Employer of Record Denmark
An Overview of Employing in Denmark
Danish Kroner (DKK)
Salary Pay Date
Employees should expect to receive the main part of their remuneration as a fixed salary.
This will typically be paid on the last working day of the month, or on a fixed day as per the contract of employment.
Social Security System
Social security in Denmark is largely financed by state taxes. All employees working in Denmark who are fully tax liable to Denmark will be mandatory members of the Danish social security scheme and are obliged to make social security contributions (ATP).
Employers are expected to make contributions per employee. An exemption may be obtained in the case of foreign workers if there is a totalization agreement in place between Denmark and the home country/jurisdiction.
Denmark provides public healthcare to citizens and residents, largely funded through tax-payer contributions.
Contributions are made quarterly to a number of statutory schemes that help support the Danish labour market and ensure better terms for employees.
The contributions are collected by the Joint collection unit; Samlet Betaling (Combined Payments).
Breakdown of Costs
|Scheme||Description||Quarterly employer contribution (per employee)|
|Arbejdsgivernes Uddannelsesbidrag (AUB)||Employers’ Reimbursement System||DKK 803.25|
|Arbejdsmarkedets Erhvervssikring (AES)||Labour Market Insurance||*Determined by industry code|
|Arbejdsmarkedets Fond for Udstationerede (AFU)||Danish Labour Market Fund for Posted Workers||KK 4.25 (2021)|
|Barsel.dk.||Maternity/paternity leave allowance||DKK 337.50 (2022)|
|Finansieringbidrag||Employees’ Guarantee Fund||142.75 (2022)|
|Lønmodtagernes Feriemidler.||Solidarity- based insurance fund||DKK 4.75 (2022)|
|Praktikplads-AUB||Workplace/internship bonus||*Contributions are due if employer does not meet targets|
An Overview of the Main Statutory Benefits
ATP Livslang Pension
Pension contributions are made by both the employer and employee. The rates below are applicable to employees paid on a monthly basis:
|A-rate (hours/month)||Employee Share||Employer Share||Total|
|Min. 117||94.65 DKK||189.35 DKK||284.00 DKK|
|78-116||63.10 DKK||126.25 DKK||189.35 DKK|
|39-77||31.55 DKK||63.10 DKK||94.65 DKK|
|Under 39||0.00 DKK||0.00 DKK||0.00 DKK|
All salaried employees in Denmark are entitled to sickness benefit.
From the first day of absence to the 30th day of sick leave inclusive, it is the responsibility of the employer to pay sickness benefit.
Maternity & Paternity
The Consolidation Act on Entitlement to Leave and Benefits in the Event of Childbirth (“Barselsloven”) stipulates that all pregnant women are entitled to four weeks ‘leave before the birth and then 14 weeks’ maternity leave.
Female employees comprised by the Salaried Employees Act are, however, as a minimum entitled to 50% of their ordinary salary in the period of four weeks prior to, and 14 weeks after delivery.
Parents who are not entitled to maternity leave with pay will usually be entitled to benefits from their local municipality.
If Danish employers pay a salary during maternity leave, they are entitled to reimbursement of the daily cash benefit from the local municipality that the employee would have received. In addition, it is possible for employers to receive a supplementary reimbursement from the Danish Maternity Leave Fund.
Fathers are entitled to two weeks of paternity leave, which they must take during the first 14 weeks after the birth.
Workers’ Compensation insurance is required in Denmark to insure employees against industrial injury or disease which the employee may encounter during work. The insurance will cover the employee’s expenses in relation to treatment, medicine and rehabilitation. The insurance also covers in the cast of permanent injury, loss of earning capacity and compensation to the family in case of death. In relation to diseases, compensation is handled by the Danish public administrator AES (Arbejdsmarkedets Erhvervssikring).
Accidents must be reported to the authority no later than 9 days after the accident.
Arbejdmarkedsbidrag (AM-bidrag) – Labour Market Contribution
In addition to municipal taxes, all employees in Denmark must also pay a labour market contribution (AM-bidrag) of 8 percent. The labour market contribution is deducted from the gross earnings. This is a tax, which, among other things, covers in the event of unemployment and sickness benefits and expenditure for training and activation.
Contract of employment
Many people working in Denmark are employed on the basis of the Danish Salaried Employees Act (funktionærloven). Funktionærloven, like collective bargaining agreements, includes laws concerning the employment relationship with regard to, among other things, termination, sickness, parental leave, and competition and customer clauses.
A probationary period of three months is standard practice in Denmark.
Standard working hours are 37 hours weekly. The maximum working hours per week should be no more than 48 hours (calculated on average, over a four-month period) including overtime.
All employees over the age of 18 years old are entitled to:
Employees will usually expect to be compensated for any time worked in excess of 37 hours per week. It may be possible to include an all-inclusive compensation to cover incidental overtime. Our Contracts team will be able to advise on this during the contract drafting stage.
An employee earns the right to 2.08 days of paid holiday for every month they work in the course of a year from 1 September – 31 August the following year. This period is called the accrual year.
Vacation days may then be spent in the concurrent holiday period from 1 September to 31 December the following year (16 months). The new Holiday Act also permits employees to take paid holiday provided that an agreement is made between the employer and employee.
Employees either receive their regular salary during their holiday or they can receive holiday pay, corresponding to 12.5 per cent of their salary in the accrual year and a holiday supplement of 1 per cent.
The regulations for termination of contract are in accordance with the rules of the Consolidation act on Employers´ and Salaried Employees´ Legal Relationship (Funktionærloven).
The notice an employer gives to an employee is dependent on the time worked for the company:
|Time worked||Notice period|
|Less than 6 months||1 month|
|Up to 2 years and 9 months||3 months|
|Up to 5 years and 8 months||4 months|
|Up to 8 years and 7 months||5 months|
|Over 8 years and 7 months||6 months|
Employees are entitled to give 1 month’s written notice to terminate a contract.
TopSource Worldwide will be able to advise on the options on a case-by-case basis.
Holiday Entitlement in Denmark
In accordance with the Holiday Act (September 2020), during a given holiday year, employees will earn the right to 25 paid days off, which may be settled during the period of the 1 September – 31 December (“ferieafholdelsesperioden”) of the following year (16 months).
There are some changes in regard to the payout of the special holiday allowance for monthly salaried employees.
The five weeks of holiday entitlement are divided into main holiday (three weeks) and remaining holiday (two weeks).
The three weeks of main holiday must be taken between 1 May – 30 September each year. Employees must provide a minimum of three months’ notice in advance of taking their main holiday leave and one month prior to remaining holiday leave.
Employers are obligated to ensure that all employees take five weeks of holiday or receive payment in lieu of excess vacation days.
Bank holidays are paid days off. If the holiday falls on the weekend, no substitute day is given.
|Public Holidays 2022|
|New Year’s Day||Saturday 1st January|
|Maundy Thursday||Thursday 14th April|
|Good Friday||Friday 15th April|
|Easter Sunday||Sunday 17th April|
|Easter Monday||Monday 18th April|
|Prayer Day||Friday 13th May|
|Ascension Day||Thursday 26th May|
|Bank Holiday||Friday 27th May|
|Whit Sunday||Sunday 5th June|
|Whit Monday||Monday 6th June|
|Christmas Day||Sunday 25th December|
|2nd Day of Christmas||Monday 26th December|