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.
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.
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. 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.
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:
- Workers who consistently exceed 8 hours weekly and have been employed for over a month should be provided with a comprehensive written employment agreement within one month from their start date. This contract should outline essential aspects of employment, including commencement date, work hours, location, job responsibilities, leave accumulation regulations, and notice period for termination, among other relevant details.
- There’s no statutory minimum wage in Denmark. However, minimum wage standards are established through national collective bargaining agreements between workers' unions and employer associations. On average, the effective hourly minimum wage across both private and public sectors is around 110 Danish Krone (DKK).
- A workweek should be no more than 48 hours, including overtime. Collective agreements determine overtime pay and whether salaried employees are paid for working on holidays.
- There are eleven public holidays and five weeks (25 days) of vacation leave per year.
- One to six months’ notice of termination is required, depending on how long an employee has worked for the company. Salaried employees are entitled to redundancy pay if they have been continuously employed with the same employer for at least 12 years. In such a case, the severance pay will amount to one month’s pay.
- Payment should be in local currency only, and on a monthly basis. Employers must collect tax information from workers, report payroll information, and pay withheld taxes to the Danish government every month.
- Employer-provided pensions are required 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.
Benefits of using an EOR to hire in Denmark
An EOR in Denmark will have deep local knowledge of labor laws, employment practices, cultural norms, and employee expectations. By leveraging the expertise of an EOR partner, you’ll be able to easily tap into the Danish talent pool, onboard talent more efficiently, and have peace of mind regarding legal compliance.
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.
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.
