Starting a business in Denmark

Hiring Guide: Key Intel to know before Hiring Denmark Employees

Denmark enjoys a capitalist economy, shielded by exceptional social welfare safety laws and networks, making it among the happiest countries in the world. In any form of community, the high-spirited Danes play a considerable role in determining the tone of the environment, a very crucial yet ignored aspect in a work environment. 

Controlled by progressive laws and CBAs that change as per the market, Denmark has been ranked fourth by the World Bank for ease of doing business. Danes often enjoy free education from their government. Hence the country boasts a very high literacy rate compared to its European siblings, effectively pointing to a rich talent pool. 

The progressive laws are put into motion by the employers and the employees, a high education index, and the gritty spirit of the Danish citizen make them the most valued employees one can hire. However, to leverage these perks, an employer must comply with all the local laws and understand their legal models. 

Here’s everything you need to know before hiring employees in Denmark. 

Things to Know Before Hiring in Denmark

The progressive laws in Denmark, coupled with the availability of talented professionals, attract the attention of several employers across the world. However, before hiring employees in Denmark, a company should be aware of the mentioned rules and regulations.  

Attracting vetted professionals

Denmark enjoys a human development index of 0.948, making it one of the most education-rich countries amongst its European counterparts. Due to its high literacy rate, the country offers an abundance of talent waiting to be hired.

Job changes are a predominant trend in Danish culture, as reports have shown 25% of the working population have changed jobs in the last few years. It certainly opens up new possibilities for an employer, as they can easily scout and have experienced professionals join their ranks with the right offer.   

Flexicurity

The famous hiring market in Denmark is known for its agile labor model called flexicurity. It allows an employer to reconfigure the workforce to adjust to market changes. Furthermore, the model enables a Danish employee to opt for a subscription model known as a-kasse or an unemployment insurance fund. These funds allow an employee to acquire benefits after losing their job.

The unemployment benefit is locally known as dagpenge, and the benefits can be obtained for up to 2 years, making flexicurity a win-win for both the employer and the employee.  

Collective bargaining agreement

A collective bargaining agreement, or the CBAs, primarily undertakes the role of labor laws in Denmark. Instead of the government, most laws, or the CBAs, are passed after a mutual agreement between the labor unions and the employer unions. Such an arrangement allows both parties to protect their interests and agree upon agile rules per market changes. 

Social security

Compared to its European neighbors Denmark has a high tax rate. On average, working Danish professionals pay almost half their income as taxes annually.

Employers are required to pay between DKK 8,000 and 10,000 a year under the social security fund to a full time employee. However, employees contribute 0% to social security.  

Average work hours and paid leaves

Danish citizens are allowed to work no more than 48 hours a week, which includes overtime. The labor laws in Denmark also highlight an employee’s entitlement to a five-week paid leave or 35 days off annually. 

The Cost of Hiring an Employee in Denmark

Niche plays a massive role in underlining the cost of recruitment and selection in Denmark. The recruitment budget should focus on the mentioned instances. 

  • Acquiring a work permit: Any employer who is not a Danish citizen must apply for a work permit in Denmark. EU citizens are granted a work permit by default.  
  • Establishment cost: To hire staff in Denmark, a company needs to either have a subsidiary or a registered company in the said country. A huge cost is involved as one needs to legalize their company and ensure it abides by all the local laws. 
  • Job advertisement: To attract applications for a specific job, an employer needs to advertise it. Therefore, an employer should consider this instance. 
  • Training: An employer looking to hire freshers in Denmark must provide these recruits with the required training. Making such an arrangement is always accompanied by a specific cost. 
  • Annual salary: There is no minimum wage cap in Denmark. Annual salaries are often negotiated and decided upon by both parties.  

What Does a Company Need to Hire Employees in Denmark?

To leverage such a lucrative model and acquire abundant talents, a company must suffice the mentioned prerequisites. 

  • An employer needs to acquire a work permit in Denmark. 
  • Have a registered subsidiary or business in Denmark
  • CBAs are considered agile, as they continuously change per the market. A company needs to be updated on the latest CBAs in place. 
  • The annual contribution a company needs to make to social security in Denmark, which varies as per the revenue and size of the company in question 

Global EORs are an excellent alternative to this learning curve. A company can transfer all the mentioned procedures to global EORs like Multiplier and focus on testing new markets. 

Various Options for Hiring Employees in Denmark

Ideally, there are only three suitable options that a company can leverage if they want to hire staff in Denmark. These two options have been listed and explained below.

Hire as a company

Hiring as a registered company is a traditional path taken by a company. Usually, to start recruitment and selection in Denmark, a company must register its business in the country and abide by all Danish laws. Once a business is registered, it can hire staff in Denmark, like in its home country. 

Partner with an EOR platform

An employee of record (EOR) is a Saas-based platform that allows a company to hire employees without needing a business registration in Denmark. As the process saves a considerable upfront cost and time, EOR solutions have gained massive traction in recent years. Using an EOR platform like Multiplier, a company can directly hire by advertising open positions in Denmark. 

The Steps to Hiring in Denmark

The steps to recruitment and selection in Denmark have been listed below

Establishing a business or subsidiary:

An employer must register their businesses in the said country to hire staff in Denmark. On the other hand, an employer can also opt to form a subsidiary to start recruitment and selection in Denmark. 

Advertising open positions:

Advertising open positions is the fastest way to hire staff in Denmark. A company can rely on popular Danish job portals like JobIndex, TheLocal, or JobFinder. 

You can mention the job post requirements including educational qualification and job experience while advertising.

Conducting interviews:

Once you look through the job applications, you can organize interviews with potential candidates.

Depending upon the job position, the levels of interviews may vary. You can also conduct a skill test if necessary. 

Background checks:

Background checks are legal in Denmark when done in accordance with privacy regulations and statutory laws. You can efficiently run legal checks and cross-verify the information provided by an applicant.

Training:

Training is a non-negotiable step every employer must deliver after hiring a candidate. While experienced professionals might not require training, freshers portray a different story altogether. 

Let Multiplier be Your EOR Platform in Denmark

To hire staff in Denmark, a company must ensure all the necessary paperwork is in place. It further sparks the need for including an agent, increasing the overall establishment cost and time required. You can contact a global EOR/ PEO platform like Multiplier to assist you in the process. 

Multiplier is a Saas-based Employer of record solution (EOR) that eases hiring in Denmark by leaps and bounds. You are not required to open a subsidiary nor re-register the business in Denmark. You can focus on testing new markets and easily set up teams in new countries.

Frequently Asked Questions

You need to have a company or a subsidiary registered in Denmark to hire employees there. On the other hand, you can also rely on a global EOR service for recruitment and selection in Denmark without establishing a company there.

Every business looking to hire employees in Denmark must have a registered company. All registered companies have to contribute to social security annually.

A company must provide a minimum notice period of one to four months to its employees. On the other hand, an employee must issue a formal notice to their employer one month before resigning.

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