Overview: Employment and employee benefits in Denmark

Last updated on 20 December 2018

A Q&A guide to employment and employee benefits law in Denmark.

Scope of employment regulation

Do the main laws that regulate the employment relationship apply to:

  • Foreign nationals working in your jurisdiction
  • Nationals of your jurisdiction working abroad?

Laws applicable to foreign nationals

Most Danish employment laws are applicable to employees who work for the majority of the time in Denmark or if the employment otherwise has its closest connection to Denmark, regardless of the employee's nationality and any choice of law clause in the employment contract. Posted workers working in Denmark are subject to specific minimum regulation regardless of any choice of law clause in the employment contract.

Laws applicable to nationals working abroad

In general, Danish law does not apply to Danish nationals who work abroad for the majority of the time, or if the employment otherwise has its closest connection to another country, regardless of any choice of law clause in the employment agreement. Danish workers posted abroad will remain subject to Danish law in addition to any specific minimum regulation that applies in the other jurisdiction regardless of any choice of law clause in the employment contract.

Employment status

Does the law distinguish between different categories of worker? If so, what are the requirements to fall into each category, the material differences in entitlement to statutory employment rights and are there any maximum time periods for which each category of worker can be engaged?

Categories of worker

Danish law distinguishes between different categories of employees:

  • Salaried employees (white-collar employees).
  • Workers (blue-collar employees).
  • Chief executive officers.
  • Employee shareholders.
  • Self-employed workers (independent contractors).

Salaried employees are typically shop assistants or office workers who are employed for at least eight hours a week on average and occupy a position in which work is performed under the instructions of the employer.

Workers are generally employed in manufacturing industries and so on and are often members of a trade union.

Chief executive officers (CEOs) are registered as a CEO with the Danish Business Authority and are generally not protected by the Salaried Employees Act as they are not considered to be in an employment relationship.

Self-employed workers are characterised by their level of independence, and they carry out tasks on the self-employed worker's own account and with the intent of obtaining a profit.

Whether employee shareholders are considered as an employee depends, among other factors, on the number and type of shares that the employee shareholder owns in the company.

The main risk in the case of misclassifying an employee as self-employed, a chief executive officer or an employee shareholder is that both salaried employees and workers are subject to the protection of statutory law (for example, the Danish Holiday Act, Consolidated Act No 1177 of 9 October 2015 and for salaried employees the Salaried Employees Act, Consolidated Act No 81 of 3 February 2009,). These statutory protections do not apply to the self-employed, chief executive officers and certain employee shareholders.

Entitlement to statutory employment rights

Danish law provides statutory protection for salaried employees and workers in a variety of areas, including provisions that govern:

  • Employment contracts.
  • Working hours.
  • Holiday entitlements.
  • Temporary workers.
  • Part-time work.
  • Non-discrimination.
  • Information and consultations.
  • Transfers of undertakings.
  • Post-employment restrictive covenants.

Salaried employees are subject to the Salaried Employees Act, which includes protections in relation to notice periods, severance pay, compensation for unjust termination and maternity leave.

The employment of workers is mainly regulated by collective bargaining agreements (CBAs), where these are in place. A CBA will generally include protections in relation to salary, shop stewards, working hours, holidays, notice periods, unfair dismissal, maternity and paternity leave and pensions. Where workers are not subject to a CBA the employment is regulated by the employment contract.

Chief executive officers, the self-employed and some employee shareholders are, with some exceptions, not subject to these statutory protections.

Time periods

There are no maximum time periods during which any of the categories of employee listed above can be employed.

Recruitment

Are any grants or incentives available for employing people? Does any information/paperwork need to be filed with the authorities or given to new employees when employing people?

Grants or incentives

Employers may benefit from grants for recruiting certain categories of employees, namely unemployed individuals with a disability or with a reduced working capacity. Examples include:

  • Grant for hiring the unemployed (the grant can last for a period of up to six months).
  • Grant for hiring graduates with a disability (the grant can last for a period of up to one year).
  • Grant for hiring a part-time worker with reduced working capacity (the grant is temporary for five years where the employee is aged below 40 and can be permanent after the first job for employees aged over 40).

Filings

Certain filing requirements must be made to the authorities by the employer and/or the employee prior to the beginning of the employment in order for the employer to claim any of the above grants, and the requirements vary depending on the type of grant. Employers also have general filing requirements in order to comply with their tax reporting and withholding obligations.

Background checks

Are there any restrictions or prohibitions on carrying out background checks in relation to applicants?

Employers may conduct background checks in accordance with the applicable data privacy regulations and statutory law (for example, the Act on the Use of Health Data on the Labour Market, Act No 286 of 24 April 1996). Obtaining criminal records will, as a starting point, require the employee's consent. Even where the employee provides this consent, the employer must also have a substantial reason to obtain such documents.

Information on the employee's health is regulated under the Danish Act on the Use of Health Data on the Labour Market. Employers can only request information which is relevant to determine whether an employee is suffering, or has suffered, from a disease of significant importance to the performance of the job. Job applicants are under an obligation to provide future employers with any information which may significantly impact the applicant's ability to perform the job in question.

Third parties who obtain criminal records or health information on behalf of an employer are subject to the same obligations that apply to the employer.

Permission to work

What prior approvals do foreign nationals require to work in your country? What information/paperwork needs to be kept or filed with the authorities when they start work?

Visa

Procedure for obtaining approval. EU/EEA citizens are not subject to any visa requirements, but nationals of other third countries must obtain a visa to enter Denmark for short-term business trips, unless that country is on the list of visa-free countries.

Cost. The submission to the diplomatic mission will normally include a fee og EUR 60.

Time frame. The procedure takes from 15 to 60 days.

A visa normally grants the right to stay in the entire Schengen area for up to 90 days. The employee must leave the country no later than on the date that the visa expires.

Sanctions. A person who remains in the country after the visa expires or attempts to use the visa stay to obtain permanent or long-term residency can be banned from entering Denmark for a period of three or five years.

Permits

Procedure for obtaining approval. Citizens from the Nordic countries, EU/EEA and Switzerland are entitled to live and work in Denmark. However, if the intention is to reside in Denmark for more than three months they must apply for a registration certificate at the International Citizen Service or the State Administration upon arrival. Citizens from other countries must apply for a work and residence permit before entering Denmark. The application is submitted to a Danish diplomatic mission in the country of residence or from the country of residency.

To obtain a work permit substantial conditions related to the employment must be met. The conditions depend on the specific circumstances of employment, and there are various schemes including the "positive list", the "pay limit scheme" and other more specific schemes.

Cost. Costs for the residence and work permit are approximately EUR 280 to EUR 440 depending on the applicable scheme. In addition, the submission of the application will normally include a fee of EUR 60.

Time frame. The processing of the application ranges from one to three months depending on the applicable scheme. The duration of the permit depends on the specific scheme. The employee may need to make a new application if the employee finds a new job, and the employee may be able to apply for an extension in time and stay and continue work even though the permit is expiring.

Sanctions. Employees working illegally may be subject to sanctions, including fines, imprisonment or deportation. Employees who employ employees working illegally may be subject to fine.

Restrictions on managers and directors

Are there any restrictions on who can be a manager or company director?

Age restrictions

In general, there are no age restrictions, but managers or company directors of public limited companies, private limited companies and foundations carrying out business activities must be at least 18 years old.

Nationality restrictions

There are no nationality restrictions on managers or company directors.

Other restrictions

Managers and company directors must not be under any form of voluntary or mandatory guardianship.

Regulation of the employment relationship

How is the employment relationship governed and regulated?

Written employment contract

The Danish Act on Employment Certificates, Consolidated Act No 240 of 17 March 2010, requires that the employee must be notified in writing of all material terms of the employment, if the employment is intended to last at least one month and the employee is working at least eight hours a week in average. As a minimum, the information must include details on the following:

  • Name and address of the employer and the employee.
  • Address of the workplace.
  • Description of the job content, or the designated title, rank, position or job category.
  • Date of commencement of the employment.
  • Duration of the employment (if the employment is not of indefinite duration).
  • Entitlement to paid holiday, including if the employee is entitled to holiday with pay or holiday allowance.
  • Length of termination notice.
  • Compensation and the time of payment.
  • The daily or weekly working hours.
  • Any collective bargaining agreement (CBA) that applies to the job position.

It is not a requirement that the employment contract is written in Danish.

Implied terms

Implied terms apply to employment contracts from statutory, any applicable CBA and case law. Examples of implied terms include the following:

  • The employee is subject to a duty of loyalty and confidentiality.
  • The employee must give notice to the employee of any material change to the employment conditions.

Collective agreements

The labour law system in Denmark is primarily based on CBAs. Most CBAs are entered into between a trade union and an employer's association and these agreements regulate the salary and the working conditions in the sector. A company may become subject to a CBA via membership of an employer organisation or if the company accede to a CBA directly or by reference.

What are the main points to consider if an employer wants to unilaterally change the terms and conditions of employment?

Material changes to the terms and conditions of the employment can only be introduced where the employer provides the employee with the relevant contractual notice, or where the employee agrees that the material changes can take place without the relevant prior notice. If the material changes are introduced with notice, the changes will take effect upon the expiry of the notice period. If the employee cannot accept the changes, the employee may consider himself or herself dismissed by the employer. In this case, the employee may be entitled to compensation for unfair dismissal depending on whether or not the material changes are objectively justified by the employer's circumstances.

Assessing whether the change is material must be done on a case-by-case basis. Changes that are not material can be introduced without notice, or with reasonable notice, depending on the specific change.

Minimum wage

Is there a national (or regional) minimum wage?

There is no statutory minimum wage in Denmark, but collective bargaining agreements often include regulations on minimum wages.

Restrictions on working time

Are there restrictions on working hours? Can an employer opt out on either an individual or collective basis?

Working hours

The average working hours within a seven-day period, as calculated over a period of four months, must not exceed 48 hours, including overtime work.

Rest breaks

Employees are entitled to:

  • A rest break if the daily working time exceeds six hours. There are no specifications on the length of the rest break in the law or any executive order, but it must be a suitable, taking into consideration the purpose of the rest break.
  • A daily rest period of at least 11 consecutive hours within each 24-hours period.
  • A weekly day off within each seven-day period, which must follow a daily rest period. The day off should, to the extent possible, be on a Sunday and should be the same for all employees in the company.

Specific regulations apply to night work and to employees under 18 years of age.

Shift workers

Under to the Work Environment Act, the daily rest period for shift workers can be reduced to eight hours for:

  • Companies with several shifts, where it is not possible to maintain the daily rest period between the end of one shift and the start of another.
  • Agriculture work of up to 30 days' duration in any calendar year.

Holiday entitlement

Is there a minimum paid holiday entitlement?

Minimum paid holiday entitlement

Employees are only entitled to paid holiday when it has been accrued in the previous calendar year. Employees are entitled to five weeks' statutory holiday per year, corresponding to 25 working days, under the Holiday Act. Holiday with pay or holiday allowance is accrued in the calendar year. The holiday can be taken in the holiday year which runs from 1 May to 30 April in the following year.

Employees who are employed on a monthly basis or for longer periods and who are entitled to full pay in respect of public holidays and days of sickness (that is, salaried employees) are entitled to paid holiday and a holiday supplement of 1% of the eligible pay. Such employees earn the right to 2.08 days' paid holiday for each month of employment in the calendar year preceding the year on which the respective holiday year begins. Employees who are not entitled to paid holiday instead receive a holiday allowance equal to 12.5% of the eligible pay.

On 1 September 2020 a new Holiday Act is due to enter into force, which will change the Danish holiday system significantly (Danish Holiday Act No 60 of 30 January 2018).

Public holiday

In addition to the statutory holiday entitlement, there are 11 public holidays in Denmark. Some collective bargaining agreements may also include additional days off (for example, 1 May and/or Constitution Day), although these are not official public holidays.

Illness and injury of employees

What rights do employees have to time off in the case of illness or injury? Are they entitled to sick pay during this time off? Who pays the sick pay and, if the employer, can it recover any of the cost from the government?

Entitlement to paid time off

Salaried employees are entitled to receive full salary during leave due to illness or injury. Employees subject to a collective bargaining agreement (CBA) may be entitled to receive full or partial salary during such leave depending on the specific CBA. Employees who are not entitled to salary during sick leave are entitled to a statutory sickness benefit in accordance with the Sickness Benefit Act, Consolidated Act No 38 of 19 January 2018:

  • The first 30 days of sickness benefit are paid by the employer, if the employee has been continuously employed by the employer for the last eight weeks and has worked for at least 74 hours.

  • Thereafter the municipality will pay the sickness benefit provided that the relevant] conditions are met, including that the employee has been in employment and has [worked for at least 240 hours within the latest six calendar months, and that during at least five of those months has been employed for a minimum of 40 hours each month.

The sickness benefit is calculated based on the employee's hourly pay and weekly working hours. The highest rate of sickness benefits is currently DKK4,300 per week or DKK116.22 per hour.

Entitlement to unpaid time off

An employee can take unpaid leave and be lawfully absent from work if the employee is not able to perform the work as a result of illness or injury.

Recovery of sick pay from the state

Employers paying salary during sick leave can recover the costs in full or in part from the municipality after the 30-day period. The employer will receive an amount corresponding to the sickness benefits the employee would have received had the employee not received salary during sickness.

Statutory rights of parents and carers

What are the statutory rights of employees who are:

  • Parents (including maternity, paternity, surrogacy, adoption and parental rights, where applicable)?
  • Carers (Including those of disabled children and adult dependants)?

Maternity rights

The Act on the Entitlement to Leave and Benefits in the Event of Childbirth, Consolidated Act No 822 of 20 June 2018, regulates the right to leave and the right to receive child benefit from the municipality during leave related to childbirth. There is no general statutory entitlement for employees to receive salary during leave related to childbirth, but female salaried employees are entitled to receive 50% of their salary during pregnancy and maternity leave in accordance with the Salaried Employees Act. Furthermore, a right to salary may follow from the individual employment agreement or from any applicable collective bargaining agreement.

If an employer pays salary during leave related to childbirth, the employer may recover the cost, in part or in full, from the municipality and from the maternity fund.

The mother is entitled to the following leave:

  • Four weeks' leave prior the expected date of birth.
  • 14 weeks' leave after the birth (the first two weeks after the birth are mandatory)

Female salaried employees are entitled to 50% of their salary during the above periods. Other employees are entitled to receive leave benefits from the Danish authorities, if the relevant conditions are met.

Paternity rights

A father or co-mother is entitled to a leave of absence of two consecutive weeks of paternity leave within the 14 weeks directly after the birth. There is no statutory right to salary. Employees are entitled to receive leave benefits from the Danish authorities, if the relevant conditions are met.

Surrogacy rights

Surrogacy is not legal in Denmark. According to the Danish authorities, the surrogate mother carrying the child is considered to be the legal mother and is entitled to the usual maternity leave described above. The woman receiving the child after the birth is not entitled to any leave under Act on the Entitlement to Leave and Benefits in the Event of Childbirth as she is not considered to be either the legal mother or an adoptive parent.

Adoption rights

Adoptive parents are entitled to the following leave:

  • Four weeks' leave prior to receiving the child for each of the prospective adoptive parents (with the possibility of extension), where the adoptive parents are residing abroad in order to adopt the child.
  • One weeks' leave prior to receiving the child for each prospective adoptive parent, where the child is adopted in Denmark, and it is necessary to reside in the place where the child is situated before receiving the child.
  • After the child's arrival, one of the adoptive parents is entitled to an initial adoption leave for 14 weeks, if so decided by the adoption authorities. During this period, the other adoptive parent is entitled to leave with statutory benefits for two weeks, and the remaining 12 out og the 14 weeks' adoption leave can be divided between both the adoptive parents (so that one parent is on leave at any one time). After this 14-week period the adoptive parents are entitled to 32 weeks' parental leave (see below)

Adoptive parents are entitled to receive leave benefits from the Danish authorities during the above periods provided that the relevant conditions are met.

Parental rights

Each parent is entitled to 32 weeks' leave, with the possibility to prolong the leave with up to 46 weeks. During parental leave the Danish authorities only pay leave benefits for 32 weeks in total provided that the relevant conditions are met.

Carers' rights

Under the Act on Leave from Work Due to Special Family Reasons, Act No 223 of 22 March 2016, employees have the right to take unpaid leave from work where:

  • Urgent family reasons (for example, the illness or injury of a relative) makes the immediate and urgent presence of the employee necessary (force majeure).
  • The employee is engaged by the local authority to care for a closely connected person with a substantial and permanent impairment og physical or mental function, or a serious, chronic, or long-term illness or disorder.
  • The employee is engaged by the local authorityto care for a closely connected person who wishes to die at home.

A closely connected person is a spouse, partner, child, parents, and others who are closely connected to the person.

Continuous periods of employment

Does a period of continuous employment create any statutory rights for employees? If an employee is transferred to a new entity, does that employee retain their period of continuous employment? If so, on what type of transfer?

Statutory rights created

Some statutory employment rights depend on the employee's continuous period of employment, namely in relation to:

  • Termination notice (for salaried employees the length of the notice will depend on the employee's period of continuous employment).
  • Compensation for unfair dismissal (salaried employees employed for at least one year at the time of termination).
  • Severance pay (salaried employees employed for 12 or 17 years)

Similar rights are often found for workers in collective bargaining agreements, if applicable.

Consequences of a transfer of employee

If employees are transferred to a new legal entity, as a transfer of an undertaking or as part of a transfer of an undertaking, the transfer is subject to the Act on Transfers of Undertakings, Consolidated Act No 710 of 20 August 2002. In such cases, the employees retain their period of continuous employment as well as all other collective and individual employment rights. If the transfer is not subject to the Act on Transfers of Undertakings, the period of continuous employment will generally not be retained unless this is stated in the individual employment contract.

Fixed term, part-time and agency workers

To what extent are temporary and agency workers entitled to the same rights and benefits as permanent employees? To what extent are part-time workers entitled to the same rights and benefits as full-time workers?

Temporary workers

Under the Danish Act on Temporary Employment, Consolidated Act No 907 of 11 September 2008, temporary workers are entitled to the same rights and benefits as those applicable to a comparable full-time employee unless any different treatment is based on objective reasons.

A "comparable full-time employee" is an employee within the same company who is engaged for an indefinite period and who carries out the same or corresponding tasks as the temporary worker, with due regard to qualification and skills.

There is no time limit on the duration of a temporary employment contract, but the repeated renewal of a temporary employment contract must be based on objective reasons. If there are no objective reasons, the employee can be deemed to be a permanent employee. No qualifying period applies.

Agency workers

Agency workers are defined as those workers who are employed by a temporary employment agency in accordance with the Act of the Legal Rights of Temporary Agency Workers upon Assignment by a Temporary Work Agency, No 595 of 12 June 2013. Agency workers subject to this Act are entitled to the same rights as the employees of the user company as provided to them by law, a collective bargaining agreement or any generally binding rules. Agency workers are also entitled to use the same facilities. No qualifying period applies.

Part-time workers

In accordance with the Act on Part-Time Work, Consolidated Act No 815 of 26 September 2002, part-time workers are entitled to the same rights and benefits as those applicable to a full-time employee, unless the employer can justify that any different treatment is based on objective reasons. No qualifying period applies.

Data protection

Are there any requirements protecting employee privacy or personal data? If so, what are an employer's obligations?

Employees' data protection rights

The Danish Data Protection Act No 502 of 23 May 2018 and Regulation (EU) 679/2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data (General Data Protection Regulation (GDPR)) regulate the processing of employees' personal data. As data subjects, employees have the following rights in relation to the processing of their personal data:

  • The right to be informed
  • The right of access
  • The right to rectification
  • The right to erasure
  • The right to restrict processing
  • The right to data portability
  • The right to object
  • Rights in relation to automated decision-making and profiling

Employers' data protection obligations

Employers are under an obligation to comply with seven key principles when processing the personal data of employees:

  • Lawfulness, fairness and transparency.
  • Purpose limitation.
  • Data minimisation.
  • Accuracy.
  • Storage limitation.
  • Integrity and confidentiality.
  • Accountability
Employers should principally be aware of these obligations in relation to background checks, workplace monitoring, whistleblower schemes, the storage of personnel records and the processing of sensitive data.

Discrimination and harassment

What protection do employees have from discrimination or harassment, and on what grounds?

Protection from discrimination

The Act Equal Treatment of Men and Women in Relation to Employment, Consolidated Act No 645 of 8 June 2011 and the Act on Prohibition against Discrimination on the Labour Market, Consolidated Act No 1001 of 24 August 2017 prohibits direct or indirect discrimination due to:

  • Gender (including pregnancy and child-related leave).
  • Race or colour.
  • Religion, belief, or political opinion.
  • Sexual orientation.
  • Age.
  • Disability.
  • National, social, or ethnic origin.

The prohibition against discrimination applies on appointment, during the employment and upon dismissal. The employee may make a claim for compensation due to discrimination, harassment, retaliation from the employer or termination due to discrimination. The compensation payable depends on the type of claim. No qualifying period applies.

Protection from harassment

Employees are also protected against harassment that relates to any of the issues listed above. An employee that has been exposed to harassment can claim compensation. The level of compensation depends on the specific circumstances and is generally approximately DKK25,000, but under case law this compensation may rise to DKK100,000 where the harassment constitutes a serious offence. No qualifying period applies.

Whistleblowers

Do whistleblowers have any protection?

There are no general statutory protections for whistleblowers. However, some sectors have their own whistleblower requirements and protections (for example, in the financial sector).

Termination of employment

What rights do employees have when their employment contract is terminated?


Notice periods

Salaried employees are entitled to a notice period of between one and six months, depending on seniority, when dismissed by the company. Where employees resign, they must provide the employer with one month's notice.

Employees who are not subject to the Salaried Employees Act or to a collective bargaining agreement (CBA) are entitled to a reasonable notice, taking into consideration the type of work and the duration of employment. When assessing what constitutes a reasonable notice period, a CBA applicable to similar types of work may provide guidance.

Severance payments


There is no general statutory regulation on severance pay, but salaried employees who have been in continuous employment for between 12 to 17 years are entitled to a severance payment of between one to three months' salary if dismissed by the employer. Some CBAs also include rules on severance pay that depend on seniority.

Procedural requirements for dismissal

There are no procedural requirements for dismissal for private employers unless the dismissal qualifies as a collective redundancy. Special procedural requirements may apply to protected employees and any applicable CBA may also include its own procedural requirements.

What protection do employees have against dismissal? Are there any specific categories of protected employees?

Protection against dismissal

Salaried employees who have been employed for at least one year at the time of dismissal are protected against dismissal without just cause. Employees covered by a collective bargaining agreement (CBA) will typically be protected against dismissal without just cause after nine months of employment. A dismissal is without just cause if it is not reasonably justified by either the employee's conduct or the employer's circumstances, for example:

  • Employer's financial circumstances and reduction of staff.
  • Company restructuring.
  • Problems in terms of co-operation or trust on the employee's part.
  • Employee's unfitness for the job.
  • Breach of contract by the employee.

Generally, the fact that a dismissal is without just cause does not render the dismissal void, but the employee will be entitled to compensation for unjust dismissal. Salaried employees are entitled to compensation for unjust dismissal of up to six months' salary, depending on seniority. Similar rules are also included in CBAs. Special protection against dismissal applies to protected employees (see below).

Protected employees

There are several types of protected employees, but the most relevant are as follows:

  • Shop stewards
  • Working environment representatives
  • Employee representatives (information and consultation or work councils).
  • Employee representatives on the board
  • Employees protected by the Act on Equal Treatment of Men and Women in Relation to Employment.
  • Employees protected by the Act on Prohibition against Discrimination on the Labour Market. 

Special procedural requirements may apply to the dismissal of protected employees, and the compensation for unjust dismissal is typically higher for protected employees. The amount of compensation for dismissal due to discrimination of protected employees protected by the equal treatment or the discrimination legislation noted above depends on the specific circumstances and the seniority of the employee, but is typically six, none or 12 months' salary, and can be higher in serious cases.

Redundancy/layoff

How are redundancies/layoffs defined, and what rules apply on redundancies/layoffs? Are there special rules relating to collective redundancies?

Definition of redundancy/layoff

There is no legal definition of redundancy in Denmark, but the term generally relates to the company's dismissal of one or more employees as a result of the company's circumstances. If several employees are subject to redundancy, this may qualify as a collective redundancy (see below).

Procedural requirements

There are no legal procedural requirements for individual redundancies which do not constitute collective redundancies and are therefore not subject to the Act on Collective Redundancies. The general regulations on the employer's dismissal of employees apply. For collective redundancies subject to the Act on Collective Redundancies, Consolidated Act No 291 of 22 March 2010, procedural requirements apply, including an obligation to:

  • Consult with the employee representatives (or where there are no representatives, the employee themselves) as soon as possible, and before any decision has been made.
  • Notify the Regional Labour Market Council (RLMC) both at the start and at the end of the process if the employer still intends to make a number of employees within the threshold redundant.
  • In certain circumstances, 21 days must pass between the first consultation with the employee representatives at the start of the process and the second notification to the RLMC at the end of the process. 
  • Generally, dismissals cannot take effect until 30 days after the date on which the second notification is sent to the RLMC, and in some cases the dismissals cannot take effect until 8 weeks after the second notification.

Redundancy/layoff pay

There are no special rules regarding redundancy or layoff pay in Denmark, but non-compliance with the Act on Collective Redundancies may result in fines and/or the payment of compensation to the employees affected.

Collective redundancies


The Act on Collective Redundancies applies when the number of employees to be made redundant over a 30-day period is expected to reach one of the following thresholds:

  • Minimum of 10 employees in companies with more than 20 and fewer than 100 employees.
  • Minimum of 10% of all the employees in companies with at least 100 and fewer than 300 employees.
  • Minimum of 30 employees in companies with at least 300 employees.

Employee representation and consultation

Are employees entitled to management representation (such as on the board of directors) or to be consulted about issues that affect them? What does consultation require? Is employee consultation or consent required for major transactions (such as acquisitions, disposals, or joint ventures)?

Management representation

In public or private limited companies, or foundations carrying out business activities, which have employed at least 35 employees during the past three years, the employees are entitled to elect employee board members.

Consultation

Companies with at least 35 employees must inform and consult with the employee representatives in accordance with the Act on Information and Consultation of Employees, Act No 303 of 2 May 2005, unless the employees have access to information and consultation under an applicable collective bargaining agreement (CBA). The employees must be informed at an appropriate point in time of issues that may be of material importance to their employment and, as a minimum requirement, on matters concerning the:

  • Recent and expected development of the company's activities and economic situation.
  • State of employment within the business, in particular, measures which present a threat to that employment.
  • Decisions likely to lead to substantial changes in the work organisation or in the contractual relations between the employer and the employees.

Most CBAs includes rules on information and consultation for shop stewards and/or work councils.

Large companies operating across borders must set up European work councils upon receiving a request to do so from the employees, when certain conditions on the number of employees are met. European companies and European co-operative companies must negotiate with the employee representative on the creation of a special negotiation body.


Major transactions

There is no requirement to obtain employee consent for major transactions, but an obligation to inform and consult with the employee may apply. If the transfer is an asset deal, transferring a business or a part of a business, it is subject to the Act on Transfers of Undertakings. In this case, the seller must, in a reasonable time before the transfer, inform the employee representatives (or the employees, if there are no representatives) of the:

  • Date, or suggested date, of the undertaking.

  • Cause of the undertaking.

  • Legal, financial, economic and social consequences for the employees.

  • Potential measures that may be taken that affect the employees.

Where the seller is considering initiating measures affecting the employees in connection with the transfer, the seller must, within a reasonable time before the transfer, consult with the employee representatives (or the affected employees, if there are no representatives) with a view to reaching an agreement on these measures.If the buyer is already a company owner, the buyer must inform affected  employees in that company and negotiate with affected employees where required. If the transfer is a share deal, the employer may be required to inform the employees under the Act on Information and Consultation of Employees.What remedies are available if an employer fails to comply with its consultation duties? Can employees take action to prevent any proposals going ahead?

Remedies

If the employer fails to comply with the obligation to consult with employee representatives, the company may be fined and employees may be entitled to compensation.

Employee action

Generally, employees cannot veto or otherwise prevent any proposals from going ahead.

Consequences of a business transfer

Is there any statutory protection of employees on a business transfer?


Automatic transfer of employees

Employees are automatically transferred in the case of a business transfer, and all rights and obligations under individual employment agreements and collective bargaining agreements (CBAs) are automatically transferred to the buyer.

Protection against dismissal

Employees have statutory protection against dismissals that are solely due to a transfer of a business (or a part of a business), unless the dismissals are also due to economic, technical or organisational events which necessarily involve changes in the workforce and can therefore be reasonably justified. If the dismissal is not with just cause, the employee can claim compensation for unfair dismissal under the ordinary rules on unjust dismissals where he or she is protected by the Salaried Employees Act or a CBA.

Harmonisation of employment terms

Harmonisation of employment terms is possible, but if that harmonisation includes material changes to the employment terms the procedure for material changes must be followed. In an asset deal subject to the Act on Transfers of Undertakings, the buyer will be considered to have acceded to the seller's CBA, if applicable, unless the buyer gives notice to the union within a certain time limit stating that it does not accede to the CBA. For share deals, the buyer is not able to change the CBA before the CBA expires.

Employer and parent company liability

Are there any circumstances in which:

  • An employer can be liable for the acts of its employees?
  • A parent company can be liable for the acts of a subsidiary company's employees?

Employer liability

An employer can be held liable for the acts of its employees where the employee is acting under the employer's authority and is subordinate to the employer, and the damage was caused whilst the employee was in the performance of their work.

Parent company liability

Parent companies are typically not liable for acts done by a subsidiary company's employees.

Employer insolvency

What rights do employees have on the insolvency of their employer? Is there a state fund which guarantees repayment of certain employment debts?

Employee rights on insolvency

Where the employer has been declared insolvent, the trustee in bankruptcy must, as soon as is practically possible, inform the employees whether or not the trustee in bankruptcy will take over the employees' employment contracts. If the trustee in bankruptcy does take over the employment contracts, the employees have the right to request security for their salaries and to terminate those employment contracts of the bankruptcy causes material changes to the terms of employment.

State guarantee fund

There is no state guarantee fund in Denmark, but the Employees' Compensation Fund is an insurance fund which receives contributions from all private employers. The employee can therefore obtain repayment of certain claims of unpaid salary, compensation, holiday pay and so on from this fund. How much an employee can receive depends on the type of employment, but the compensation cannot exceed DKK160,000 after taxes.

Health and safety obligations

What are an employer's obligations regarding the health and safety of its employees?

Employers must ensure a safe and healthy work environment and may be liable for claims if the company has neglected its obligations under the Working Environment Act, or the executive orders and guidelines from the Work Environment Authorities. The employer must have mandatory industrial injury insurance, which covers industrial injuries and occupational diseases.

Taxation of employment income

What is the basis of taxation of employment income for:

  • Foreign nationals working in your jurisdiction?
  • Nationals of your jurisdiction working abroad?

Foreign nationals

Foreign nationals are only liable to pay tax in Denmark if they meet the requirements for either:

  • Full tax liability. This applies to foreign nationals who are either residents in Denmark or stay in Denmark for an uninterrupted period of more than six months. Those foreign nationals are liable to pay Danish tax on all their employment income.
  • Limited tax liability. This applies to foreign nationals who are resident in a foreign jurisdiction and who receive income for work performed in Denmark for an employer that either has its domicile (registered office) or a permanent establishment in Denmark, provided that the employee stays in Denmark for a maximum of six months. These foreign nationals are only liable to pay Danish tax on the portion of the employment income relating to work actually performed in Denmark.

If income is taxed both in Denmark and in another country, the distribution of the tax will be decided in accordance with the relevant double tax treaty, if such a treaty exists with the relevant country.

Nationals working abroad

Taxation of employment income for Danish nationals working abroad depends on the duration of the employment, the nationality of the employer and if any double taxation agreement is in place between Denmark and the country where the employee works. Employees working abroad for at least six months and who do not reside in Denmark for more than 42 days within that period may be able to benefit from the provisions of any relevant double taxation agreement. Nationals who do not obtain income from Denmark and have no establishment in Denmark are not subject to Danish income tax.

What is the rate of taxation on employment income? Are any social security contributions or similar taxes levied on employers and/or employees?

Rate of taxation on employment income

The tax system in Denmark is progressive, which means that the more the employee earns, the higher the percentage of income tax. The marginal income taxation rates on personal income varies between approximately 41% and 56% (which includes a labour market contribution).

Foreign employees coming to work in Denmark may be subject to special tax schemes (for example, the expert tax scheme, which has more favourable tax terms).

Social security contributions

In Denmark, the social security system is generally funded by tax revenues and not by social contributions, and the level of social contribution is therefore relatively low. The social contribution to be paid consists of fixed contributions, and the amount of these fixed contributions depends on the nature of the relevant industry and the employee's working hours. The employer's contributions are paid into:

  • The maternity pay equalisation scheme.
  • The educational scheme financing vocational training placements for young people.
  • The scheme financing compensation to employees with recognised work-related diseases.
  • The pension finance scheme.
  • The Danish labour market fund for posted workers.

The employer pays two thirds of the contribution to the labour market supplementary pension fund (ATP contribution). Employees must pay labour market contributions (8%) and one third of the ATP contribution. For full-time employees within the industrial sector with an annual salary of DKK400,000, employer contributions will normally be approximately DKK12,000 per year.

Bonuses

Is it common to reward employees through contractual or discretionary bonuses? Are there restrictions or guidelines on what bonuses can be awarded, whether generally or in particular sectors?

It is relatively common to reward employees through contractual or discretionary bonuses. There are no general statutory restrictions on the payment of bonuses, but within the financial sector and the insurance sector special regulations apply on the payment of variable pay to the executive management, board of directors and employees who are considered risk takers. Furthermore, special regulations apply to variable pay to members of the executive management in a listed company.

A salaried employee who receives a bonus as a part of their salary, and who's employment terminates during a financial year, is entitled to a pro-rated share of the bonus that the employee would have been entitled to, if the employee had been employed in the company at the end of the financial year or when the payment should have been made. This applies regardless of whether the employee or the employer terminated the employment, and regardless of the reasons for the termination.

Intellectual property (IP)

If employees create IP rights in the course of their employment, who owns the rights?

Generally, intellectual property rights created during the course of employment belong to the employee unless the employment contract states otherwise. However, computer programmes made by an employee during the course of employment or upon the employer's request are automatically transferred to the employer in accordance with the Copyright Act, Consolidated Act No 1144 of 23 October 2010.

Patentable inventions and utility models made by employees during the course of employment are regulated by the Act on Employees' Inventions, Consolidated Act No 104 of 24 January 2012. If the employee has created the invention during the course of employment, the employer is entitled to claim the right to the invention provided that the exercise of the invention falls within the scope of the company's activities, or that the employee's invention was created as a result of a specific job request made by the company.


Restraint of trade

Is it possible to restrict an employee's activities during employment and after termination? If so, in what circumstances can this be done? Must an employer continue to pay the former employee while they are subject to post-employment restrictive covenants?

Restriction of activities

Employees are subject to a duty of loyalty during the course of employment, which prevents the employee from commencing employment in a competing company. In addition, employees are subject to a duty of confidentiality, which prevents the employee from disclosing confidential information to third parties both during the course of employment and after termination of the employment.

Post-employment restrictive covenants

Non-solicitation of customer clauses, non-competition clauses and clauses combining both non-solicitation and non-competition obligations are governed by the Act on Employment Clauses, Act No 1565 of 15 December 2015. Non-solicitation of customer clauses can only be enforced in relation to customers with whom the employee has had business-related contact within the past 12 months.

Non-competition clauses can only be enforced where the employee holds a particularly trusted position and the company must have a justifiable reason why the clause is required. Non-solicitation clauses and non-competition clauses must in addition have all the following characteristics to be enforceable:

  • A maximum duration of 12 months from the effective date of termination.
  • A payment of a monthly compensation to the employee during the term of the clause constituting 40% (where the duration of the clause is up to six months) or 60% (where the duration of the clause is longer than six months) of the monthly salary at the time of the termination of employment. If the employee obtains other appropriate employment during the term of the clause, this compensation can be reduced to 16% (where the duration is up to six months) or 24% (where the duration of the clause is longer than six months).

For a combined non-solicitation and non-competition clause, all the following characteristics must be present to be enforceable:

  • A maximum term of six months from the effective date of termination.
  • A payment of a monthly compensation to the employee during the term of the clause constituting 60% of the employee's monthly salary at the time of the termination of the employment. If the employee obtains other appropriate employment during the term of the clause, this compensation can be reduced to 24%.

The above clauses can only be enforced after the employee has obtained six months of employment, and the employee must receive the above information concerning the terms of the clause in writing. Non-solicitation of employees clauses, non-poaching clauses and no-hire clauses are prohibited by law, except for in the case of company acquisitions.

Reassignment of employees

Can employers include mobility clauses in employment contracts, or take any other measures, to ensure that employees are obliged to reassign?

The enforcement of a mobility clause will most likely be considered to constitute a material change to the employment conditions, and material changes can only be effected with the relevant contractual notice period or with the employee's express agreement. Employers are generally not under any legal obligation to provide a reassignment allowance or any other assistance to employees that are reassigned.

Proposals for reform

Are there any proposals to reform employment law in your jurisdiction?

A new Danish Holiday Act was passed in January 2018. When this enters into force on 1 September 2020, the new Act will substantially change the Danish holiday system.

A bill to amend the Danish Stock Options Act was sent for consultation in July 2018. The bill includes significant changes to the employees' entitlements to options or warrants when the company terminates employment. Changes will take effect as of 1 January 2019 if the bill is passed.