inputs to collect and validate, among other equally crucial considerations. Additionally, noncompliance to statutory components of payroll also hurts your relationship with any remote employees when their pay is delayed or becomes inaccurate.

Companies large and small can be understandably overwhelmed by the requirements of running payroll.

This is why many companies that want to hire in Denmark choose to hand over these responsibilities to a partner PEO that can guarantee compliance while also affording them a payroll platform that can streamline the effort. Skuad’s global HR and payroll platform effortlessly manages international worker payments while staying 100% compliant with local labor laws in Denmark’s. Request a demo from Skuad’s experts to know more.

What a PEO in Denmark Can and Cannot Do for You

It’s a significant business decision to sign on with a PEO and share the responsibilities and liabilities of hiring in Denmark. It is crucial that you clearly understand what a PEO can and cannot do in terms of handling your HR functions. As a general guide, these are the top-level delineations:

A PEO can:

  • Run payroll processing and management for your remote teams in Denmark, which includes the management of tax filing compliant with local labor laws
  • Help in the recruitment, hiring, and onboarding of employees in Denmark
  • Reduce overhead costs that come with remote employee management, and at the same time mitigate of inherent risks associated with compliance requirements

A PEO cannot:

  • Be the sole legal employer of your workers
  • Take full control of your company
  • Be solely responsible for the recruitment and termination of your employees

Businesses Big and Small Can Find Value in Partnering With a PEO in Denmark.

Building globally distributed teams in Denmark requires a solid grasp of local employment regulation. Not every company can muster these capabilities in-house, which means what they can do on their own is severely limited. This limitation also extends to every international market they want to break into and in which they want to hire remotely.

Partnering with a reliable PEO in Denmark is the strategic solution to addressing all of these concerns at once. A trusted PEO in Denmark will be the partner that shoulders the compliance concerns for you as you build international teams and continue growing your business.

Skuad’s unified HR and payroll platform helps you hire remotely in Denmark hassle-free, enabling your company to seamlessly hire, onboard, manage, and pay employees in the country while staying completely compliant with local labor laws. Book a demo with Skuad today.

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