Table of content:
- Employer of Record service
- Labor law in Denmark
- Collective agreements
- Contract
- Working hours
- Taxes
- Paid time off
- Minimum wage
- Termination
- EOR in Denmark
Employer of Record service
Employer of Record service, also known as EOR, is one of the best and the easiest ways to expand a business to new countries. It allows you to hire workers in a new country without establishing a legal entity. Thanks to this service a company can save a lot of money and time while expanding the business.
Labor law in Denmark
Collective agreements
Most of labor law in Denmark is set by Collective Bargaining Agreements (CBA). These types of agreements are signed by employers and the labor market parties. Employer is obligated to go by the agreement while signing a contract with the new employee. CBA usually decides about the minimum wage, working hours, working overtime and a minimum amount of paid time off.
Contract
Employer has to provide a written contract to the employee. The contract can be written in another language than danish.
Every contract must contain: employee’s and employer’s / company’s personal data, employee’s duties and responsibilities, working hours, workpace’s location, notice period, probation period, salary, date of commencement, the amount of paid time off, reference to collective agreements. Employees have the right to negotiate the contract terms.
Probationary period can last up to three months. Two weeks before a termination of probationary period employees must get a notice for termination. Notice period basically is 14 days, but it can be extended up to three months.
Most contracts are signed permanently, but there is an option to hire for a shorter period of time. Temporary workers have the same rights as permanent workers.
Working hours
In Denmark employees work for 37 hours per week. The working day in Denmark usually starts at 6.00 am and ends at 6.00 pm. There is no legislation for working overtime in Denmark. Employees must negotiate the terms of working overtime with the employer while signing the contract. Usually employees get an extra 50% of the salary for working overtime. Working hours including working overtime cannot extend to more than 48 hours per week.
Every employee has the right to have a day off once a week. Usually it is Sunday. Also every 24 hours an employee has to have a minimum 11 hours of free time. During the day an employee has the right to have a break if the work duration is longer than 6 hours.
When the employee works at night, he can work up to 8 hours a day.
Taxes
Both employer and employee have to pay taxes. The rate of employer’s tax, which is called corporate tax, is 22%. Employees tax has two rates, depending on the employee’s salary. When it is up to 56,500 DKK the income tax rate is 27% and when it is more than 56,500 DKK the rate is 42%. VAT rate and sales tax rate is 25%.
Paid time off
Every employee has the right to get up to 25 days of paid time leave per year. It means that every month an employee earns 2.08 days of paid leave.
Female employees can get childbirth leave for 14 weeks after giving birth. They can also get a pregnancy leave for four weeks before the childbirth. Parental leave can last up to 46 weeks.
In Denmark there are 11 days of public holidays. Usually at that time employees get a day off work.
Employees are entitled to 30 days of sick leave. During that time they can get at least 90% of their salary. First 30 days of the sick leave are paid by the employer. If the sick leave takes longer it is paid by the authorities. Sick leave can extend up to 22 weeks.
Minimum wage
One of the most important things that everyone should know about hiring in Denmark is there is no minimum wage set by the government. Usually the minimum wage is determined by the CBA, which is signed by the employer and the labor market parties. Most of them set a 110 DKK per hour as a minimum wage.
Termination
Employer has the right to terminate the contract, when the employee’s performance at work is not good enough. The reason for termination must be reasonable.
When the employee had worked for the company for up to six months the notice period is one month. When the employment was longer than six months the notice period is three months. Employees, who worked for the company for over nine years, are entitled to a sixs month notice period.
EOR in Denmark
Thanks to the Employer of Record service your company will be able to expand to Denmark without taking the risk of setting up a legal entity. It is a beneficial solution for every business because it lowers costs connected with employment in Denmark and it is time saving. Hiring in Denmark has a lot of other advantages: benefits for employees connected with health, parental leave and insurance. Another important thing is that EU and EEA citizens do not have to have any visa or work permission to start working in Denmark. All those things make hiring in Denmark very easy and beneficial.