Employer of Record in Denmark

What is an Employer of Record in Denmark?

An Employer of Record (EOR) in Denmark is a strategic partner that acts as the legal employer for your employees residing in Denmark. The EOR takes on all employment responsibilities and liabilities on your behalf, handling payroll, benefits, taxes, and regulatory compliance.

By partnering with an EOR, you can hire employees in Denmark without the need to establish a local entity or navigate complex labor laws.

General Information

• Currency: Danish Krone (DKK)
• Employer Taxes: 14,026.00 DKK +1%
• Payroll Frequency: Monthly
• Employee Costs: %
• Capital: Copenhagen
• Fiscal Year: 1 January – 31 December

Main Aspects of the Labour Code

Minimum Wage

General: The minimum wage in Denmark is determined by the Collective Bargaining Agreements specific to each sector.

For foreign nationals working in Denmark, the government has established a minimum salary requirement of 465,000 DKK per year under the pay-limit scheme (for 2023).

Payroll

Payroll Cycle: In Denmark, the payroll cycle is typically monthly, with employers required to make payments on the same day each month, ensuring they are completed before the end of the month.

13th Salary

There is no legal obligation to provide a 13th-month salary; however, it is common for employers to offer bonuses.

Working Hours

General: The standard workweek for a Danish employee typically consists of five days, with an average of 37.5 hours per week. Under the Working Time Directive Act, the maximum allowable working time is 48 hours per week, averaged over a four-month period.

Overtime: A maximum of 48 hours per week, including overtime, is permitted. Overtime hours beyond 37 hours per week are compensated at a rate between 150-200% of the employee’s regular pay, depending on the applicable Collective Bargaining Agreement. Overtime pay is only mandatory if specified in a Collective Agreement.

Leave

Annual Leave (Vacation):

In Denmark, full-time employees are entitled to 25 working days of paid leave per year, accrued at a rate of 2.08 days per month. It is common for employers to offer an additional 5 days of leave as a benefit. The holidays are typically divided into three weeks: the main holiday plus two additional periods known as residual holidays.

The Danish Holiday Act provides two systems for holiday pay. Employees are either entitled to their regular salary plus a holiday supplement of 1%, or a holiday allowance of 12.5% of their salary or wages (for blue-collar workers). This holiday allowance must be deposited with FerieKonto, the administrator responsible for disbursing these funds.

Leave entitlement is accrued from September 1 through August 31, but can be taken until December 31 of the following year, subject to employer approval. Employees must use at least 20 days of leave each year, though any remaining days can be carried over. Special circumstances may allow up to four weeks of paid holiday to be transferred to the next holiday period if the employee is unable to take their accrued leave before it expires.

Public Holidays

Public holidays that fall on the weekend are usually lost.

Sick Days

Under the Salaried Employees Act and most Collective Agreements, workers are generally entitled to their usual remuneration during sickness.

For the first 30 days of sickness, the employer covers the pay. Beyond this period, sickness benefits are provided by the authorities, though the employer usually continues to pay the full amount and then reclaims the corresponding sickness benefit from the local municipality. Typically, employees can receive sickness benefits for up to 22 weeks within a nine-month period.

To qualify for sickness benefits, employees must have been employed continuously for the eight weeks preceding their sickness absence and have worked a minimum of 74 hours during this time. Employers are required to inform the municipality of the employee’s illness within the designated time frame.

Maternity Leave

Mothers are entitled to 4 weeks of maternity leave before the expected date of birth, though longer leave may be granted if specified in their employment terms.

Following childbirth, mothers are eligible for 24 weeks of leave, divided as follows:

• 2 weeks of parental benefits immediately after childbirth.
• 8 weeks of parental benefits for the first 10 weeks of the child’s life.
• 14 weeks of parental benefits to be used before the child turns one year old. (5 weeks of this period can be deferred until the child reaches nine years old if certain conditions are met.)

Starting May 1, 2024, parents of two or more live-born children from the same birth are each entitled to an additional 13 weeks of leave. Adopters of two or more children born at the same time are also eligible for 13 weeks of extra leave if the children are under one year old at the time of adoption.

Full-time employees (those working 37 hours a week with a monthly salary exceeding DKK 19,728) will receive a maximum unemployment benefit of DKK 4,550 (2023) per week before tax during their leave.

To qualify for maternity or parental leave, employees must have worked a minimum of 40 hours per month for at least three months.

Paternity Leave

Fathers or co-mothers are also entitled to 24 weeks of leave following the child’s birth, which includes:

• 2 weeks of compulsory leave immediately after the birth.
• 22 weeks of flexible leave, which can be taken within the first year after the child’s birth, with some exceptions for special circumstances.

The 9 weeks of leave within the first year must be used by the parent taking the leave and cannot be transferred to the other parent.

The remaining 13 weeks can be transferred to the mother and used until the child is one year old. This period can be extended or postponed until the child reaches nine years old, subject to specific conditions.

These provisions ensure that both parents have the opportunity to take time off to care for their child during the important early stages of life.

Other Leave

National Military or Civil Service Leave – In Denmark, employees aged 18 to 30 may be selected for national military or civil service through a ballot, though both men and women can volunteer for national service. The standard duration of service is four months. Employers are required to grant leave for national service, and employees are protected from dismissal related to requesting or taking this leave.

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