Expand your organization into Denmark with or without a Danish entity
The Scandinavian nation of Denmark, located in Northern Europe, is a popular place for businesses to expand. The country’s strong economy, high standards of living, and membership to the EU, among other factors, make it an attractive destination for foreign organizations, and there are many economic opportunities to be enjoyed.
If your organization is contemplating a move to Denmark, we recommend enlisting professional help. While the country is well-equipped for foreign businesses, you will need to understand the complex business and employment laws, which are influenced by both national and EU-level policy, and must be prepared to work in the Danish language. These hurdles can cause unexpected delays, and setting up your expansion could take weeks or even months.
At New Horizons, we offer full support to organizations planning an expansion into Denmark. Our bespoke professional employer organization (Denmark PEO), employer of record, and payroll services can offer everything needed to expand your business into Denmark, whether or not you have already established a Danish entity.
With our own in-house recruitment team, we can also source, hire, and onboard your employees in Denmark, as well as manage any ongoing HR and compliance administration. Our dedicated team will provide everything you need to expand into Denmark as efficiently as possible and could save you thousands in expenditure.
Why choose our Denmark PEO for your expansion?
New Horizons enables your business to expand its operations into Denmark, without having to establish a legal subsidiary.
Employment & Labor Laws in Denmark
Employment contracts in Denmark
It is not mandatory, but we strongly recommend providing formal contracts of employment for all of your employees in Denmark. These contracts should be written in Danish, use the Danish kroner, and include all relevant details such as maternity leave, vacation allowance, salary/wage, expected working hours, and so on.
Many employee rights in Denmark are not centrally mandated but are negotiated via collective bargaining agreements (CBAs), so you may need to negotiate with trade unions or employee representatives when writing up your employment contracts, or adhere to pre-negotiated industry norms.
By partnering with our Denmark PEO, New Horizons’ team of local experts can provide assistance for drafting strong employment contracts that are compliant with local regulations.
Working hours in Denmark
The standard working week in Denmark is generally limited to 37.5 hours per week, and employees must be given one full 24-hour rest period every week. Overtime compensation is set by CBAs, so you must be sure to understand the specifics of your situation when hiring.
The maximum working week including overtime is usually 48 hours.
Public holidays in Denmark
As with many employment terms, Denmark’s annual holidays are set by CBAs, so can vary from role to role. However, the main holidays, which many workers receive paid leave for, are:
Denmark vacation leave
Employees in Denmark are entitled to a minimum of 25 days of paid vacation leave per year after they have been with their employer for a full year. Newer employees can take 20 days of unpaid leave, and accrue 2.08 days of paid leave per month of employment. Up to five days of leave can be carried over to the following year.
Denmark sick leave
Employers in Denmark must cover employees for 14 days of absence through sickness. After 14 days and up to one year of absence, payments totaling 90% of normal salary are covered by the state up to a maximum of just over 3,000 kroner per week.
Parental leave in Denmark
Female employees in Denmark can take four weeks of maternity leave before childbirth, and 14 weeks after childbirth, with 50% of salary covered.
Male employees can take two weeks of paternal leave, also at 50% of normal salary, within 14 weeks of their child’s birth.
These payments are covered by the country’s social security system, not employers.
Both parents can also take up to 32 weeks of leave after this initial period of parental leave, and may be able to extend this even further in some cases.
Terminations and severance in Denmark
Termination terms in Denmark can vary depending on the individual agreements made by employees or their representatives. Many people are covered by the Salaried Employees Act, under which:
- Employees of up to two years and nine months = Three months of notice
- Employees of up to five years and eight months = Four months of notice
- Employees of up to eight years and seven months = Five months of notice
- Above eight years and seven months = Six months of notice
Severance entitlements are handled similarly, with employees of more than 12 years entitled to one month of salary, employees of more than 15 years entitled to two months of salary, and employees of more than 18 years entitled to three months of salary.
Navigating employee terminations and handling severance packages can be complicated for companies expanding overseas for the first time. New Horizons’ Denmark PEO can mitigate risk for foreign companies and provide guidance through this process.
Taxation in Denmark
Employees in Denmark must pay a range of taxes and contributions, including a social security contribution of 8% of gross income, a municipal tax which varies by locations, and a progressive state income tax. These taxes cannot exceed a total of 52.06% (as of 2020), but this does not include several other smaller taxes such as shares tax and church tax.
Health coverage in Denmark
Denmark’s healthcare is nationalized and of a very high standard, so employers do not need to offer private medical insurance. However, some do choose to as part of their benefits packages.
Denmark compensations & benefits
Compensation laws in Denmark
There is no nationally standardized minimum wage in Denmark, but the most common rate across the county is around 110 kroner per hour. This can vary depending on specific CBAs, so it is important that you understand the relevant rules for your situation when hiring in Denmark
Benefit management in Denmark
Many employers in Denmark choose to offer their employees benefits packages, including things such as extra pension contributions, a company car allowance, paid vacation days, a holiday bonus, and so on. However, setting up a benefits system in Denmark can be difficult if you are not familiar with the country’s complicated labor laws, language, and administrative norms.
New Horizons can help you simplify this stage of your expansion by offering tailored Denmark PEO & benefit management outsourcing. Our experts will advise you on the best course of action and take care of your benefit setup and management, helping you focus on the important job of your Danish expansion.