Employment laws in Denmark

Denmark is often seen as an easy place to do business due to its well-structured systems, transparent regulations, and a highly dependable workforce.

However, when planning to hire, employers need to understand the employment laws in Denmark. This helps you build long-term relationships with your full-time employees and contractors. 

This guide will cover what you really need to know so that you can hire with clarity and be aware of potential pitfalls along the way.

Key employment laws in Denmark

Denmark has a strong legal framework that protects both employees and employers. Here are the key laws you need to know.

1. The Salaried Employees Act (Funktionærloven): It outlines rights and responsibilities for salaried employees, covering termination rules, full salary entitlement during illness and maternity leave, paid vacation, and overtime compensation. 

2. The Holiday Act (Ferieloven): It gives the right to five weeks of holiday per year. 

3. The Working Environment Act (Arbejdstidsloven): This act allows employees to have a pre-determined working week with the mention of working hours. 

4. The Parental Leave Act (Barselsloven): Salaried employees are entitled to maternity and parental leave. However, collective agreements may extend the specified period.

5. The Act on Prohibition of Differences of Treatment (Forskelsbehandlingsloven): This Act prohibits discrimination and harassment on the grounds of race, colour, religion or belief, political views, sexual orientation, age, disability, and national, social, or ethnic background.

Contract employment laws in Denmark

Denmark has clear and structured rules around employment contracts. 

Here are the types of employment contracts in Denmark:

1. Permanent Contract (Fast Ansættelse)

This is the most common employment contract in Denmark. It has no end date. The employee has full rights, including holiday pay, sick leave, and notice period. The contract can be terminated by either party with notice.

2. Fixed-Term Contract (Tidsbegrænset Ansættelse)

This contract has a start date and an end date. This contract is usually entered into if an employer requires extra staff to do a particular project or to cover an employee on leave. 

Employees on a fixed-term contract enjoy the same rights as permanent employees. If a fixed-term contract is renewed without a valid reason, it can be considered permanent employment.

3. Part-Time Contract (Deltidsansættelse)

Part-time employees work fewer hours than full-time employees. They are entitled to the same rights as full-time employees on a pro-rata basis. This includes holiday pay, sick leave, and pension contributions.

4. Freelance or Consultant Contract (Freelanceaftale)

This is used for self-employed individuals or independent contractors. Freelancers are not considered employees and therefore do not receive statutory employment benefits. The terms are agreed upon between both parties.

5. Collective Agreement-Based Contract

Collective bargaining agreements between trade unions and employer associations govern many employment relationships in Denmark. These agreements set the terms for salary, working hours, and other conditions. They often replace or supplement individual contracts.

Essential contract terms

Under Danish employment regulations, you must give employees a written statement outlining the terms of employment within one month of their start date. 

All employers must furnish these points to the employees:

• The complete identity of the employee and the employer
• Details of the workplace 
• The employer’s head office
• The position/occupation with the job description and specifications of job attributions
• Date of commencement of the contract
• Duration of the contract
• Leave entitlements
• Basic wages, along with other benefits
• Working hours and overtime hours
• Probation and notice period
• Termination

Minimum wage in Denmark

Denmark does not have a national minimum wage set by law. This means no fixed baseline applies across all roles. Because of this, employers need to make certain that compensation is clearly defined in the employment contract.

Working hours in Denmark

Working hours in Denmark are generally consistent across companies. 

• The standard looks like 37 hours per week and 160.33 hours per month. 
• In some companies, employees work slightly longer days of around 7.5 hours, 37.5 hours per week and 162.5 hours per month.

While the daily structure may vary a little, the overall working time stays within a narrow range. Typically, the average weekly working hours should not be more than 48 hours over 4 months.

This makes it easier for employers to plan workloads and manage team schedules.

Overtime laws

There is no standard rule that defines overtime laws in Denmark for all employers.

Overtime is usually governed by collective agreements with unions. If no such agreement is in place, as in some cases, overtime is handled based on company policy.

This makes it important for employers to clearly define how overtime is managed and compensated, so expectations are set early and there is no confusion later.

Typically, the overtime pay rates are:

• 150% of the salary for the first 2 hours
• 200% of the salary from the 3rd hour

This applies to weekends and public holidays.

Mandatory benefits

When hiring in Denmark, benefits and leave are not just add-ons. They are a key part of employee rights and play a big role in how employees view their job. 

That is why it is of utmost importance that employers clearly define these rights from the start.

• Annual leave in Denmark: Employees are entitled to 25 days of annual leave each year. 
• Sick leave in Denmark: Sick leave in Denmark is unlimited. This means employers need to have clear internal processes in place to manage absences, since there is no fixed cap on the number of sick days an employee can take.
• Public holidays: Employees are entitled to 12 public holidays in Denmark. They are as follows:
  • New Year’s Day
  • Maundy Thursday
  • Good Friday
  • Easter Sunday
  • Easter Monday
  • Ascension Day
  • Whit Sunday
  • Whit Monday
  • Constitution Day
  • Christmas Eve
  • Christmas Day
  • Boxing Day
• Maternity leave: Maternity leave in Denmark comes with both time off and partial pay. Mothers are entitled to 50% of their salary for:
  • 4 weeks before the due date
  • 14 weeks after the due date

Employers can claim a social security refund for up to 32 weeks. Any maternity leave taken beyond this period is unpaid by the employer.

• Paternity leave: Paternity leave in Denmark is based on company policy. This gives employers flexibility, but it also means expectations should be clearly defined in the employment terms.
• Health insurance: Public health insurance in Denmark is mandatory and automatically covers all residents. Employers can also offer private health insurance as an additional benefit. 
• Social security (ATP pension): Employers must contribute to the ATP pension scheme. The contribution is shared:
  • 2/3 paid by the employer
  • 1/3 paid by the employee

The total contribution is 300 Danish kroner per month for a full-time employee.

• Industrial injuries insurance: This insurance is mandatory for all employers. It covers:
  • Work-related accidents
  • Occupational diseases caused by working conditions

This is an important part of employee rights in Denmark, as it offers protection in case of workplace risks.

Termination

Understanding termination laws in Denmark is important before you hire your first employee. These rules affect how and when you can end an employment relationship, and what obligations you must meet during the process.

Valid termination scenarios

Employers can terminate employment under specific situations. These include:

• Disciplinary dismissal due to misconduct or poor performance
• Dismissal due to objective reasons such as redundancy, restructuring, or financial grounds
• Expiry of a fixed-term contract
• Termination during the probation period
• Employee resignation
• Mutual termination agreement

Each scenario should be handled carefully, with proper documentation and clear communication.

Termination without cause

There is a key distinction based on how long the employee has been with the company.

Within the first 12 months, it is possible to terminate an employee without cause, as long as the decision is not based on discriminatory or protected reasons. In this case, there is no requirement to pay compensation for unfair termination.

After the first 12 months, employers cannot terminate without cause. A valid reason must be established, making it important to manage performance and documentation from the beginning.

Probation period rules

The probation period in Denmark can last up to 3 months.

During this period, the notice period in Denmark is shorter. Either party can terminate the employment with 2 weeks’ notice, which gives employers more flexibility in early-stage hiring decisions.

Notice period after probation

Once the probation period ends, notice periods depend on how long the employee has worked with the company.

Employer notice periods –

• 0–5 months: 1 month
• 5 months to 2 years and 9 months: 3 months
• 2 years and 9 months to 5 years and 8 months: 4 months
• 5 years and 8 months to 8 years and 7 months: 5 months
• More than 8 years and 7 months: 6 months

Employee notice period (In case of resignation):

• 1 month, regardless of seniority

It is possible to agree on a longer employee notice period in writing, but the employer’s notice period must be extended accordingly.

Severance pay

In most cases, severance pay in Denmark is not required.

Employers are generally only required to provide the applicable notice period.

However, there are exceptions:

• Employees with 12 or 17 years of continuous service may be entitled to 1 to 3 months’ salary upon termination by the employer
• Employees who are unfairly dismissed and have worked for at least one year may receive compensation

The amount in unfair dismissal cases depends on several factors:

• Up to 50% of salary during the notice period
• Up to 3 months’ salary if the employee is over 30
• Up to 4 months’ salary if employed for at least 10 years
• Up to 6 months’ salary if employed for at least 15 years

These conditions make it important for employers to handle terminations carefully, especially after the first year of employment.

Navigate employment laws in Denmark with Payoneer Workforce Management

Managing labor law compliance in Denmark can feel complex when you are entering the market for the first time. There are many moving parts, from setting up employment contracts to handling payroll, leave, and termination laws in Denmark.

Payoneer Workforce Management helps simplify these tasks. It supports you across the employee lifecycle, from onboarding to everyday management through a unified technology platform. This includes tracking working hours, managing leave, and notice period alignment and other requirements are handled correctly.

For employers, this means fewer issues and smoother day-to-day operations. You can focus on growing your team while keeping administration in line with local requirements.

Book a demo to learn more about how Payoneer Workforce Management can help.

FAQs

1. What are the rights of the employees in Denmark?

Employee rights in Denmark cover key areas such as working hours, leave, and workplace protections. Employees are entitled to annual leave, public holidays, and unlimited sick leave. They are also covered by public health insurance and workplace injury insurance. In addition, rules around notice periods and termination help ensure fair treatment during employment.

2. How can employers stay compliant with Denmark’s employment laws and regulations?

To maintain labor law compliance in Denmark, employers need to set clear policies from the start. This includes well-defined employment contracts, proper handling of working hours and leave, and following rules related to termination and notice periods. Regularly reviewing internal processes also helps reduce issues later. Payoneer Workforce Management can offer support with navigating local employment laws.

3. How do labor laws work in Denmark?

Labor laws in Denmark are based on a mix of legal requirements and company-level policies. Some areas, such as working hours and leave, follow standard practices, while others, like overtime, may depend on company rules if no collective agreement is in place. Employers need to manage these areas carefully to ensure smooth day-to-day operations.

4. What are the employment laws in Denmark?

Labor laws in Denmark define the rules for hiring, managing, and ending employment. They cover areas like employment contracts, working hours, leave, and termination laws.