Employer of Record in Denmark

Hiring independent contractors has boomed in popularity because of the cost savings and flexibility they offer. It can be a great option if you require niche skills or short-term project support. Contractors allow businesses to access specialized skills quickly, without the time and cost of setting up a local entity.

However, it’s important to know the limits of this model: contractors are not a substitute for full-time employees. Relying on them for ongoing, long-term roles can create serious compliance risks, including employee misclassification, which can lead to fines, back taxes, and reputational damage.

Playroll’s contractor management solutions make it simple to compliantly engage, onboard, and pay contractors around the world. We provide clear visibility into agreements, streamline payments, and reduce compliance risks – so you can focus on getting the work done. And when you’re ready to take the next step, we can help seamlessly convert contractors into full-time employees through our global Employer of Record service.

Businesses can only operate smoothly in Denmark if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Denmark below, to avoid any compliance issues.

Employment Contract Requirements

Denmark, known for its progressive work culture and emphasis on a healthy work-life balance, offers a welcoming environment for businesses. When employing individuals in Denmark, there are several key hiring formalities to consider for the employment contract:

• Employment Contract Terms
• Probationary Period
• Working Hours and Overtime
• Non-Compete Clauses

Onboarding Process

We can help you get a new employee started in Denmark quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Probation Period in Denmark

For employees covered by the Salaried Employees Act, the probation period is capped at 3 months.

In Denmark, the standard working week for an employee typically consists of five days, with an average of 37 hours worked per week, with daily limits generally around 8 hours. The average weekly working hours including overtime must not exceed 48 hours as per the Working Time Directive Act.

Working hours and overtime are primarily regulated through collective agreements, which set important rules on maximum hours, rest periods, and specific industry exceptions. Employees must receive at least 11 consecutive hours of rest within each 24-hour period and are entitled to meal breaks when working more than 6 hours a day. Special regulations apply to night shifts, weekend work, and managerial employees, ensuring both flexibility and protection.

Overtime work is compensated according to collective agreements, at a rate ranging from 150% to 200% of the regular pay rate, depending on the provisions outlined in the applicable Collective Bargaining Agreement. There are additional bonuses for work on Sundays and public holidays.

It's important to note that the payment of overtime is not mandatory unless specified in a Collective Agreement.

In Denmark, the absence of a statutory minimum wage means that compensation is primarily determined through collective bargaining agreements between employers and trade unions. This system ensures that wages are tailored to specific industries and roles, often resulting in earnings that surpass a basic living wage. Employers must stay informed about the relevant agreements within their sectors to ensure compliance and fair compensation practices. Regular reviews and negotiations allow wage structures to adapt to economic shifts, maintaining Denmark's commitment to equitable and competitive labor standards.

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Growing your team in Denmark is exciting, but it’s not without challenges. Local labor laws are often nuanced, and hiring without the right legal structure or processes can lead to misclassification, non-compliance penalties, or disputes. An Employer of Record removes that risk by acting as the legal employer on your behalf, taking full responsibility for compliance, contracts, payroll, and employee benefits.

This gives you the freedom to scale at your own pace, whether you're adding one employee or building out an entire function, without the burden of setting up and managing a local entity. You remain in control of day-to-day responsibilities and performance, while the EOR ensures every hire is legally protected and properly supported. It's a strategic way to expand globally without spreading your internal team too thin or exposing your business to legal liabilities in unfamiliar markets.

Denmark's payroll system features a comprehensive tax structure designed to fund its extensive social welfare programs.

Employers must navigate several mandatory contributions, including the 8% Labor Market Contribution, income tax withholding based on progressive rates, ATP pension contributions, and holiday pay accrual at 12.5% of salary. Compliance requires timely reporting through the eIndkomst system by the 10th of each month and payment by the month's last working day.

The total employer cost typically adds 15-20% beyond gross salary. Using payroll management software can help employers consolidate payroll data and stay compliant in Denmark by automating complex calculations, ensuring accurate reporting, and maintaining proper documentation for Danish tax authorities.

Employees expect to be paid accurately, on time, and in full compliance with local standards. When you're hiring in Denmark, providing a smooth payroll experience is critical to retention and trust. An Employer of Record ensures that employees receive what they’re owed, without errors, delays, or confusion about taxes or benefits.

Key Ways an EOR Supports Payroll in Denmark:

• Reliable Salary Payments: Ensures employees are paid promptly in local currency.
• Clear Payslips & Documentation: Provides employees with compliant, understandable records.
• Correct Benefits & Contributions: Delivers legally mandated contributions and any changes in compensation, like bonuses.
• Payroll Setup & Processing: Handles salary calculations, tax withholdings, and local reporting obligations.
• Boosts Employee Confidence: Builds trust with compliant, consistent payroll operations.

In Denmark, work permits and visas are essential for employers hiring foreign workers from outside the EU/EEA. The key visa types include the Positive List Scheme for in-demand occupations, the Pay Limit Scheme for high-salary positions (requiring annual earnings above DKK 514,000), and the Fast-Track Scheme for certified employers needing expedited approvals.

The application process involves submitting a valid job offer, providing supporting documentation, paying application fees (typically around DKK 6,055 for main applicants), and completing biometric data requirements. Processing times range from 15 days to 45 days. Employers must also stay compliant with renewal requirements and salary thresholds to avoid legal complications.

Mandatory Leave Entitlement in Denmark

The annual leave entitlement in Denmark is 5 Weeks for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Denmark

Denmark has 11 mandatory national public holidays in a year.

Paid Time Off in Denmark

Full-time employees in Denmark, working five days a week, have a minimum entitlement of 25 paid business days per year.

• The accrual rate for leave is 2.08 days per month, and part-time employees enjoy the same allocation of vacation days.
• If an employee is given more than 25 days, the accrual rate per month is their annual vacation allowance divided by 12. Employees are required to take a minimum of 20 days off annually.

Maternity Leave In Denmark

The mother has the right to take 4 weeks of maternity leave before the anticipated date of birth. However, if her terms of employment specify a longer maternity leave, she is entitled to it. After giving birth, mothers are granted a total of 24 weeks of leave. This is paid by the state through maternity benefits

Paternity Leave In Denmark

Parents of children born after August 2, 2022, are entitled to 24 weeks of leave. This includes 2 compulsory weeks directly after birth, 9 non-transferable weeks to be used within a year, and 13 flexible weeks that can be taken, postponed, or transferred to the other parent before the child turns 9.

Sick Leave In Denmark

The Salaried Employees Act and most Collective Agreements stipulate, but the general rule is that employees are typically entitled to their regular remuneration during periods of sickness.

• The employer covers the payments during the initial 30 days of sickness. Subsequent leave is compensated by the authorities. The maximum benefit is 4695 DKK per week and 126.89 DKK per hour.
• In general, employees can receive sickness benefits for a maximum of 22 weeks within a nine-month period. To qualify for sickness benefits, individuals must have been continuously employed for the eight weeks preceding the sickness absence and worked a minimum of 74 hours during that period.
• Employers are required to inform the municipality of their employee's illness-related absence within the specified timeframe.

Parental Leave In Denmark

Parents can collectively opt for an additional 14 weeks of parental leave. The distribution of this unpaid leave, to be taken after the initial 52 weeks of maternity and paternity leave, is at the discretion of both parents.

National Military/Civil Service Leave

In Denmark, employees aged 18 to 30 may be selected for national military or civil service through a random draw, and voluntary participation is open to both men and women. Employees will not receive pay for their first call-up, but subsequent call-ups will be paid for the month of call-up and one month thereafter.

Carer's Leave

An employee has the right to time off to care for a close relative who is dying, is seriously ill or disabled. The leave can be up to 6 months with possible extension of 3 months.

In Denmark, failing to provide the correct employee benefits can have serious consequences. Mistakes in benefits administration may result in fines and harm your reputation as an employer. An Employer of Record ensures statutory benefits and leave are handled correctly, every time, and provides comprehensive options for extra perks to reward your team.

Beyond just avoiding legal issues, a well-managed benefits program builds trust with your employees. An EOR ensures benefits are set up quickly during onboarding, updated when employee status changes, and fully compliant with national regulations. They also manage communication with employees, so there’s no confusion around what’s offered and how to access it. This combination of legal compliance and positive employee experience is hard to replicate without local infrastructure. With an EOR, you can offer peace of mind to your team (and to yourself) knowing that your benefits program in Denmark is running as it should.

Termination Process in Denmark

In Denmark, Employers must provide a valid justification for terminating an employee to mitigate the risk of potential claims of unfair dismissal. Specifically, when terminating employees with over 12 months of service due to poor performance, it is crucial to adhere to a proper disciplinary procedure to reduce the likelihood of facing an unfair dismissal lawsuit.

• Misconduct
• Performance due to unsuitability for the job
• Disciplinary dismissal
• By mutual agreement

Notice Period in Denmark

Employee notice periods are one month. The minimum notice period required by the employer is 2 weeks and increases according to the length of the employment.

• Up to 3 months of employment - 2 weeks notice
• Up to 6 months of employment - 1 months notice
• Six months to 3 years of employment - 3 months notice
• Up to 6 years of employment - 4 months notice
• Up to 9 years of employment - 5 months notice
• Over 9 years of employment - 6 months notice

Severance in Denmark

In Denmark, there are typically no statutory requirements for severance pay. However, employees with continuous employment ranging from 12 to 17 years are entitled to 2 months' pay. Employees with continuous employment for more than 17 years are entitled to 3 months' of pay.