Employer of Record Denmark

Salary currency

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.

Healthcare

Denmark provides public healthcare to citizens and residents, largely funded through tax-payer contributions.

Employers’ Costs

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

Pension

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:

Sickness

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.

Statutory Insurances

Workers’ Compensation

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.

Other

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.