Denmark
Capital: Copenhagen
Language: Danish
Currency: Danish Krona (DKK)
Grow with us
Work for the Best Foreign Employers and Companies in Denmark.
Interested in working remotely in Denmark? We will help you with compliant employment for your employer, handling all employment tasks and payroll.
Facts & Stats
Denmark, officially the Kingdom of Denmark, is a Nordic country in Northern Europe. Denmark is considered to be one of the most economically and socially developed countries in the world. The country ranks as having the world’s highest social mobility, a high level of income equality, the lowest perceived level of corruption in the world, the eleventh-highest HDI in the world, one of the world’s highest per capita incomes, and one of the world’s highest personal income tax rates.
Capital city: Copenhagen
Currency: Danish krone (kr., DKK)
Population size: 5,824,857
Languages spoken: Danish
Time zone: UTC +1
Ease of doing business: Very easy
Cost of living index: 7 of 139 nations
Payroll frequency: Monthly
VAT – standard rate: 25%
GDP – real growth rate: 1.49% (2018)
Employing in Denmark
Employment law in Denmark is governed by statutory legislation and collective labour labour agreements. Denmark has a long tradition of allowing the conditions of employment and pay to be decided on through collective bargaining agreements. This means that there are just a few pieces of legislation that applies to all employers and employees, such as the Danish Salaried Employees Act (Funktionærloven) and the Holiday Act (Lov om Ferie).
Almost all employment contracts in Denmark are governed by collective agreements. Danish employment law and collective agreements provides strong labor conditions and protections for employees, so employing people will be an important investment and commitment.
Temporary agencies are popular options for more flexible workforce arrangements. For these and many other reasons, the following are only guidelines in the broadest sense, and professional legal services are recommended when employing in Denmark.
Payroll
The payroll cycle in Denmark is generally monthly, and employers must make payments on the same day of each month before the end of the month.
Minumum Wage
There is no national minimum wage in Denmark. Instead, minimum pay rates are defined by collective agreements for each individual industry.
Bonuses
There is no law which mandates the payment of a 13th salary in Denmark but performance-based bonuses become increasingly popular.
Employment Contract Details
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
For salaried employees, probationary periods of up to three months are allowed. During these three months it is possible to agree that both parties can terminate the employment with 14 days’ notice.
For non-salaried employees, there is no minimum or maximum probationary period (unless agreed in a collective agreement).
Onboarding time
The minimum onboarding time we need is only 2 working days!
Working hours and overtime
For most employees in Denmark, a standard working week is 37 hours with work being distributed over five days from Monday to Friday. According to the Working Time Directive Act, the maximum average working hours are 48 hours per week, calculated as an average over four months.
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 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.
Paid time off
Full-time employees are entitled to 25 days of paid time off (PTO) a year. Part-time employees’ PTO is pro-rated based on how many days they work per week. PTO accrues monthly at 2.08 days per month. Employees are eligible for PTO as soon as it has accrued. During the first year of employment, an employee can negotiate with the employer to take leave over what they have accrued.
The paid leave entitlement is accumulated from 1st September through to 31st December of the following year.
Public Holidays
Denmark celebrates 11 national holidays:
- New Year’s day
- Maundy Thursday
- Good Friday
- Easter Monday
- General prayer day
- Ascension day
- Pentecost Monday or Whit-Monday
- Constitution day
- Christmas Eve
- Christmas
- Second Christmas
Competitive Benefits Package in Denmark
Swapp Agency can help employers provide a competitive and compliant benefits package for their employees in Denmark. If you have questions, let us know and we can help.
- Medical insurance plan
- Dental insurance plan
- Vision insurance plan
- Additional paid holidays
- Flexible work schedule
- Pension scheme
- Life insurance
- Other insurance
Taxes in Denmark
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.
Employer
- 22% corporate tax rate
- 25% VAT (standard rate)
- Annual contributions to various social security funds, pension and mandatory industrial injury insurance: roughly between DKK 10,000 and DKK 12,000.
Employee
- 8% of labour market contribution on all income.
- 12.1% to 15% state tax (in 2022, the tax threshold for the higher income tax rate is set at DKK 552,500).
- between 22.8% and 26.3% municipal tax.
- Share Tax 27.00% – up to 56,500 DKK; 42.00% – 56,500 DKK and above.
- optional church tax.
- Fixed annual contribution to mandatory pension scheme: DKK 1,135.80
Types of leave
Sick leave
Employees are entitled to paid sick leave for up to 26 weeks.
Parental Leave
Parental leave in Denmark is complex. Parents are entitled to choose an additional 8 or 14 weeks of parental leave between them. Both parents can decide how to distribute the time off, which should be taken after the initial 52 weeks of maternity and paternity leave are used. This leave is unpaid.
- Maternity leave: employees who have worked for 160 hours in the last 4 months are entitled to 18 weeks of paid leave. 4 weeks can be taken before the child’s birth. After 14 weeks, an additional 32 weeks can be divided between the mother and father. The employee will receive 50%, of their average salary during this period, and Social Security will be responsible for this pay.
- Paternity leave: employees who have worked for at least 160 hours within the last 4 whole months are entitled to 2 weeks of paid paternity leave. The 2 weeks must be taken before the child reaches 14 weeks. The employee will receive 50% of the salary during this period, and Social Security will be responsible for this pay.
Other leave
Under the Danish Act on Leave from Work Due to Special Family Reasons, employees are entitled to unpaid time off due to:
- urgent family matters. This type of leave is unpaid.
- need to care for a family member. Not statutory required, but is common.
Adoption leave: adoptive parents are entitled to 4 weeks of leave prior to receiving the child if the adoptive parents have to reside outside of Denmark to adopt. If the child is adopted in Denmark and it is necessary to reside where the place child is situation, one week’s leave before adoption. In all cases of adoption, one of the adoptive parents are entitled to adoption leve of 14 weeks and the other with to leave with statutory benefits for 2 weeks. The remaining 12 weeks can be split between the adoptive parents.
Employment termination
Termination process
Termination of the employment relationship always have to be with written notice with proof that the notice has been received. Employees have been employed for at least one year at the time of the termination are protected against dismissal without just cause. Generally, collective bargaining agreements have the same protection, but after 9 months. Just causes include, but are not limited to:
- Change in employer’s financial situation and reduction of staff;
- Restructuring of the company;
- Problems related to co-operation or trust in the employee;
- Employee’s unfitness for the job;
- Contract breach by the employee, for example in the case of serious misconduct or theft.
Notice period
The statutory notice period for an employer depends on the duration of employment:
- Less than 3 months: 2 weeks
- Less than 6 months: 1 month
- Between 6 months and 3 years: 3 months
- Between 3 and 6 years: 4 months
- Between 6 and 9 years: 5 months
- More than 9 years: 6 months
Severance
In Denmark, generally, there are no statutory requirements on severance pay. Employees who have been in continuous employment for between 12 to 17 years are entitled to a severance payment of between one to three months.
Hire Employees in Denmark
With Swapp Agency, your business can easily hire employees in Denmark. No more worrying about complex tax systems, managing international payroll, or local laws. No entity needed. Swapp Agency takes care of everything in +170 countries.
Usually, to hire in Denmark your business needs an entity. That means a local office, an address registered as a subsidiary, and an account with a local bank. All of this, plus navigating regional benefits, payroll, tax, and HR laws, can take months. Swapp Agency lets you hire employees in Denmark quickly, easily, and compliantly. We even automate tax document collection, payroll, benefits, and more.
Risks of misclassification
Denmark, like many other countries, treats self-employed individuals or contractors and full-time workers differently and there are risks associated with misclassification.
Grow your Team in Denmark with Swapp Agency
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.
Common questions that could come up during the hiring process include the minimum wage, overtime rates, and guaranteed paid time off.
Swapp Agency can help you offer a complete, competitive, and compliant benefits package to your employees in Denmark.
Our team ensures your employees are onboarded and paid as quickly as possible while keeping your business compliant with all local employment legislation. The minimum onboarding time begins after the employee submits all required information.