Things to consider when hiring an employee in Denmark

Denmark rightly enjoys a reputation as a nation with a high quality of life and is consistently recognised for the happiness and well-being of its citizens. This Scandinavian country offers a unique blend of solid social benefits, environmental sustainability and community-orientated values that contribute to the overall happiness and prosperity of its inhabitants.

Furthermore, Denmark's attractiveness goes beyond its lifestyle and positions itself as a prime location for business and investment. Denmark's high ranking as the fourth easiest country to do business in is a testament to its efficient regulatory environment, transparent legal framework and innovation-friendly ecosystem.

However, in order to hire a new employee in Denmark, you need to familiarise yourself with the country's cultural norms, labour market and legal framework. Below we have listed the most important aspects you should consider.

The preliminary considerations

Collaborative Bargaining Agreements (CBAs): These significantly influence working conditions and salaries through negotiations between unions and employers.

The working week and holidays: As a rule, the working week is 37 hours, with employees entitled to generous holidays to ensure a good work-life balance.

Social security and taxes: Denmark offers extensive social security benefits, which are financed by relatively high taxes for employers and employees.

Labour agreements: These are mandatory and regulate the details of the job, salary, working hours and other conditions to ensure clear and legally secure employment relationships.

Knowing these factors well and incorporating them into your recruitment strategy in Denmark will not only help with compliance, but will also help build a respectful and mutually beneficial relationship with your employees.

Drafting an employment contract

To ensure that the employer and employee agree on the terms of employment and legal obligations, a comprehensive employment contract in Denmark should contain the following points

Employer and employee details: Full names and addresses as well as the necessary information to clearly identify the parties involved.

Job title or role description: An accurate description of the duties and expectations of the position.

Start date and conditions for non-permanent positions: Specific start date and conditions for temporary or contract positions.

Holiday entitlement and compensation: Clearly defined leave periods and corresponding compensation that meets national standards.

Notice periods for both parties: Agreed notice periods for either party to terminate the employment relationship.

Salary details: Including the amount, payment schedule and any bonuses or additional compensation.

Working hours: Detailed weekly working hours and overtime arrangements.

Applicability of collective labour agreements: Indicate whether and how industry-specific CBAs affect employment terms.

Understanding Hiring Costs in Denmark

When engaging in international recruitment, the financial implications can surpass those associated with local hiring due to several key factors:

Business Establishment Costs: Setting up operations in a new country often involves legal, administrative, and infrastructural expenses that can significantly impact the budget.

Recruitment Agencies or Committees: Utilizing specialized services to identify and vet potential candidates abroad may be necessary, leading to additional costs.

Recruitment Software: Investing in advanced software solutions can streamline the hiring process across different geographies but requires upfront and ongoing investment.

Job Advertisements: Targeting a global talent pool might entail higher advertising fees across multiple platforms and countries to effectively reach the desired candidates.

Legal Compliance Checks: Ensuring adherence to the employment laws of both the home country and the candidate's country necessitates thorough legal reviews, possibly requiring consultation with legal experts.

Employee Training Programs: Integrating international hires into the company may demand specialized training programs to align them with company practices, culture, and expectations.

Accounting for these considerations in the budget is crucial for successfully navigating the complexities of international recruitment.

Company requirements for recruitment in Denmark

To ensure legal recruitment in Denmark, companies must take several basic steps to ensure compliance with local regulations and establish a solid operational base:

Define their Organizational Structure: Clarification of the company's legal and operational framework is essential for alignment with Danish corporate regulations and governance standards.

Register as a Doing Business As (DBA): Formal registration of the company under a trade name with the Danish authorities is crucial for legal recognition and a licence to operate.

Enroll with the Danish Tax Authorities (IRS): This ensures compliance with tax obligations, including income tax, VAT, and employee taxation, essential for lawful business conduct.

Set up a Bank Account and Allocate Share Capital: Opening a local bank account and depositing the required minimum share capital is necessary for financial transactions and compliance with corporate law.

Prepare Necessary Documentation: Gathering and preparing all legal and operational documents required by Danish law is key to a smooth registration and setup process.

Secure a Workspace: Finding a physical or virtual office space that meets the needs of the business and its employees is important for establishing a presence in Denmark.

Obtain Work-Related Injury Insurance: Ensuring coverage for employees against workplace injuries is a legal requirement, providing protection for both the workforce and the employer.

Alternatively, collaborating with a Professional Employment Organization (PEO) or Employer of Record (EOR) offers a streamlined approach to entering the Danish market. This partnership can simplify the complexities of legal compliance, payroll, and HR management, allowing companies to focus on their core business activities while the PEO/EOR manages employment-related responsibilities.

Hiring a Worker in Denmark: A Step by Step Guide

The process of hiring in Denmark bears similarities to international standards, yet it is important to note specific nuances unique to the Danish labor market.

1. Posting Job Openings Online

Start by crafting detailed job postings that clearly outline your organization's overview, along with the responsibilities and qualifications for each role. Advertise these positions on popular Danish job boards such as Remotepad, Jobnet, Ofir, Jobzonen, Jobindex.dk, and Stepstone to ensure visibility among local job seekers. For roles requiring specific expertise, consider niche job boards relevant to your industry. If proficiency in English is required, highlight this requirement in your postings.

2. Reviewing Applications

For those unable to manually review applications, consider enlisting a recruitment agency or utilizing recruitment software for efficiency. Be prepared for Danish CVs, which typically provide comprehensive details akin to European standards, and are lengthier than North American resumes. Shortlist candidates who align with your role's requirements and exhibit potential.

3. Conducting Interviews

For remote positions, or if the candidate is not locally based, opt for in-person, telephonic, or video interviews, taking into account the time zone differences with Central European Time (CET) for scheduling convenience.

4. Extending Job Offers and Contracts

Upon identifying suitable candidates, extend formal job offers. Concurrently, prepare detailed employment contracts that delineate job roles, terms of employment, and other critical employment conditions. Ensure candidates fully understand the offer and contract before signing, to foster transparency and mutual agreement.

5. Onboarding New Employees

Initiate the onboarding process for new hires, ensuring they complete all requisite documentation and are introduced to your company’s culture, systems, and processes effectively.

This streamlined approach to hiring in Denmark emphasizes clarity, efficiency, and compliance with local employment practices, ensuring a smooth integration of new employees into your organization.

Food For Thought

Although Denmark offers a favourable business environment, navigating the legal and regulatory framework for starting a business and hiring employees can be complicated and resource-intensive. Utilising an Employer of Record simplifies entry into the Danish market, especially for foreign companies.

For further assistance, the Swapp Agency is available to provide expert advice and support for your recruitment requirements in Denmark.