Table of Contents

Denmark

Table of Contents

Currency

Danish Krone (DKK)

Payroll Frequency

Monthly

Employer Taxes

13,721 DKK

About Denmark

Situated in Northern Europe, Denmark stands as the southernmost Scandinavian nation. Sharing its sole land border with Germany, Denmark is renowned for offering diverse services and products, with a notable emphasis on the salt and limestone industry.

While Denmark’s historical reputation lies in its agricultural sector, the current flourishing state of the production sector has businesses scrambling to begin operations there. Organizations looking to hire local talent in Denmark don’t always need a physical entity or a local provider to manage their payroll.

Employment Relationship

• Permanent Employment

The labor code of Denmark defines permanent employees as employees who are in an indefinite employment relationship with the employer. Employees whose employment relationship expires when they reach retirement age or who are entitled to receive a retirement pension from the employer are not temporary employees.

• Fixed-Term or Specific-Purpose Contracts

Fixed-term employment is established directly between the employee and an employer where the date of the employment relationship is determined based on objective criteria such as a particular date, completion of a specific task or the conclusion of a certain event, and is renewable under specific conditions. The law requires that the conditions of employment for fixed-term employees are as favorable as those for permanent employees. Renewal of several consecutive fixed-term employment contracts can only take place if the renewals are justified by objective conditions.

• Temporary Employment Contratcs

The Law No. 595 of 2013 applies to temporary workers who have entered into an employment contract or employment relationship with a Danish or foreign temporary agency and are sent by the temporary agency to user companies in Denmark to temporarily carry out duties under their supervision and management. The law applies to for-profit and non-profit enterprises, and, among other things, obligates the temporary agency to ensure that temporary workers during their posting to a user company receive at least the same treatment as workers employed directly by the user company to carry out the same tasks. The user company must ensure that temporary staff are informed of any vacancies in the user company, so that they have the same opportunity to obtain permanent employment as other employees in the company. Temporary staff must have access to the user company's collective facilities and goods, including canteen, childcare and transport facilities, on the same terms as employees who are employed directly by the company.

Probationary Period

Per the law in Denmark, the maximum probationary period for salaried employees is set at 3 months. During the probationary period, an employer is required to give 14 days' notice to terminate the contract, while an employee can terminate without notice. A contract may provide for a longer notice of termination for a salaried employee if the length of the employer's notice of termination is extended accordingly. Probationary periods for non-salaried employees are generally set by collective agreements.

Working Hours

Per the labor law of Denmark, an employee's weekly working time must not exceed 48 hours on average over a period of 4 months, including overtime. Periods of annual paid leave and periods of sick leave are not included in or are neutral in relation to the calculation of the average.  Employers must give a rest period of at least 11 consecutive hours within every period of 24 hours. There must be at least one 24-hour rest period per week. The employer must do their best to ensure that this period falls on a Sunday and that all employees take this rest at the same time. The regular daily working hours for night workers must not exceed an average of 8 hours over a period of 4 months. Where a night worker is employed for particularly hazardous work or for work that involves a significant physical or mental strain, no more than 8 hours shall be worked in a 24-hour period during which night work is performed. 

Holidays / PTO

• Statutory Holidays

In Denmark, the official public holidays are those recognized by the Church of Denmark. For 2023, these are: April 6: Maundy Thursday April 7: Good Friday 10 April: 2nd Easter Sunday May 5: Great day of prayer May 18: Ascension Day 19 May: Bank closure day 29 May: 2nd Pentecost 5 June: Bank closure day 25 December: Christmas Day December 26: Boxing Day

• Paid Annual Leave

Under Denmark's Holiday Act, employees are entitled to 5 weeks of paid leave per year. Leave is earned continuously from September 1 to August 31 of the following year (12 months), and 2.08 days of paid leave are earned for each month of employment. For periods of employment of less than 1 month, the holiday is earned in proportion to the length of employment. Employees can earn and take their leave at the same time over a 16-month period. The right to paid annual leave does not accrue during periods in which the employee participates in a strike or lockout or during paid maternity or sick leave. 

• Sick Leave

Employees who are unable to work due to illness or injury are entitled to sickness benefits under Denmark's Act on Sickness Benefits. Employees qualify for sickness benefits if they have been employed for at least 240 hours in the past 6 months, and for at least 40 hours in at least 5 of these months. The employer pays sickness benefits to employees on sick leave for 30 calendar days from the first day of absence. After the first 30 calendar days of sickness, the municipality will pay the employee sickness benefits. Salaried employees are entitled to full pay from their employer for the first 30 days of sick leave absence, while most collective agreements provide the same for hourly employees.

• Maternity Leave

Denmark's Maternity Act grants pregnant employees four weeks of maternity leave prior to birth and 14 weeks of maternity leave after delivery. After the first 14 weeks of maternity leave, each parent has the right to parental leave of up to 32 weeks. Additionally, employed parents may extend their leave by up to 14 weeks, although the maternity benefit amount will be decreased. The law also allows parents to resume working and postpone up to 32 weeks of parental leave (it can be used until the child has turned nine years of age). However, parents who extended their leave by an additional 14 weeks cannot postpone it. 

• Paternity Leave

Denmark's labor law grants employees the right to two consecutive weeks of paternity leave within 14 weeks after the birth of the child. Both parents are entitled to receive the statutory maternity leave pay throughout the leave period unless stated otherwise in the contract of employment. The father retains this entitlement if the child is stillborn or passes away soon after birth. The father or co-mother enters into the mother's right to leave, if the mother dies or becomes unable to care for the child due to illness. Fathers can extend their parental leave for a total of two months post-delivery. In case of adoption, both parents can take up to four weeks of paid leave, and in some cases, they may be eligible for eight weeks of paid parental leave.

Termination of Employment

• Notice Period

Denmark's labor law stipulates that employers must give notice before terminating a salaried employee. The termination notice period applicable to both the employee and employer is often stated in the collective agreements for hourly employees. For salaried employees, the notice period is dependent on their years of service, ranging from 1 month to 6 months. If the employment relationship is temporary and does not exceed 1 month, no notice period is required. If the employment is probationary and does not exceed three months, the employer must provide at least 14 days' notice, while the employee is not required to give notice.

• Severance Benefits

The law in Denmark entitles dismissed salaried employees to severance pay if the employee has been continuously working for the same company for at least 12 years. Severance benefits are provided as follows: Employees are entitled to 1 month’s salary if they have worked for the same employer between 12 and 15 years. Employees are entitled to 2 months’ salary if they have worked for the same employer between 15 and 17 years. Employees are entitled to 3 months of salary if they have worked for the same company for 17 years or more. No severance benefits are paid if the employee receives a retirement pension from the employer upon dismissal.