Employment in Denmark

EMPLOYMENT IND DENMARK IN GENERAL 

In comparison with other countries, Denmark has a flexible labour market due to the Danish model of “flexicurity” (composed of the terms "flexibility" and "security“). The term describes a system between the unions, employers’ associations, and the state the unions and the employers’ associations, as well as statutory legislation, provide flexible employment opportunities with easy access to hiring and firing.

In return, the state provides a stable social welfare safety net and training opportunities for employees who have been fired. You may consider the appointment of an agent, distributor, or franchisee as an alternative to establishing business on your own and employing your own staff.

EMPLOYEE CATAGORIES - Blue-collar & White-collar WORKERS

In Denmark, a distinction is made between blue-collar workers, white-collar employees and managing directors.

Blue-collar workers are typically characterised by working with practical work, e.g. psychical work such as construction, cleaning etc.

The definition of white-collar employees is directly defined in the legislation, according to which office/sales workers and employees who supervise and issue instructions to other employees fall within the ambit of the legislation.

While collective bargaining agreements typically apply for blue-collar workers, white-collar employees are covered by the Danish Act on Salaried Employees (in Danish: "Funktionærloven") and less often by collective agreements. The Salaried Employees Act is the most important legal instrument for white-collar employees, with most provisions being mandatory to follow when hiring and firing.

Other staff members, e.g., managing directors, are not covered by these acts and agreements. Such executive staff members enjoy broad freedom of contract. Based on the principle of equal treatment, temporary employees (in Danish: “vikarer”) enjoy the same rights as other employees.

STATUTORY  PROTECTION  OF  EMPLOYEES 

The primary aim of the statutory provisions is to protect employees’ rights in relation to e.g. termination, holiday entitlement and illness.

The Danish Act on Salaried Employees protect white-collar employees, but in addition to that there are several acts protecting both blue-collar and white-collar employees, such as the Danish Holiday Act, the Danish Maternity Leave Act etc.

COLLECTIVE  BARGAINING  AGREEMENTS 

Collective bargaining agreements in Denmark are concluded between either a union and an employer’s organisation or between the union and the individual employer.

They regulate salary and working conditions in a specific industry sector or company, most often for the category of blue-collar workers, and less so for white-collar workers.

Neither Danish nor foreign companies are however obligated to conclude collective bargaining agreements, and hence, terms of employment can be freely negotiated with respect to the statutory provisions. However, parties to collective agreements, especially the unions, have an interest in achieving a high degree of organisation.

The unions can take certain industrial actions to try to reach an agreement with employers. Employers can choose to either join one of the employers’ associations – thus being directly covered by the terms of collective agreements – or may enter their own “company agreements” with a union.

ARE FOREIGNERS ABLE TO WORK IN DENMARK? 

Any national citizen of an EU member state may work in Denmark without a work permit. EU nationals must however register with the Danish authorities, but they cannot be refused to live and work in Denmark.

An employee from outside the EU shall have a work and residence permit in order to work in Denmark, and there are special permits to apply for depending on the work carried out. One of the permits most often applied for is the pay limit scheme for highly paid employees.

 

EMPLOYMENT CONTRACTS In Denmark 

It is mandatory to issue an employment contract outlining all essential terms and conditions. This is required for all employees employed for more than 1 month for more than 8 hours per week on average.

An employment contract continues for an indefinite period until terminated, unless it is specifically agreed to be a fixed term contract.

Fixed term contracts can be prolonged if the employer has an objective reason. In general, if a fixed term contract is prolonged more than once, it will be considered employment on indefinite terms.

SALARY AND WORKING HOURS IN DENMARK 

SALARY 

There is no minimum wage in Denmark and salary is a highly negotiable term. The salary must, however, be considered “reasonable” when compared to hours worked.

Collective bargaining agreements often specify a certain minimum salary, and even if an employer has not concluded a collective bargaining agreement, it is common to look to the industry’s main collective agreement when determining salary for blue-collar workers. This also helps to minimise the risk of industrial actions from unions that wish to conclude a collective agreement with your company.

Blue-collar employees are often paid an hourly wage.

For white-collar employees, who are most often not covered by collective bargaining agreements, salary is usually negotiated individually and paid as a monthly fixed salary. Danish employees will expect the main part of their salary to derive from a fixed base salary. For white-collar employees, a smaller percentage of salary may consist of commission or bonus payments. Salary-related benefits such as free mobile phone, company car, internet, laptop etc. are also negotiable terms.

WORKING HOURS

There is no statutory requirement of working hours, but there is a maximum of 48 weekly hours on average within a four-month period.

Besides this legislative requirement, the weekly working hours are usually regulated in the employee’s employment contract. Usual working time in Denmark is 37 hours per week.

For white-collar employees, it is usually common to agree that overtime is not compensated but included in the agreed base salary.

For blue-collar employees, it is normal to pay for overtime, and if the employer has concluded a collective bargaining agreement, the overtime pay will be regulated in detail in such.

TERMINATION in denmark

The notice of termination for blue-collar workers is determined in the applicable collective bargaining agreement, if any such is concluded. If not, it is subject to freedom of contract. As a general rule, the notice periods for blue-collar workers are quite short, often between 14 days (after 6 months’ employment) and 3 months (after 6 years’ employment), depending on industry and seniority.

For white-collar employees, notice of termination is regulated by the Danish Act on Salaried Employees. 

According hereto, the period of notice in case of termination by the employer is between 1 and 6 months depending on the duration of the employment relationship. Employees may terminate their employment contracts with one month’s notice, irrespective of their length of service with the company. The parties may agree on a trial period of up to 3 months during which the employment relationship may be terminated by either side subject to observance of 14 days’ notice.

Employees must receive their salary during the notice period. According to the Danish Salaried Employees Act, it is a requirement after one year of employment that the employer’s termination must be considered fair.

For blue-collar workers covered by a collective bargaining agreement, this requirement is usually activated after 9 months of employment.

A fair reason for termination can be present if, e.g., the employee does not perform as expected or if the employer is terminating the employment due to restructuring or scale down. Scale down and restructuring will most often be considered a fair reason for termination, whereas terminations based on the employee’s behavior are more often challenged.

A white-collar employee who has been dismissed unfairly may file claim for a compensation of a maximum of 6 months’ salary, depending on seniority.

For blue-collar workers, the maximum compensation  will derive from the collective bargaining agreement in force, if any.

White-collar employees are entitled to a compensation of 1 month of additional salary after 12 years of employment and 3 months of additional salary after 17 years of employment.

For blue-collar workers, any compensation will be regulated by the collective bargaining agreement in force.

Summary dismissal (immediate termination of employment) may take place only in the event that the conduct of the employee constitutes gross misconduct.
 

THE WORKING ENVIRONMENT in denmark 

It is in general recognised in Denmark that a healthy work environment is best achieved by cooperation between employers and employees. Employers are under a duty to create a safe working environment, both physical and mental, ensuring that the employees are protected from injuries or health damages and that the workplace complies with health and safety regulations.
 

EQUAL OPPORTUNITIES in denmark

Employers shall comply with antidiscrimination legislation, based on EU law, which makes it unlawful for an employer to discriminate on the grounds of sex, ethnic origin, disability, age, or sexual orientation in connection with recruitment, promotion, salary, and dismissal. Employers  may be liable to pay high compensation in case of breach of antidiscrimination laws.
 

HOLIDAYS in denmark

Minimum holiday entitlements and holiday pay are regulated by the Danish Holiday Act. The minimum holiday entitlement is five weeks per holiday year, but it is common to agree – either in collective bargaining agreements or individual contracts - on an additional five days’ paid holiday per holiday year. The monthly paid employee earns 2.08 days’ paid holiday for each month of employment. Upon termination, the employer is obligated to account and pay for any accrued but not taken holidays. Payments must, as a general rule, be made to the statutory holiday fund “FerieKonto”. The Danish Holiday Act is comprised of very detailed regulation of e.g. notice to take holidays, legal impediments to taking holidays, access to transfer holidays to a new holiday year, compensation for holidays not taken and not transferred etc.
 

ILLNESS in denmark 

White-collar employees covered by the Danish Act on Salaried Employees are entitled to their usual salary during illness. There is no maximum duration on this entitlement. However, after 30 days, the employer will most often receive reimbursement of statutory sickness benefits and will thus be compensated to some extent.

For blue-collar workers, the entitlement to salary during illness, will derive from the collective bargaining agreement in force, if any, or from individually agreed terms between employees and employer. It is common that blue-collar workers receive salary during illness for a certain period, but not indefinitely like the white-collar employees. There are certain rules regarding termination of employment after 120 days of illness if such is agreed between employer and employee in the employment contract.

MATERNITY & PATERNITY LEAVE in denmark 

Employees have a statutory right to be absent from work during maternity, paternity and parental leave during a total of 52 weeks, which the parents – to some extent – can divide between them.

Subject to the meeting the statutory criteria, parents are entitled to statutory maternity pay during the leave. This is paid by the government. Whether the employee is also entitled to salary from the employer during the leave depends on whether the employee is a white-collar employee, or employed under collective bargaining agreements, or on individually agreed conditions.

A white-collar employee, who has become a mother, is entitled to half of her usual salary for a total of 18 weeks. Blue-collar employees are usually entitled to full salary for several months, if covered by a collective agreement. If an employer pays salary during leave, the employer is entitled to reimbursement of the maternity benefits that the employee would have received.
 

PENSIONS in denmark 

Employees in Denmark accrue statutory retirement pensions (state pension and state supplementary pension) from the Danish government. However, though not mandatory, it is common practice for employers to pay a supplementary pension for their employees. The usual market standard is an employer contribution around 8% of the monthly salary, whilst the employee usually pays 4% of the salary. If the employer has concluded a collective bargaining agreement, the pension contribution is most often regulated in the agreement.
 

MASS REDUNDANCIES AND TRANSFER OF UNDERTAKINGS

Statutory legislation applies in case of mass redundancies, including obligations to provide information and negotiate. The threshold level for a mass redundancy depends on the size of the company in question, but it shall involve at least 10 employees in a company with at least 20 employees.

In case of an undertaking in Denmark, the companies shall comply with the Danish Act on Transfer of Undertakings, which is implemented from the EU directive on the same topic. As a rule, this entails that the employees are transferred from seller to buyer on their existing employment terms and conditions. The employees cannot object to the transfer, unless under unique  circumstances. It is unfair to terminate employees based on the undertaking itself, unless terminations are made due to economic, technical or organisational reasons.

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