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Starting a business in Denmark

Danish Labor Law: Employment Terms & Conditions

Denmark is number one on the World Bank’s ease of doing business index in Europe. The Scandinavian country holds favorable demography and other resources for the growth of cleantech, design & innovation, software development, life sciences, food, and maritime industries. 

Global companies and entrepreneurs may hire local talents to get better returns on their investments in Denmark. And in doing so, they must enter into a fair employment relationship in compliance with Danish labor law, following basic labor regulations in Denmark –  

  • A maximum of 48 hours of weekly work, including overtime
  • Five weeks of annual vacation leave 
  • Ten weeks of maternity leave in Denmark for foreigners and citizens
  • Equal treatment and equal pay for all employees, irrespective of gender
  • Mandatory tax deductions and social security contributions

Continue reading this employment law in Denmark guide on significant provisions, like working hours, leave schemes, payroll taxes, dismissal rules, and data privacy obligations. 

Applicability of the Act

Most Danish employment laws apply equally to all salaried residents, irrespective of their nationality. 

Denmark’s employment laws are derived from the legal framework of labor laws and suitably applied to the individual employee-employer relationship. 

The labor law in Denmark encompasses employee rights protection, social security benefits, leave entitlements, privacy protection, and greater transparency in salary and bonus payments. 

The Danish labor law provisions like working hours and overtime protection, dismissal rules, employee data privacy, etc., are usually not applicable to managing directors and employee shareholders. 

Furthermore, the labor law in Denmark also does not apply to independent contractors and self-employed individuals. However, platform workers in Denmark may be classified as employees and come under the protection of Danish employment rules.  

Employment Contract

The labor law in Denmark allows employers to conclude written or verbal employment contracts with salaried employees or workers, defining employee-employer rights and obligations. 

However, Danish employment rules require employers to provide written terms of employment within one month of the commencement of work along with the following details: 

  • Establish the identity of employer and employee 
  • Specify the date of beginning the work 
  • Elaborate on the employee’s job role and place of work
  • Mention working hours, holidays, salary, and any allowances (if applicable)

The applicable collective bargaining agreements may oblige employers to additional employment terms and conditions.

Employers may also negotiate a particular contract with chief executive officers (CEOs), employee shareholders, or independent contractors who are usually outside the ambit of Danish labor act rules.  

Key Provisions of the Act

Employer obligations for hiring and managing local talents in Denmark are based on the following: 

  • National labor rights legislation (for example, The Salaries Act, The Holiday Act, etc.)
  • European Union directives on employment 
  • Case laws decided by Danish labor courts
  • Individually negotiated employment contracts
  • Collective bargaining agreements 

Here are some of its key provisions, including working hours, leave schemes, payroll taxes, reporting obligations, dismissal rules, and data protection. 

Working hours

  • Danish working hours law mentions overtime provisions and is measured over a seven-day work week across an average period of four months. 
  • The average working hours per Danish labor law is 37 hours a week across employment sectors. However, employers may extend the maximum working hours to 48 weekly.
    1. Per Danish labor act rules, daily working hours are determined with a mandatory rest period of 11 hours. 
    2. The labor regulations in Denmark oblige employers to add mandatory rest breaks for employees working more than six hours a day. 
    3. Employers may accept flexible working hour requests per collective bargaining agreements. 
  • Additionally, employers have no statutory restrictions to ask employees to work at night, on Sundays or on public holidays. 


  • The labor regulations in Denmark do not impose statutory obligations on employers to pay employees for overtime work. 
  • However, individual employment contracts or collective bargaining agreements may detail rules on overtime pay. 

Minimum wage

Denmark does not prescribe a statutory minimum wage. However, Denmark’s employment law, in cognizance with EU directives, expects employers to make fair wage payments and bonuses proportional to the work. 

Additionally, the Equal Treatment Act per labor code in Denmark obliges businesses to offer equal treatment and pay to all employees, irrespective of gender. 

Public holidays 

  • Danish labor law prescribes 11 public holidays per year, including New Year’s Day, Maundy Thursday, Good Friday, Easter, Great Prayer Day, Ascension Day, Pentecost, Whit Monday, and Christmas Day. 
  • Employers may oblige to collective bargaining agreements for additional days off (for example, Labour Day on 1 May and/or Constitution Day on 5 June). 

Leave schemes

Maternity and Paternity leave:

  • The recent implementation of the new European Work-Life Balance Directive makes significant changes to shared paternity leave in Denmark. 
  • Some crucial provisions for BPL under Danish labor law include: 

Maternity leave

  • Denmark’s paid maternity leave period per statutory requirements is ten weeks, usually taken four weeks before birth and two weeks immediately after birth. 
  • Employers may extend post-natal leave up to eight weeks. 
  • Further, two weeks of paid leave are earmarked for the other parent, and the employer must grant it anytime within ten weeks after childbirth.  

Parental leave

  • Employers must ensure both parents take 24 weeks of leave each in connection with pregnancy & parenting. 
  • Further, employers may make suitable provisions for 13 weeks of shared paternity leave in Denmark. 

Annual leave:

  • Denmark’s labor code, in the Holiday Act, prescribes five weeks or 25 working days of annual paid leave. 
  • Further, the labor act rules in Denmark regarding paid annual leaves obliges employers to
    1. Allow employees to accrue and take holidays at the same time
    2. The accrual period runs from 1 September to 31 August, with 2.08 days paid holiday for each month of employment
    3. Extend a holiday supplement of 1% to eligible salaried employees
    4. Offer holiday allowance equal to 12.5% of the eligible pay for those not entitled to paid annual holidays, for example, non-salaried employees.

Other leaves 

Denmark’s labor law mandates employers to grant leave during ordinary working hours, without employees having to use their paid vacation for work absence, for the following reasons. 

Furthermore, employers may get the equivalent allowance reimbursed from the government if the salary has already been paid. 

Sickness leaves:

  • The labor regulations in Denmark oblige employers to grant sickness benefits for the first 30 days of sick leave. 
  • Employees are eligible for sickness benefits only if they have worked for eight weeks and at least 74 hours in that time. 

Carer’s leave:

  • Employers may grant paid time off to care for a close relative who is dying, terminally ill, or disabled. 

Payroll taxes & obligations

The financial year in Denmark runs from 1 January to 31 December. Here is a brief account of payroll tax obligations for employers per Denmark’s labor laws –   

  • A registered employer in Denmark is required to:
    1. Deduct and withhold taxes and social security contributions from the salaried employee
    2. Pay social security premiums & file withheld taxes to Danish authorities on the 10th of the following month
  • Income taxes deduction
    1. Income taxes in Denmark are progressive and grouped under three income slabs: DKK 0 – 46,700, DKK 46,701 – 544,800, and above DKK 544,800. 
    2. Visit this page to learn about Denmark’s latest applicable income tax deduction rate. 
  • Social security contributions
    1. Employers in Denmark must ensure the following contributions towards employee social security benefits.
      1. ATP: mandatory pension contributions 
      2. AM-bidrag: mandatory labor market contributions for unemployment benefits, absence due to sickness, training costs, etc. 
      3. Maternity leave fund: monthly contributions to the maternity fund
      4. AES: employer contributions toward occupational injury and disease 
    2. An employer’s annual social security contributions went up to 13,721 DKK per employee in 2022. 
  • There are no statutory obligations on employers per Danish employment law to deduct income tax or social security contributions when paying self-employed individuals. 


  • Denmark employment rules prescribe salary payments to be transferred digitally to Danish bank accounts. 
  • While the labor code in Denmark has not mentioned any template for payslips, employers may ensure the following details in the employee payslip:
    1. Disclose information about the employer and employee, including name, address and CVR no. (for business), civil registration number of employee, employee code, tax cards (hovedkort, bikort, or frikort), etc. 
    2. Recorded working hour
    3. Record of employee absence 
    4. Gross salary (before deductions) 
    5. Tax deducted at the source
    6. Employer’s social security contribution
    7. Date of salary payment 
    8. Total amount paid 

Employee termination

Danish employment law regarding termination allows employers to terminate employment contracts without statutory obligations unless it is a collective redundancy.

Collective redundancy in Denmark means dismissing employees over 30 months in the following circumstances

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


Notice period:

  • Employers may ask employees to serve a notice period before terminating the employment contract. 
  • The labor regulations in Denmark mandate employers to offer notice periods of one month to six months to terminate employment, based on seniority level:
    1. one month’s notice for the first six months of employment
    2. three months of notice for three years of employment
    3. four months of notice for six years of employment
    4. five months of notice for nine years of employment; and hereafter
    5. six months of notice


Severance payment:

  • Danish labor law prescribes severance pay of one to three months’ salary upon dismissing an employee who has worked for over 12 or 17 years with the same employer. 
  • No other statutory requirements regarding severance pay apply per Danish employment rules.  

Data protection and employee privacy

Employers in Denmark are bound by the European Union’s General Data Protection Regulations (GDPR) to ensure data protection and employee privacy. 

The Danish Data Protection Act supplements GDPR while collecting, storing, and processing employee information and requires prior employee consent for activities like background checks, workplace supervision, monitoring employee access to company electronic resources, etc. 

Danish employment law on employee privacy mandates employers to disclose stored employee data upon request. 


Employers are charged with fines and/or payment of compensation for not obliging to the following terms under the Danish labor law: 

  • Non-compliance with the Act on Collective Redundancies 
  • Non-compliance with the Working Environment Act and executive orders and guidelines from the Work Environment Authority
  • Failure to consult with employee representatives 

Compliance Strategies for Employers

Businesses may hire and manage employees adhering closely to Danish labor law using the following compliance strategies: 

Hire through employment contracts:

  • The labor act rules in Denmark include guidelines for working conditions and other statutory employee rights. 
  • Employers may negotiate Danish employment rules based on these guidelines and draft employment contracts to frame a legal basis for hiring and managing employees.  

Develop an in-house HR team to manage employees:

  • Companies may build an in-house HR team that analyzes Danish labor law to draft job-specific employment contracts, manage payrolls, and compliant hiring. 
  • Management usually entrusts HR managers to maintain safe workplace conditions and deal with structural changes, layoffs, employee appraisals, etc.  

Third-party assistance for managing payroll

  • Contemporary global businesses are rapidly switching to SaaS-based HR solutions for payroll management, drafting legal documents, and background checks. 
  • Such platforms ensure compliant hiring and managing employees globally with minimum effort and maximum benefit. 

How Can Multiplier Help?

Multiplier is a leading PEO/EOR platform that ensures compliance with Danish labor and employment laws for employment-related services like automated employment contracts, tax reporting, social security obligations, and salary payments at the click of a button. 

Further, a well-drafted employment contract in the local language can improve hiring outcomes. You can collaborate with Multiplier to generate employment contracts and related legal documents in Danish, thus simplifying hiring and managing employees in Denmark. 

Hundreds of entrepreneurs and global companies have trusted Multiplier to fast-track their international expansion in 150+ countries, including Denmark. Now you can too!

Frequently Asked Questions

While employees in Denmark enjoy the right to form associations or join a union, the labor laws in Denmark do not recognize special rights for trade unions. However, specific collective bargaining agreements may recognize trade unions in Denmark.

Employers may be liable for the maximum compensation amounts for discriminatory dismissal equivalent to 6-12 months of the employee’s legal and contractual entitlements.

The employee owns all IP rights created during employment unless the employment contract specifies otherwise. However, copyrights on computer programs made during employment belong to the employer.

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