Hiring guide in Denmark

What should I know about hiring in Denmark?

The prospect of hiring in Denmark can be incredibly exciting and daunting for those new to the labour market. Before starting the hiring process, it’s essential to gain a deep understanding of the country’s employment contracts, taxes, work permit system, and labour regulations. 

Employers must comply with anti-discrimination legislation and offer attractive salaries and advancement opportunities to discover and retain top talent. To facilitate strong bonds and loyalty among Danish employees, it’s also crucial to adhere to cultural norms and local business practices.

Why is Denmark a good choice for finding remote employees?

Denmark is an attractive choice for businesses to tap into the talented remote workforce due to several reasons. Firstly, the country produces a steady stream of qualified professionals in many fields, including IT, design, engineering, and more. 

In addition, Danish people have a high level of English proficiency. This significantly eases communication and collaboration with foreign clients and team members. 

The nation’s work culture values work-life balance and flexible work arrangements, which boost employees’ productivity levels and satisfaction. Finally, Denmark’s high environmental standards, excellent healthcare system, and strong social support make the country a desirable location for remote workers.

How can Native Teams help you hire in Denmark?

If you’re struggling to navigate Denmark’s complex labour laws and requirements for employing team members, Native Teams is here to help. Our Employer of Record solutions offer legal employment provisions, including benefits and compensation packages, to be more aligned with the market demand. Our team of experts will offer insightful guidance when navigating local laws and regulations.

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 Hire your first Danish employee with Native Teams.

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Legal requirements for hiring in Denmark

To hire employees from Denmark, employers must follow a few essential laws and regulations to ensure a fully compliant employment process.

Legal framework

Types of employment contracts

There are two types of employment contracts recognised by the Danish labour law – indefinite-term and fixed-term employment contracts. Indefinite-term employment contracts are valid until one or both parties decide to terminate them, while fixed-term contracts are valid for a pre-determined period of time. 

Content of an employment contract

According to the Act on Employment Certificates and Certain Employment Conditions, employers are obligated to provide employees with an “employment certificate” that outlines the most significant terms of the employment relationship in written form. This statutory provision ensures that all employees receive clear and comprehensive information about their employment terms and promotes transparency and fairness in the workplace.

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Download a free employment contract for Denmark through Native Teams.

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Oral, written or electronic employment contracts

Employers are required to provide employees with all the essential information regarding their employment, either in written or electronic format. Such details must include the job description, probationary period, initial remuneration, working hours, leave entitlements, notice periods, duration of employment, and other information. 

Working hours and night work

Working hours in Denmark are primarily governed by collective agreements and the EU Working Time Directive. The average working limit is 48 hours per week, including overtime work. 

When it comes to night work, it refers to a duration of work spanning at least seven hours, including the interval from 10 pm to 5 am. An employee who engages in work for a minimum of 300 hours during the night time for 12 months is classified as a night worker.

Breaks and annual leave

In Denmark, employees who work more than six hours a day are entitled to a rest break of an unspecified duration, depending on the purpose of the break. When it comes to daily rests, it’s mandatory to provide 11 consecutive hours within each 24-hour period. In cases of shift work that involves shift changes, the minimum daily rest period can be reduced to eight hours. 

Danish annual leave regulations guarantee a minimum of 25 days of annual leave per year, typically to be used during the “holiday period”.

Public holidays

Denmark boasts a rich calendar of festivities with ten official public holidays. Some of them are New Year’s Day, Good Friday, Easter Sunday, Easter Monday, Christmas Day, and Boxing Day.

Salary and contributions

As outlined in the labour code of Denmark, employers must provide equal treatment and pay to all employees, regardless of their gender. 

A fundamental right for Danish employees is the entitlement to receive their agreed-upon salary. The standard payroll cycle is typically monthly, while employees are required to issue payments on the same day each month. 

Remuneration, as defined, includes the standard basic or minimum pay along with any additional benefits for the employee.

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To calculate the salary and taxes in Denmark, click here. 

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Sick leave

The employer takes care of sick leave benefits for the first 30 days, while the local authority takes over for the next period of up to 22 weeks. 

However, employees must have worked for a minimum of 240 hours in the preceding six months, with at least 40 hours worked in at least five of these months, to be eligible for sick leave benefits.

Parental leave

According to the Act of Entitlements to Leave and Benefits, biological or adoptive parents have the right to take 32 weeks of parental leave for their child, and each parent can take this leave individually. Typically, the parental leave begins ten weeks after the child’s birth or adoption.

Paternity and maternity leave

Maternity leave in Denmark is divided into two distinct periods – pregnancy leave and maternity leave. Pregnancy leave is the time taken before childbirth and typically starts four weeks before the expected due date. Maternity leave starts immediately after childbirth, with a mandatory period of two weeks, which can be extended to an additional eight weeks of maternity leave. 

If the mother is unable to care for the newborn due to illness or in the unfortunate event of her death, the child’s father or co-mother is entitled to take all or a portion of the maternity leave.

Methods of employment termination

The termination of employment contracts in Denmark depends on the circumstances and which party initiates the process. 

Unilateral termination includes resignation by the employee, who must give advance notice to the employer. On the other hand, employers must provide written notice to terminate the employment contract, also known as dismissal.

Mutual termination agreements are also common, involving both parties agreeing to end the employment relationship.

Ordinary dismissal by employer

Termination rules and procedures in Denmark vary depending on the employee’s status, and often the industry they work in. 

Dismissal procedures for white-collar workers are governed by The Salaried Employees Act, while blue-collar and hourly-paid employees must adhere to rules outlined in collective agreements.

For some employee groups like senior managers who are not subject to the Salaried Employees Act and collective agreement, dismissal provisions are usually outlined within the employment contract.

Notice period and challenging the dismissal

If the termination of employment occurs during the probationary period, employees are only required to provide a 14-day notice, while employees are not obligated to give any notice.

After the probationary period, notice is required from both the employer and the employee, except in cases where the work is temporary, and the employment lasts for less than one month. The minimum notice period depends on the length of service, with one month’s notice for the initial six months and six months of notice after nine years of service.

In cases of unfair dismissal, if the employee demonstrates that they were using their rights under the law or lodges complaints about these rights, the burden falls on the employer to prove otherwise.

Rights and obligations of unemployed individuals

In Denmark, individuals can opt into an unemployment insurance system voluntarily. This means that when an individual is employed in Denmark, they are not automatically covered for unemployment.

To get coverage for unemployment, employees must sign up for a private unemployment insurance fund and make regular contributions to stay covered and protected against unemployment.

Severance pay

The eligibility for severance pay in Denmark depends on the type of worker and the duration of service.

Employees who have constantly worked for the same company for 12 to 17 years are entitled to receive severance pay equivalent to one month’s salary. For employees who have more than 17 years of service, the severance pay increases to three months’ salary.

Probationary period

The decision to include a probationary period in the employment contract is at the discretion of both the employer and the employee. 

According to Danish labour law, white-collar and salaried employees can have a maximum probationary period of three months. Other employees’ probationary period duration can be extended up to six months. 

Intellectual property rights

Employee inventions, such as patents and utility models, are governed by the Danish Act of Employees’ Invention, covering both employees in the public and private sectors.

If an employer wants to claim ownership of an employee invention, special conditions need to be met. The invention must be eligible for patenting or registering as a utility model in Denmark, created by an employee during their employment, and falling within the scope of the employer’s business activities.

Employee data privacy

When it comes to employee data privacy, employers must adhere to the regulations in the European Union’s General Data Protection Regulation (GDPR), especially when handling and processing personal data about employees and job applicants.

The Data Protection Agency is responsible for enforcing the GDPR regulations, overseeing compliance, and handling complaints related to the provisions.

Prohibition of competition

Competition prohibition in Denmark is regulated by the Act on Restrictive Employment Clauses and outlined in the employment contract.

A “non-competition clause” is an agreement between the employer and the employee which states that the employee will refrain from engaging in competitive business activities or accepting employment with a competitor for a specified period after resigning. 

The clause can be valid for a maximum of 12 months following the employee’s resignation, during which the employer must provide appropriate compensation. In addition, all the terms of the clause must be formally documented.

Remote working policy

The Danish Social Security Authority has adopted the EU Guidance Note on telework, effective since July 1, 2023. This guidance note defines “cross-border telework” as the employee working in one or more EU member states other than the one where the employee is based, using technology linked to the employer’s organisation. 

Telework should be conducted to fulfil tasks assigned by the employer and should occur under a formal agreement between the parties.

Responsibilities within a remote work arrangement

According to the Working Environment Act, the employer is primarily responsible for ensuring the safety and health of employees, even when the work is conducted from home. 

However, certain requirements are applicable to screen-based work if the employee regularly engages in such work for more than two days per week. Such requirements include work equipment, furniture, and workstation furnishing including lighting conditions and eye examinations.

Health and safety at home

According to the Danish Working Environment Act, employers are responsible for ensuring the safety and well-being of their employees in all aspects of their work environment. This includes providing clear work instructions and participating in safety protocols. Employees, on the other hand, are required to use the protective equipment provided by the employer, while employers are encouraged to inspect the employees’ home offices and ensure compliance with workplace safety regulations.

What are the advantages of hiring employees from Denmark vs other countries?

Hiring employees from Denmark offers several advantages over hiring employees from other countries.

Thanks to the country’s strong emphasis on education, Danish employees are often highly educated and fluent in English. The country also has a reputation for a strong work ethic and a culture of innovation and creativity, which contribute to a forward-thinking mindset and productivity.

The Danish labour market is also very flexible, making it easier to adjust the workforce from the country to your business model and unique business needs. In addition, Denmark promotes a healthy work-life balance, which contributes to higher job satisfaction and employee retention and makes the country a very attractive place for remote workers and digital nomads.