Denmark PEO & Employer of Record

WeHireGlobally provides an International PEO and global Employer of Record service in Denmark to organizations who have the intention of entering the Danish market or hiring local/expat employees in this country. 

A Traditional approach demands creating a subsidiary in Denmark.  However, our solution allows you to commence the operations in Denmark within days thus saving time and money.  WeHG  employs candidates on your behalf while you maintain full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf.

Denmark fast facts

Population:5,873,420
Land area: 42,933 km²
Capital: Copenhagen
Local currency: Danish Krone (DKK)

In general, the statutes regulating employment relationships apply to all persons working in Denmark, regardless of both: 

• Their national status and country of residence. 
• Any choice of law in the employment contract.

Therefore, they also apply to foreign nationals working in Denmark. They include statutes on: 

• Employment contracts 
• Working hours  
• Holiday entitlement  
• Leave Temporary workers 
•  Non-discrimination  
• Information and consultation  
• Transfers of undertakings  
• Employers’ use of non-solicitation and no-hire restrictions

Hiring, Negotiating and Doing Business in Denmark

Necessity of written employment contract

An employer is obliged to prepare an employment contract for an employee.  A written employment contract is recommended but not required. However, employees working at least eight hours a week on average, and whose periods of employment are planned to last at least one month, must be notified in writing of all material employment terms (Employment Contracts Act (Consolidated Act No. 240 of 17 March 2010)). This notification must be given to them within one month after the date on which their employment begins. At a minimum, the notification must include details regarding:

• The names and addresses of the employer and the employee. 
• The address of the place of work. 
• The job title or position, or a description of work duties. 
• The date of inception of employment. 
• In the case of temporary employment, the expected length of employment. 
• Entitlement to paid holiday and other employee rights.
• Notice periods. 
• Remuneration, including benefits-in-kind and pension contributions, and the intervals at which remuneration is paid. 
• The standard daily or weekly hours of work.
• CBAs governing the employment

The Employment Contracts Act contains additional minimum requirements for employees posted from Denmark to work in another jurisdiction. This information must be obtained by employees before they are sent abroad and it should be no later than one month after the date on which the employment begins.

Different forms of engagement: employment, contracting, work with private entrepreneur

Temporary workers

A temporary worker is an individual who has been employed for a specified period of time. Temporary workers are entitled to the same statutory rights and benefits as permanent employees. With regard to non-statutory rights and benefits, they are generally entitled to the same rights and benefits as those that apply to a “comparable permanent employee” (Act on Temporary Employment (Act No. 907 of 11 September 2008)). A comparable permanent employee is defined as an employee in the same establishment:

• Who has an employment contract or relationship of indefinite duration. 
• Is engaged in the same or similar work or occupation, with proper attention being given to the qualifications and skills of the individual. 

No qualifying period applies.

Agency workers

Agency workers are qualified to have the same statutory rights and benefits as permanent employees. No qualifying period applies.

In relation to non-statutory rights and benefits, the rights of agency workers’ mostly depend on the terms and conditions that have been started in their individual employment contracts and/or a CBA, apply to their employment relationship with the agency in which they are employed. However, if a CBA applies at the company to which the agency workers provide their services, the company may have to ensure that, at a minimum, the agency workers have the same rights and benefits as the company’s employees.

Denmark Employment Contract

Types of employment agreements

While a written employment contract is not required, in Danish it is best practice to put a strong employment contract which shows the details of the terms of the employee’s reimbursement, benefits, and termination requirements. It is demanded by law that employees are entitled to a written contract after the commencement of their employment.

Denmark working hours

The standard working hours in Denmark is 37 hours per week. Unless otherwise agreed in a Collective Bargaining Agreements (CBA), the average working hours during a seven-day period must not exceed 48 hours, including overtime, over a period of four months. In addition, average nightly working hours must not exceed eight hours for each 24-hour period (Working Time Act (Consolidated Act No. 896 of 24 August 2004)).

Overtime pay is governed by the CBA.

Rest breaks

Employees over the age of 18 are entitled to a:

• Daily rest period of 11 consecutive hours for every 24-hour period. 
• Weekly rest period of 24 consecutive hours for every seven days, which must immediately follow a daily rest period. The weekly rest period should generally fall on Sundays and be at the same time for all employees working in the company.
• A break when the work duration in a day exceeds 6 hours. The period is determined by the purpose e.g. meal breaks.
  

There are exceptions to both the daily and the weekly rest period.

Vacation leave in Denmark

Employees are entitled to a 5 weeks paid holiday per year (Holiday Act (Consolidated Act No. 762 of 27 June 2011)). According to the new law by the Danish parliament, employees earn the right to 2.08 days’ paid holiday for each month of employment in the calendar year and they have access to use it immediately unlike the old scheme.

Employees whose notice period is one month or more, and who are entitled to be paid on public holidays and during sick leave for example, salaried employees receive their full salary during paid holidays and a holiday allowance amounting to 1% of their salary in the previous calendar year.


All other employees who are entitled to paid holiday receive holiday pay equivalent to 12.5% of their income in the previous calendar year.

Payment in lieu of holiday can only be made in respect of the last five days’ holiday. CBAs and individual agreements often provide employees with more favorable holiday entitlements.

Denmark Maternity Leave

In Denmark, a mother has the right to a sum of 50 weeks parental leave. The Act on the Entitlement to Leave and Benefits in the Event of Childbirth, Consolidated Act No. 67 of 25 January 2019, regulates the right to leave and the right to receive child benefit from the municipality during leave related to childbirth. There is no general statutory entitlement for employees to receive salary during leave related to childbirth, but female salaried employees are entitled to receive 50% of their salary during pregnancy and maternity leave in accordance with the Salaried Employees Act. The right to either get a full salary or not during this period is dependent on the employment agreement in place or from any applicable CBA. 

The mother is entitled to the following leave:

• Four weeks’ leave prior to the expected date of birth. 
• 14 weeks’ leave after the birth (the first two weeks after the birth are mandatory).

Danish Severance Laws

Termination of employment

Many people working in Denmark are employed under a legislation called the “funktionærloven”. If an employee falls under a contract following this act, there are clear rules of notice and termination that must be complied with:

• Up to six months employment – one month notice period
•  From six months to three years – three-month notice period 
• Three years to six years – four-month notice period 
• From six years to nine years – five-month notice period 
• Over nine years – six-month notice period Employees are also

Employees are also entitled to the following severance pay per the Salaried Employees Act: 

• One month’s salary if the employee has been continuously employed with the same employer for at least 12 years, but less than 15 years.
•  Two months’ salary if the employee has been continuously employed with the same employer for at least 15 years, but less than 18 years.
•  Three months’ salary if they have been continuously employed with the same employer for at least 17 years. 

Employees can challenge a termination in court if they deem it unfair. Also, severance payment might depend on the level of seniority according to the rule of some CBAs.

Denmark Tax

Income tax. To calculate tax on employment income in a tax year (calendar year), it is essential to differentiate between labour market income, personal income, capital income and taxable income:

• Labour market income is calculated as taxable employment income less: any employee pension contributions to a tax approved pension scheme  any employee social security contributions  
• market tax. 
• Capital income is generally calculated as the difference between interest earned and interest paid by the employee. 
• Taxable income is calculated as personal income less any negative capital income and various deductions, including a personal allowance of up to 52.07% (55.90% including AM tax, which is also income tax for DTT purposes) in 2022. 

Income tax rates are progressive. In 2022, the rates are: 

• Labour market income: labour market tax of 8%.

Social security contributions

Employees are only liable to make minor Labor Market Supplementary Pension contributions (LMSP contributions). The amount of LMSP contributions payable by the employee depends on the number of working hours of an employee. The monthly contributions payable are about DKK90 for a full-time employee.

Employers are liable to make various minor social security contributions, including the employer’s part of LMSP contributions In general, for a full-time employee, these various contributions total about DKK8,000 – 10,000 per year.

Health Insurance Benefits in Denmark

Entitlement to time off

Employees can lawfully be absent from work in the case of illness or injury if their illness or injury renders them unable to perform their work.

Entitlement to paid time off

During absence, the following are entitled to receive full salary from their employer without any time limit:

• Salaried employees (Salaried Employees Act). 
• Employees covered by certain CBAs.

Other employees are entitled to statutory sickness benefits from (Sickness Benefits Act (Consolidated Act No. 653 of 26 June 2012)):

• The employer for the first three weeks if they have worked with the employer for a period of eight weeks or more before the sick leave, and worked at least 74 hours during this period. It is generally not possible for the employer to recover these payments from the state or the local authority. 

The local authority for the remaining period if one of various occupational conditions is met (for example, that they have been employed with one or more employers for a continuous period of at least 13 weeks before the sick leave, and worked at least 120 hours in total during the past 13 weeks). This also applies to the first three weeks of sickness if employees do not fulfil the conditions entitling them to statutory sickness benefits from their employer during this period (see above).

Additional Benefits in Denmark

Flexible work hours are common in Denmark. As stated earlier, employees who commute from home are entitled to a statutory allowance for the expense.

Denmark Holidays

In addition to the minimum holiday entitlement, there are 10 public holidays, some of which fall or can fall in some years on a Saturday or a Sunday. Furthermore, many employees are either under a collective agreement or their individual employment agreement entitled to one to three additional semi-public holidays.

• New Year’s Day – Sat, 1 Jan 2022
• Maundy Thursday – Thu, 14 Apr 2022
• Good Friday – Fri, 15 Apr 2022
• Easter Sunday – Sun, 17 Apr 2022
• Easter Monday – Mon, 18 Apr 2022
• Great Prayer Day – Fri, 13 May 2022
• Ascension Day – Thu, 26 May 2022
• Constitution Day – Sun, 5 Jun 2022
• Whitsun – Sun, 5 Jun 2022
• Whit Monday – Mon, 6 Jun 2022
• Christmas Day – Sat, 24 Dec 2022
• 2nd Day of Christmas – Mon, 26 Dec 2022

Why Choose WeHireGlobally

WeHireGlobally takes care of all the onboarding drawbacks, payroll, earnings and privileges, tax filing, and termination of employment. Our Employer of Record solution enables you to manage your overseas teams efficiently while minimizing expense and hazard..