As you grow your business, there may be occasions when hiring an employee from overseas might be the best option. Whether you're looking for a specific skill set or need help tapping into a new market, looking beyond borders to identify global talent can help your company reach its goals, especially since two-thirds of the world's purchasing power is in foreign countries.
If that effort includes hiring employees in Denmark, getting help from an employer of record (EOR) is critical if you don't have an established legal entity in this Scandinavian nation. The employment rules and standards are trickier to navigate than in many other countries, and without expert assistance, it's very easy to make costly mistakes.
Below are some things to keep in mind if you're considering working with an EOR service to onboard Danish talent.
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Why Denmark For Global Hiring
Denmark stands out as a top destination for global hiring because of its highly skilled, English-speaking workforce. The country offers strategic access to the Nordic market with talent pools particularly strong in technology, life sciences, and renewable energy. Companies gain access to world-class skills in one of Europe's most stable, business-friendly environments.
Key Considerations For Hiring In Denmark
Here's what makes Denmark's employment landscape unique: it operates differently from most countries you've probably hired in before.
Key differences include:
- Collective bargaining agreements: These govern employment terms instead of government legislation
- Worker-centric culture: Employee rights and expectations are deeply embedded in business practices
- Complex contract rules: Specific requirements around employment agreements and termination processes
This complexity makes local expertise essential for compliant hiring.
Employment law in Denmark
Overall, Denmark is a very worker- and business-friendly country, especially compared to the rest of Europe. Most employment and labor laws here are determined via collective bargaining agreements between workers' unions and employer associations, which cover 60 to 85% of employees and serve as a baseline for disputes even for non-covered workers. Most of the governmental rules regarding employment fall under the umbrella of one of four acts:
- The Danish Salaried Employees Act: This covers most aspects of employment, including hiring processes and policies, probation and termination, employee benefits, and contractual obligations for employers and employees.
- The Danish Act on Restrictive Covenants: This policy deals with the conditions under which employers and employees can take legal action against each other.
- The Danish Holiday Act: This law specifies how many holidays employees can take and how they accrue paid time off.
- The Danish Differential Treatment Act: This act prohibits discrimination against individuals based on their age, race, nationality, ethnic background, religion, disability, or political preferences.
Other acts related to employment in Denmark include the Acts on Sickness Benefits, Workers Compensation, and Working Hours.
Employers hiring in Denmark must adhere to the provisions of these acts, as well as the rules established by collective bargaining, which can make hiring and managing Danish workers challenging. If you don't have the experience and knowledge to navigate all these regulations, you might consider partnering with an EOR service in Denmark to help keep you compliant.
Benefits of using an EOR to hire in Denmark
So, what exactly does an EOR bring to the table in Denmark? Think of them as your local employment expert who handles the complexity while you focus on building your team.
Here's what you gain:
- Deep local expertise: Labor laws, cultural norms, and employee expectations
- Faster hiring: Streamlined onboarding processes
- Legal peace of mind: Full compliance with Danish employment regulations
Being a competitive employer
Danish workers have certain expectations of their employers, and if you want to be competitive and attract top talent, it's essential to recognize and meet these expectations. For example, offering flexible working hours, additional leave, bonuses, private pensions, and career development opportunities can help you attract and retain talent. Working with an EOR can help you better understand local expectations and best practices, so you can position yourself as a competitive employer.
Streamlined onboarding
Working with an EOR makes adding Danish workers to your workforce easy. From custom contracts in Danish and English to setting up payroll and reviewing policies and procedures, you can welcome new employees in a matter of weeks.
Compliance with local laws
An employer of record in Denmark has total, up-to-the-minute knowledge of employment regulations concerning employment contracts, taxes, payroll, social contributions, and cultural expectations. You can be sure you're staying compliant and not risking fines, penalties, or reputational damage.
It's worth noting that if your company isn't based in Denmark, you can't legally hire and pay employees directly. You also can't hire contractors who are sole proprietors or LLCs to work for your company full-time. The only way for a foreign company to legally employ Danish workers is by establishing an entity there or by partnering with an EOR.
Affordable market access
An EOR provides your company access to the Danish labor market without the expense and hassle of establishing an entity. Establishing an entity requires a considerable investment of time and resources upfront, as well as ongoing maintenance costs.
Working with an EOR in Denmark
If you want to hire directly in Denmark, you'll need to establish an entity in the country. But this can be an expensive and time-consuming process that opens your company up to a host of issues related to employment law, taxation, and more.
If you only need to hire a few people from Denmark and don't plan to have a more permanent presence or set up a business there, an employer of record might be a more efficient and cost-effective alternative. With this option, the EOR—an established entity in Denmark—acts as a third-party organization that employs workers on your behalf. They take care of hiring, onboarding, payroll, benefits, and other aspects of employment while you manage the worker's day-to-day activities.
The advantages of working with an employer of record extend beyond the reduced admin and HR burden. The greatest benefit is that the EOR ensures compliance with applicable employment laws. For example, did you know that according to Danish laws:
Contract requirements:
- Workers exceeding 8 hours weekly must receive written employment agreements within one month
- Contracts must outline start date, work hours, location, job responsibilities, leave rules, and termination notice periods
Compensation and working time:
- No statutory minimum wage—rates set through collective bargaining (average ~110 DKK per hour)
- Maximum 48-hour workweek including overtime
- Eleven public holidays plus five weeks (25 days) annual vacation
Termination and benefits:
- One to six months' termination notice is required, with the period increased by one month for every three years of an employee's service, up to a maximum of six months.
- Redundancy pay for long-term employees, with those having worked 12 or 17 years entitled to 1 or 3 months' salary, respectively.
- Monthly payment in local currency only
- Employer-provided pensions mandatory for all workers
These are just a few of the intricacies of hiring in Denmark. Considering that the tax system Skatteforvaltningen (SKAT) is only in Danish, and the laws regarding taxation are strict, it's a good idea to work with an experienced EOR in Denmark to ensure total compliance.
Getting Started With Danish Employment
Navigating Denmark's employment laws requires a partner with deep local expertise. An EOR provides the simplest, most compliant path to engaging Danish talent without the overhead of setting up your own entity. By handling payroll, benefits, and compliance, an EOR lets you focus on building your team and growing your business. Ready to take the next step? Start hiring globally with a partner you can trust.
Oyster as an alternative to Danish EORs
An EOR service in Denmark will keep you compliant there and help you manage Danish employees. But if you eventually expand your team across multiple countries, it could mean having to work with multiple EORs. Coordinating with multiple vendors and their different systems and processes can soon become overwhelming. If you plan to hire in other countries in addition to Denmark, Oyster's global employment platform is an affordable and easy-to-use alternative to working with an EOR in Denmark.
Built for compliance, Oyster's intuitive, automated platform makes it possible to hire people from around the world without juggling multiple EORs. We make it simple to hire and onboard workers and contractors from over 180 countries, including Denmark, and be confident that you're staying compliant with local employment laws, payroll, taxes, and more.
When you work with Oyster, it's easy to manage the details, too, with convenient tools like the contractor vs. employee analyzer and employment checklists. We make global hiring a breeze with affordable plans and simplified management. Learn more about how Oyster can transform your global hiring strategy.
About Oyster
Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.
Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.
