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Denmark is a prosperous trading nation in Northern Europe. It is well known as a base in Europe for the ease of doing business there, and its highly-skilled local workforce. When hiring in Denmark it is important to check whether any Collective Bargaining Agreements apply, and which employment laws may affect the conduct of your business.
5.8M (2.9M Labor Force)
GDP per capita
Ease of Doing Business
4th in the world
None (except as provided in Collective Bargaining Agreements)
The Scandinavian nation of Denmark, is a popular place for international businesses seeking a foothold in the lucrative Northern European market. The country boasts a strong economy, high standard of living, and EU membership, all contributing to its attractiveness.
In 2019, Denmark’s GDP increased by 2.1%. While there was a brief downturn in 2020 due to the Pandemic, Denmark quickly bounced back in 2021, increasing in size by 4.7%. In 2022, Denmark’s GDP is estimated to grow 3% and in 2023 this is expected to remain stable. Considering global events, Denmark is peforming particular well.
According to the World Bank, Denmark is #1 in ease of doing business in Europe, and #4 in the world. This means an excellent business climate, and an attractive place to set up a business that will grant you access to the EU market.
If your organization is contemplating a move to Denmark, we recommend enlisting professional help. The country is well-equipped for foreign business, however, you will need to understand the business and employment laws which apply there, and are determined by both national and EU-level policy.
It is not mandatory in Denmark to provide a formal employment contract, but writing a detailed employment contract is highly recommended. The contracts should be written in Danish, use the Danish Kroner, and include details such as maternity leave, vacation allowance, salary/wage, and expected working hours.
Many workers in Demark are part of collective bargaining agreements, so it is possible your business will need to negotiate with trade unions or an employee representative when writing an employment contract, or you will need to adhere to pre-negotiated industry norms.
Demark is an efficiently-run welfare state. Therefore there are multiple types of leave that employers will need to offer like sick leave, maternity/pregnancy leave, and paternity leave.
In Denmark, employees get paid 100% of their salary for a minimum of 30 days of sick leave. After 30 days the employer is no longer liable to pay the salary, and social security benefits will take over paying the employee. Social benefits will last for up to 22 weeks in Denmark. After 120 days of illness the employer is entitled to terminate the contract with the employee.
Maternity/pregnancy leave in Denmark is 14 weeks (4 before birth). 50% of the salary is paid by the employer for up to 5 months, and the employer can be reimbursed by the Danish maternity fund.
Paid paternity leave (second parent) in Denmark is 2 weeks within the 14 weeks after the child is born. The employee is paid by the maternity leave fund from the Danish government. Also, there is paid paternal leave that is 32 weeks that can be used until the child is 9 years old. This is also paid for by the Danish government maternity fund
The number one things to know about Danish business culture is there is a strong sense of equality within the workplace. There is low power distance between the different layers of the corporate hierarchy. Employees at each level talk with each other on equal footing, and each is respected the same. For example, a boss’ door is usually open, and the boss in Denmark is available to chat with the employees most times throughout the work day.
It is considered very fair to disagree with the boss, even within meetings. The Danish business culture is more relaxed than its European counterparts and therefore offering your opinion to those in higher level positions is always acceptable. Consensus amongst all employees involved is usually what companies seek to reach. If new or better information emerges, then Danish companies will innovate and change, instead of sticking to stubborn old habits.
Honesty is very important in Denmark. If you make a mistake it is expected that you own up to your mistake and fix it. Trying to hide mistakes will only make matters worse within the Danish business culture.
When interviewing candidates in Demark it is most important to follow all discrimination and harassment laws for employers in Denmark. For example, it is illegal to make a decision on a candidate based on gender, race, religion, or sexual orientation. Denmark has strict equality laws that protect the candidates rights to interview for a position without discrimination or harassment.
In addition, it is important to note that Denmark has a laid back business culture. For interviewing, it is important to make the candidate feel relaxed by asking questions about how they are and how their day is going.
In Denmark it is illegal to ask what the candidate’s previous salary was. You may ask what the candidate’s salary expectations are for the role you are seeking to fill.
Typically when an employee is changing jobs, or is being promoted, the salary increase will be around 10-20% in Denmark.
Remote working tools like Microsoft Teams, WebEx, and Monday all work in Denmark and are widely used. Danish candidates are well-educated and technologically advance and should be able to work off remote working tools you use with ease.
Annual holidays in Denmark are sometimes set by the collective bargaining agreements within the trade unions, therefore the holiday season in Denmark could vary from role to role. However, typically public holidays in Denmark are:
|1 Jan, 2023||New Year’s Day|
|6 Apr, 2023||Maundy Thursday|
|7 Apr, 2023||Good Friday|
|9 Apr, 2023||Easter Sunday|
|10 Apr, 2023||Easter Monday|
|1 May, 2023||Labor Day / May Day|
|5 May, 2023||Great Prayer Day|
|18 May, 2023||Ascension Day|
|28 May, 2023||Whit Sunday|
|29 May, 2023||Whit Monday|
|5 Jun, 2023||Constitution Day|
|25 Dec, 2023||Christmas Day|
|26 Dec, 2023||2nd Christmas Day|
The typical salary increase for employees in Denmark happens annually and it is usually between 5% and 7%.
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It depends on your hiring needs. If you are hiring for short-term or project-based work, a freelancer will often be appropriate. On the other hand, if you are after long-term, fulltime workers, it is usually necessary to hire individuals as an employee. This is where an Employer of Record (EOR) solution can be useful.
Yes, you can hire foreign workers in Denmark, however proper work permits to live and work in the EU will need to be obtained. Scandinavian and EU citizens can live and work in Denmark without needing a work visa.
There are two main corporation options in Denmark to open a subsidiary or branch office in Denmark. You can either set up an Aktieselskab (A/S) or Anpartsselskab (ApS). An A/S is similar to a public limited liability company, while a ApS is equivalent to a private limited liability company. Deciding between the two depends on your company’s needs, however small and mid-sized companies typically set up a ApS.
A/S companies must invest a minimum of DKK 500,000. Whereas a ApS will need to invest a minimum of DKK 40,000.
The function of hiring employees in Denmark is similar to most other European nations: You will advertise the job on a popular job website, conducts interviews, and hire and onboard your employees. In Denmark, there are a number of discrimination and harassment laws that protect equal rights during the interview, onboarding, and employment process —these are important to follow during the hiring process in Denmark.
If your company is not based in Denmark, you can either hire employees directly through a subsidiary (using the process outlined above), or use a Danish Employer of Record solution. This allows companies form outside Denmark to hire their via a professional third-party company that becomes the legal employer.
Your business can easily hire employees in Denmark without opening a local entity. We handle local employment law, complex tax regulations, and international payroll in 180+ countries worldwide. All you need to do is focus on your business.