Hire employees in Denmark

Denmark is known for its extremely good work-life balance, resulting in increased productivity and job satisfaction levels. In fact, Denmark’s workforce is considered to be one of the most productive and hard-working in the world. Although the country’s official language is Danish, the majority of the population has a very good command of English, making it fairly easy to integrate new Danish employees into your remote team.

In Denmark, every employee working for more than eight hours per week over a period of more than one month needs to be provided with an employment contract which should contain at least the basic terms of employment such as:

• Identification of both parties

• Date of commencement (and employment duration for temporary contracts)

• Workplace

• Job description as well as duties and responsibilities

• Basic salary and other compensation or benefits as well as payment details

• Working hours

• Total number of holidays

• Notice periods for employment termination

• Reference to collective agreements

Probation Period

Probation periods in Denmark are subject to the employee’s individual employment contract but should not exceed three months.

Working Hours and Breaks

For most employees in Denmark, a standard working week is 37 hours with work being distributed over five days from Monday to Friday.

In most companies, employees receive a 30 minutes’ breakfast break – either paid or unpaid – as well as an additional break if the working day exceeds six hours. An employee’s daily rest period must not be shorter than eleven hours and he or she must be given at least one proper rest day – i.e. 24 hours following a daily rest period – per week.

Overtime

Overtime work is quite common in certain industries and job areas. However, Danish labour law rules that employees must not work for more than 48 hours per week, including overtime.

Additional hours can either be paid out together with the employee’s normal salary or compensated with additional days off. Where applicable, overtime regulations must be clearly stated in the employment contract.

Salaries in Denmark are usually paid once a month.

Minimum Wage

There is no national minimum wage in Denmark. Instead, minimum pay rates are defined by collective agreements for each individual industry.

Sick Pay

Sick leave and sick pay in Denmark are subject to collective agreements and individual employment contracts. As a general rule, employees should continue receiving their full wages for five weeks – extendable by another four weeks.

For those employees who are not covered by a collective agreement, sick leave is governed by the Act on Sickness Benefit. According to this regulation, employers are obligated to pay their employees their normal salary during the first 30 days of sickness-related absence from work. Any additional sick days – up to 22 weeks – are covered by social security.

Bonuses

There is no law which mandates the payment of a 13th salary in Denmark but performance-based bonuses become increasingly popular.

Compared to other European countries, tax rates in Denmark are relatively high. This is partly due to the fact that the Danish social security system is mainly financed through general tax while specific social security contribution rates paid by employees and employers are extremely low. The current contribution rates are set as follows (last review February 2023):

Taxes

Employers

22%

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• 22% corporate tax rate

• 25% VAT (standard rate)

Employees

up to 52.07%

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• 8% of labour market contribution on all income

• 12.09% to 15% state tax *

• 25.018% municipal tax (average)

• 0.92% church tax (average; optional)

Social security

Employers

around DKK 12,000

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annual contributions to various social security funds, pension and mandatory industrial injury insurance: roughly between DKK 10,000 and DKK 12,000

Employees

DKK 1,135.80

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fixed annual contribution to mandatory pension scheme: DKK 1,135.80

* In 2023, the tax threshold for the higher income tax rate is set at DKK 568,900.

Please note that the social security contributions indicated above do not necessarily reflect the actual employment costs. These may differ depending on the employment contract and due to other factors (e.g. 13th and 14th salary, health insurance allowances, accrual for severance pay, etc.).

Annual Leave

Under the new Danish Holiday Act, all employees are entitled to five weeks – i.e. 25 days – of annual leave from their first year of service. Each month, employees thus earn 2.08 days of paid leave.

In addition, the country observes eleven public holidays on which employees are usually not required to work. Employers may give their employees further days off on the occasion of unofficial holidays such as Christmas Eve.

Maternity Leave and Paternity Leave

Pregnant employees can claim 14 weeks of maternity leave after giving birth and four weeks before the expected due date. During this time, employees are entitled to 50% of their usual wages – maybe even their full wages, depending on the collective agreement in place. Paternity leave in Denmark is two weeks and must be taken within the first 14 weeks after the child’s birth.

In 2022, the Danish Act on Maternity Leave was amended. According to the new rules, parents whose child(ren) was/were born on or after August 2, 2022 are entitled to 24 weeks of statutory maternity benefits each. However, some of the leave is transferable. For more details see section below.

Parental Leave

For parents with children born before August 2, 2022 the old rules apply:

After the end of maternity leave, mothers and fathers can take up to 32 weeks of parental leave. As parental leave is a family entitlement, benefits for both parents are limited to a total of 32 weeks. An extension of parental leave by either eight or fourteen weeks is possible. In this case, daily allowance rates are reduced in order not to exceed the total allowance of 32 weeks.

Parentswith children born on or after August 2, 2022 are subject to the new rules, which are as follows:

• 24 weeks of maternity benefits paid per parent

• 4 weeks before birth reserved for the mother

• 2 weeks after birth reserved (and not transferable) for each parent

• 9 weeks afterwards reserved for each parent

• 13 weeks per parent that are transferable

According to another new law passed in 2022, couples where the mother gives birth to three or more children at the same time are entitled to an additional 26 weeks of parental leave for which they receive statutory benefits.

Additional Leave and Benefits

Following an amendment to the Act on Employees’ Entitlement to Absence from Work for Special Family Reasons, employees are entitled to five days of leave per year to provide support to a family member who is in need of support due to a health condition.

In addition to employment termination by default – i.e. in case of a fixed-term contract – resignation and mutual agreement, employers can terminate the employment for the following reasons (non-exhaustive list):

• staff reduction or other economic reasons

• redundancy

• summary dismissal due to gross misconduct

• constant underperformance

• long-term illness

Notice periods vary depending on collective agreements and rules set out in the employment contract. As a general standard, Denmark’s Act on Salaried Employees sets the following notice periods for employers – only applicable in those cases where dismissal is not due to employee misconduct:

According to the Danish Salaried Employees Act, only those employees who have continuously worked for the same company for at least twelve years can claim severance pay equal to one month’s salary – three months’ salary if the employee’s length of service exceeds 17 years. However, depending on the sector, regulations may be different under the respective collective agreement.