Benefits of using a Danish PEO & Employer of Record in Denmark
- Expand without an entity
- Flexible and cost-effective solution to outsource payroll and HR functions for international expansion
- In compliance with foreign local laws & regulations
- Minimizes employment liabilities and risks
- Reduced risk, as the risks of being an employer fall almost completely on the employer of record
- Let's you focus on your core business
- You manage your employees
- EoR and /or PEO takes care of registration and contact with local authorities
Employment Contracts Denmark
It is a legal requirement that employers must provide the employee with an employment contract if their employment lasts for at least a month and the the average weekly working time exceeds eight hours per week. If the general terms of the employment are regulated by a collective agreement, the employment contract will typically include a reference to applicable collective agreement.
In Denmark, several types of employment contracts exist. The most common one is an indefinite contract - a contract without a specified end date. Another common employment contract is a fixed-term contracts. A fixed-term contract they can only be renewed more than once if a justified reason exists. There is however, no legal limit for the maximum number of successive fixed-term contracts if a justified reason is given. The Danish Confederation of Salaried Employees and Civil Servants states that usually 2 successive renewals can be based on objective reasons.
Employment Termination Denmark & Notice Period Denmark
There is no ‘at will’ termination in Denmark. In order to terminate the employment contract of an employee, sufficient reasoning must be provided. The notice period in Denmark is fixed by law. Employees with an indefinite employment contract are entitled to a notice period of 1 to 6 months, depending on the length of the employment and the type of the employment contract.
|Length of employment||Notice Period Denmark|
|< 6 months||1 month|
|6 months to 3 years||3 months|
|3 years to 6 years||4 months|
|6 years to 9 years||5 months|
|> 9 years||6 months|
*If a termination is made after 5 and a half months of employment, the notice period is 3 months, not 1 month. This is because of the fact that with a notice period of 1 month, the employee has been employed for more than 6 months at the time of termination.
Fixed-term contracts can be terminated automatically on their expiry date or upon completion of specified tasks. To learn more about fixed-term contracts in Denmark we invite you to read this blog on Fixed-Term contracts in Denmark, Germany and France.
Severance pay in Denmark. In Denmark there are no general rules or regulations when it comes to severance pay. The only aspect that is set is that salaried employees who have been in continuous employment for 12 to 17 years are entitled to a severance payment of between 1 to 3 months’ salary. Some collective bargaining agreements also include rules on severance pay that depend on seniority.
As the Danish PEO and EOR provider is the formal employer of your employees in Denmark, they are also responsible for terminating the contract while applying the applicable French terms.
Social Security Contributions Denmark & Employer Taxes Payroll in Denmark
What are the primary social security contributions in Denmark? And more importantly, what is the amount of the social security contribution that is accounted to the employer? Danish employer must, just like other employers in European countries, pay social contributions for their employees. However, compared to most other European countries, the social security contributions are low in Denmark. On average, as an employer in Denmark you pay around $ 198 per month and $ 2.388 per year. Below you can find an overview of the taxes you as an employer in Denmark have to pay on an annual basis:
|Pension Scheme (ATP)||2,270 Danish Krone ($ 363)|
|Educational Scheme (AUB)||2,780 Danish Krone ($ 445)|
|Occupational Injury (AES)||215 - 5,140 Danish Krone ($ 34 - $ 823)|
|Pension Finance Scheme||590 Danish Krone ($ 94)|
|Maternity Leave Fund||1,150 Danish Krone ($184)|
|Industrial Injury Insurance*||1,025 - 23,470 ($ 164 - $ 3,758)|
*The industrial injury insurance is calculated based on the type of industry, number of employees, and the used insurance company.
Average Salary Denmark & Average Employer Costs Denmark
In Denmark, salary can be determined in various ways: individually, between the employer and employee and your employer, or partly collectively through agreements with a trade union. In 2022, the average annual wage in Denmark was $72.594,48. This is higher than the average annual wage in the United States: $53.490,00. As an employer, the actual employer costs are around $2,388 higher than the gross annual salary. Based on a $72.594,48 annual salary, the employment costs would be $74.982,48.
To learn more about the average salaries in Europe and the actual employment costs in Europe, we invite you to read this article on Costs of hiring European employees.
Working Hours in Denmark
In Denmark the standard working week is 37 hours. By law, the maximum average working hours cannot exceed 48 hours per week. A lunch break of 30 minutes is normal. In the public sector lunch breaks are usually paid, which is not always the case in the private sector. Employees are entitled to at least one day off per week.
Paid Vacation Leave Denmark
Denmark has a “concurrent holiday” system, meaning that employees earn the holidays each month. Employees earn 2.08 days of paid holiday every month, for a total of 25 days per year. Employees begin to accumulate their holidays on September 1, and run through August 31 of the following year. In general, employees accrue 12.5% of your salary in holiday allowance.
To learn more about the average paid vacation days in Europe and how Denmark compares to the rest of Europe, we invite you to read our blog on paid vacation days Europe.
Public Holidays Denmark
New Year's Day - 1 January
Maundy Thursday - 14 April
- Good Friday - 15 April
- Easter Sunday - 17 April
- Easter Monday - 18 April
General Prayer Day - 13 May
- Ascension Day - 26 May
- Whit Sunday - 5 June
- Whit Monday - 6 June
- Christmas Day - 25 December
- 2nd Christmas Day - 26 December
Maternity and Paternity Leave Denmark
In Denmark, expecting mothers are entitled to leave of 4 weeks before birth, and 14 weeks after. A total of 18 weeks. Employees receive 50% of their wages for this time. Employees who are covered by agreement may be entitled to full pay. New fathers in Denmark are entitled to 2 weeks’ leave which must be taken during the first 14 weeks following birth.
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Monique Ramondt Sanders
Executive Vice President | HR Outsourcing