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.
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.
Employers of Danish citizens are obligated to provide a written contract containing all material terms of employment to employees working over 3 hours per week in a reference period of 4 consecutive weeks. If a collective bargaining agreement regulates the general terms of employment, the contract must include a specific reference to the agreement. The written information, in paper or digital format, must be provided to the employee within 7 calendar days of the employee's start date.
Employers have the right to establish restrictive covenants with their employees, offering them options such as a non-competition clause, which prevents employees from competing with their employer, a non-solicitation of customers' clause, which prohibits employees from engaging in business with the employer's customers or associates, or a combination of both clauses. The maximum term of such clauses is 12 months. Such clauses are valid only if the employee has been informed in writing.
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 agency to user companies in Denmark to temporarily carry out duties under the user companies' 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 perform 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.
According to a Danish Labour Court decision, temporary workers are entitled to at least the same pay and employment terms as the user company’s own employees in comparable positions. If a collective bargaining agreement applicable to temporary workers gives them less favorable treatment than comparable permanent employees, they must receive compensatory benefits.
Under the Act on Employment Certificates and Certain Working Conditions in Denmark, probationary periods may not exceed 6 months or, for fixed-term contracts, a quarter of the employment period, not exceeding 6 months.
If the employer proves that the employment was on a trial basis and the employment relationship does not last longer than 3 months, the employer must give 14 days' notice to terminate the contract, while the employee can terminate without notice. A contract may provide a more extended notice of termination for a salaried employee if the employer's notice of termination is extended accordingly.
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. From July 1, 2024, employers are allowed to enter into individual agreements with certain employees to work more than 48 hours. This applies only to employees who are covered by collective agreement provisions on on-call shifts and who perform critical functions within the areas.
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.
From July 1, 2024, all employers are required to adopt an objective, reliable, and accessible working time registration system that makes it possible to measure the daily working time for employees. Employers must ensure that employees have access to their information. This data must be kept for at least 5 years.
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. Holiday pay is the same as the usual and fixed salary at the time of beginning of the leave. It is paid either at the same time as the corresponding holiday begins or holiday allowance for the period from 1 September to 31 May is paid together with the salary for the month of May, while holiday allowance for the remaining part of the holiday year is paid together with the salary for the month of August.
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.
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's sickness benefits. Sickness benefit paid by the municipality is capped at DKK 5,085 (Danish krones) per week (or DKK 137.43 per hour) in 2026. An employee may receive sickness benefits for up to 22 weeks within any 9-month period; the municipality reassesses the entitlement before the 22-week mark, and the period may be extended if required.
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.
It can be stipulated in the written employment contract that the employee may be terminated with 1 month's notice of resignation at the end of a month when the employee has received salary during illness for a total of 120 days within a period of 12 consecutive months.
Denmark's Maternity Act grants a combined total of 52 weeks of shared parental leave, with up to 4 weeks reserved for the mother prior to birth. After the birth of a child, each parent has an individual right to 24 weeks of paid parental leave with maternity benefit:
2 weeks mandatory leave must be taken by each parent immediately after birth. For the non-birthing parent, this 2-week leave must be taken within the first 10 weeks after birth.
9 additional weeks are earmarked (non-transferable) to each parent, bringing total earmarked leave to 11 weeks per parent. Earmarked weeks that are not used by the parent to whom they are allocated are forfeited and cannot be transferred.
13 weeks of each parent's 24-week entitlement may be transferred to the other parent.
Parents of multiple births receive 26 additional weeks of paid leave – 13 weeks per parent. Single parents of multiples receive an additional 13 weeks on top of their 46-week entitlement.
Adoptive parents who are staying abroad to receive a child are entitled to leave from work for up to 4 weeks before receiving the child. In the first 10 weeks after receiving the child, each of the adopters has the right to leave for 6 weeks. Each adopter has the right to transfer up to 4 weeks of their leave to the other adopter. Adoptive parents also have the right to 32 weeks of parental leave.
Each parent has the right to leave for 26 weeks after the death of the child if the child is stillborn or dies before the age of 18. Beginning January 1, 2026, eligible employees can extend maternity leave from 3 months to 12 months if their newborn child must be hospitalized. Employees are also entitled to the extended leave if their newborn is sent home for continued treatment.
The non-birthing parent, the father, co-mother, or other legal parent who did not give birth has an individual right to 24 weeks of paid parental leave with maternity benefit after the birth of a child: The law provides a 2-week paid parental leave to fathers or co-mothers after the birth or after receiving the child at home, within 10 weeks after the birth. This leave can be taken as non-consecutive periods within the first 10 weeks after the birth, in agreement with their employer. 9 additional weeks are earmarked (non-transferable) to the non-birthing parent. 13 weeks of the 24-week entitlement may be transferred to the other parent.
Each parent has the right to leave for 26 weeks after the death of the child if the child is stillborn or dies before the age of 18. Beginning January 1, 2026, eligible employees can extend maternity leave from 3 months to 12 months if their newborn child must be hospitalized. Employees are also entitled to the extended leave if their newborn is sent home for continued treatment.
Adoptive parents who are staying abroad to receive a child are entitled to leave from work for up to 4 weeks before receiving the child. In the first 10 weeks after receiving the child, each of the adopters has the right to leave for 6 weeks. Each adopter has the right to transfer up to 4 weeks of their leave to the other adopter. Adoptive parents also have the right to 32 weeks of parental leave.
Employees receive parental benefits if they have worked at least 160 hours in the last 4 full months, and at least 40 hours per month in at least 3 of those months. The benefit is paid as a maximum of DKK 5,085 (Danish krone) per week before tax. To get the full paternity benefit amount, the employee's income must be at least DKK 264,420 per year.
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 3 months, the employer must provide at least 14 days' notice, while the employee is not required to give notice.
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 is paid only if the employee was dismissed or unjustifiably dismissed by the employer
Severance benefits are provided as follows:
Employees are entitled to 1 month’s salary if they have worked for the same employer for at least 12 years
Employees are entitled to 3 months of salary if they have worked for the same company for at least 17 years
Severance pay is payable regardless of whether the employee is retiring or going on pension at the time of dismissal.
