Explore our EOR & PEO services in DENMARK

As your EOR in Denmark, we’d help you expand by hiring employees and running their payroll without establishing a local branch office or subsidiary.

Your candidate is hired by a PEO in DenmarkÂ provider in accordance with local labor laws and can be onboarded in days instead of the months it typically takes. Shortly after, your new employee will be working for you, just like any other member of your team.

European North

Country Overview

Denmark is a small Scandinavian country located in northern Europe. With a population of around 5.8 million people, Denmark is known for its high standard of living, strong social welfare system, and well-developed economy.

The Danish economy is primarily service-based, with a strong focus on industries such as information and communication technology, pharmaceuticals, and renewable energy. Denmark is also home to a number of leading global companies, including Lego and Carlsberg.

In terms of labor laws, Denmark has a strong tradition of worker protections and rights. The country has a high rate of unionization, with around 68% of workers belonging to a union. The Danish working week is typically 37 hours, and employees are entitled to a minimum of 5 weeks of paid vacation leave per year.

General Information

Population: ~6.000.000

Capital City:Â Copenhagen (population: ~2.000.000)

GDP:Â ~$411 billions

GDP per capita:Â ~$69.000

Currency: Danish Krone (DKK)

Unemployment:Â ~5%

Employer Taxes: Fixed

Employee Taxes:Â 12% – 42%

DENMARK EOR SPECIFICS

Employment Contracts in Denmark

In Denmark, the most common type of employment contract is an indefinite contract, which is assumed unless otherwise specified. Fixed-term contracts can also be agreed upon by the employer and employee, but can only be renewed more than once if there is a valid reason.

Probation Period in Denmark

In Denmark, there are no legal regulations regarding probationary periods. However, it is possible for the employer and employee to agree on a probationary period of up to three months, which cannot be extended. If an employee is hired from outside the Capital Region of Denmark, their employment will automatically be subject to a three-month probationary period. During this time, either party can terminate the contract by giving 14 days of notice.

Working Hours in Denmark

In Denmark, the standard working week is typically defined in an agreement and is generally 37 hours. These hours are usually between 6:00 am and 6:00 pm, Monday to Friday, with a 30-minute lunch break. Some employers may cover the cost of the lunch break, while others may require employees to pay for it themselves.

Vacation Days in Denmark

In Denmark, employees are entitled to 5 weeks of paid vacation leave per year if they have worked for an entire calendar year leading up to the holiday year (May 1st to April 30th). Vacation leave is earned continuously from September 1st to August 31st of the following year (12 months), with 2.08 days of paid leave earned for each month of employment.

Vacation leave may be paid out in the form of salary during the vacation and a holiday supplement, or as a holiday allowance. Even if an employee has not yet earned the right to 5 weeks of paid vacation leave, they are still entitled to take 5 weeks of leave without pay from the employer.

Employees must request and negotiate their vacation dates with their employer, and the employer has the right to determine the specific dates of the vacation as long as it is reasonable and takes into account the needs of both the employee and the business.

In Denmark, it is common for vacation to be taken during the summer months, and some companies may have specific policies or traditions regarding the distribution of vacation time. It is important for employees to communicate with their employer and come to a mutually agreed upon vacation schedule.

Sick Leave in Denmark

In Denmark, employees are entitled to receive sick leave if they are unable to work due to illness or injury. It is common for employees to receive full pay during sick leave for a certain period of time, but if an employee is not entitled to full pay according to their contract, the employer is required to pay sick pay for the first 30 days of leave.

Sickness benefits are calculated based on the employee’s average hourly pay for the last 3 months prior to their illness and the number of weekly hours they are contracted to work, but the maximum benefit is capped at DKK 4,460 per week. The maximum amount per hour is calculated by dividing the maximum benefit (DKK 4,460) by the normal number of weekly working hours (37 hours), for a maximum of DKK 120.54 per hour.

Employees must inform their employer as soon as possible if they are unable to work due to illness or injury, and may be required to provide a doctor’s note or other documentation to support their claim. It is important for employees to follow the guidelines and procedures set by their employer for requesting and taking sick leave.

Wages and Salary Payment in Denmark

There is no legally mandated minimum salary in Denmark, including in the capital city of Copenhagen. However, as of 2022, the majority of minimum wages in the country are around 110 DKK per hour, which is equivalent to approximately 16.60 US dollars. The expected minimum salary for a full-time position in Copenhagen is around 17000 DKK per month, or 2580 US dollars, before taxes. It is important to note that these figures are gross and do not take into account the high taxes in Denmark, which can be as high as 50% in some cases.

In Denmark, it is common for salaries to be paid out on the last banking day of the month. This is typically the case for both hourly and salaried employees, unless otherwise specified in the employment contract.

Public Holidays in Denmark

The public holidays recognized in Denmark are those observed by the Church of Denmark. These holidays include:

January 1st: New Year’s Day
March-April: Easter, including Maundy Thursday, Good Friday, Easter Sunday, and Whit Monday. Easter Sunday falls between March 22nd and April 25th.
April-May: Great Day of Prayer, always on the Friday before the fourth Sunday after Easter, between April 17th and May 21st.
April-June: Ascension Day, 40 days after Easter Sunday, always on a Thursday, between April 30th and June 3rd.
May-June: Pentecost, including Whit Sunday and Whit Monday. Whit Sunday is the seventh Sunday after Easter, between May 10th and June 13th.
December 25th: Christmas Day
December 26th: Boxing Day

Employer Taxes in Denmark

Employee Taxes in Denmark

In Denmark, all employees are required to pay taxes on their income. The specific tax rate that an employee pays depends on their income level and personal circumstances.

The Danish tax system uses a progressive tax rate, meaning that those who earn higher incomes are taxed at a higher rate. The tax rate for the highest income bracket in Denmark is currently around 55%, while the lowest income bracket is taxed at a rate of around 37%. There are a total of eight income brackets in Denmark, with the specific tax rate for each bracket determined by the Danish parliament on an annual basis.

In addition to income tax, employees in Denmark are also required to pay a number of other taxes, including a labor market contribution (also known as an employment tax), a health insurance contribution, and a church tax (if applicable). These taxes are typically deducted automatically from an employee’s salary by their employer.

Employees in Denmark are also entitled to a number of tax deductions and credits, which can help to reduce the amount of tax they owe. Some common tax deductions in Denmark include deductions for charitable donations, work-related expenses, and certain types of education. It is important for employees to familiarize themselves with the tax deductions and credits that they may be eligible for in order to minimize their tax burden.

Notice Period in Denmark

In Denmark, the notice period for terminating an employment contract depends on the length of time the employee has been with the company.

For employees who have been with the company for less than one year, the notice period is typically one week. For employees who have been with the company for more than one year, the notice period is typically one month.

However, it is important to note that the notice period can be longer if it is specified in the employment contract or if it is agreed upon by the employer and employee. It is also possible for the notice period to be waived if the employee and employer come to a mutual agreement to terminate the contract immediately.

It is important for both employees and employers to be aware of the notice period requirements when terminating an employment contract in Denmark. Failure to give the required notice can result in legal consequences for both parties.

Termination / Severance in Denmark

In Denmark, employees who have been continuously employed with the same company for more than 12 years are entitled to receive severance pay if they are dismissed. There are different types of severance pay, including:

Danish Salaried Employees Act: In addition to salary during the notice period, employees are entitled to compensation of one or three months’ salary if they have been employed for at least 12 or 17 years, respectively, at the time of their dismissal.

Standard collective agreement: Employees who have been employed for more than 12 years and have not yet reached retirement age may be entitled to severance pay. The amount is determined based on the employee’s age at the time of dismissal:

40 years old: one month’s salary
45 years old: two months’ salary
50 years old: three months’ salary
55 years old: five months’ salary
60 years old: six months’ salary

It is important for employees to be aware of their entitlements to severance pay and to understand the specific terms and conditions that apply to their employment.

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