All questions

Discontinuing employment

i DismissalSalaried employees

Under the Salaried Employees Act, a dismissal must be reasonably justified by the circumstances of the employer or the employee (e.g., redundancy and poor performance, respectively), assuming the employee has been employed for at least one year (on the date notice is given). Otherwise, it will be unfair.

In other words, employees who have been employed for less than one year are not protected against unfair dismissal. But they will be protected against any discrimination from the start of the employment under anti-discrimination legislation.

In the event of an unfair dismissal, the employee will be entitled to compensation of between one and six months' total remuneration, depending on length of service and other circumstances.

As a general rule, a dismissal on grounds of redundancy will be deemed fair, provided that the employer can demonstrate that the redundant position has not been immediately refilled. In such scenario the employer – as a general rule – has discretion to select the employee who is redundant and the employer is not required to use specific selection criteria. However, in terms of employees enjoying special protection against termination, the employer will typically need to justify having selected the protected employee instead of another employee and to demonstrate that no suitable alternative position was available at the time of termination.

A performance-based termination will generally not be considered fair unless the termination is based on a prior written warning.

According to Danish law, an employee may be dismissed because of sick leave provided that the sick leave is not related to pregnancy, disability of other circumstances affording the employee special protection against dismissal. In fact, pursuant to Section 5(2) of the Salaried Employees' Act, the employer may dismiss the employee because of sick leave amounting to at least 120 days during 12 consecutive months on the condition that the notice of dismissal is given immediately after the expiry of the 120 days of sick leave and while the employee is still absent.

Blue-collar workers

In the absence of a collective agreement there is no protection against unfair dismissal. Any collective agreement typically provides rules on compensation for unfair dismissal with regard to workers with at least nine months' continuous service (on the date notice is given). The compensation may amount to up to 52 weeks' salary but will normally be fixed at a considerably lower amount.

Employees enjoying special protection against dismissal

Certain employee categories enjoy special protection against dismissal according to the law, including, inter alia: pregnant employees; employees on paternity, maternity or parental leave; employee-elected board members; employee-elected work environment representatives; and union representatives.

Special protection does not rule out a lawful dismissal. However, in the event of such dismissal, the employer must be able to show that the dismissal was neither in whole nor in part based on the conditions on which the special protection is based.

In case of a termination in contravention of the rules affording special protection, the employer may be liable to pay significant compensation amounting to approximately three to 12 months' salary, as well as a penalty for violating the applicable collective labour agreements, if any. The compensation level is mainly dependent on the employee's period of continuous employment and the seriousness of the violation.

Moreover, special anti-discrimination acts protect employees from dismissal on the basis of factors such as race, ethnic origin, age and disability. Employees who have been discriminated against may be awarded compensation of six to 12 months' based on recent case law.

ii NoticeSalaried employees

The minimum notice required from the employer to terminate an employee is dependent on the employee's length of continuous service, namely, between one and six months, to expire at the end of a calendar month.

The minimum notice required from the employee is one month, to expire at the end of a calendar month.

The minimum notice periods required from the employer are:

Employment periodNotice period
Up to 5 months1 month
Up to 2 years and 9 months3 months
Up to 5 years and 8 months4 months
Up to 8 years and 7 months5 months
In excess of the above6 months

After 12 or 17 years' continuous service, the employee will be entitled to statutory severance pay amounting to one or three months' total remuneration, respectively, if the employee is dismissed (and such dismissal is not justified by material breach).

Blue-collar workers

Typically, the worker will be covered by a collective labour agreement setting out minimum notice periods for both parties. The notice required from the employer typically depends on the employee's length of continuous service with the employer.

Workers not covered by a collective agreement are not entitled to any particular minimum notice except for the notice agreed in their employment contracts.

Salaried employees and blue-collar workers

The employer is not required to provide a social plan and is not required to notify a government authority or other third party, unless otherwise set forth in the applicable collective agreement, if any. The law neither provides for a general right of reinstatement in case of unfair dismissal nor a general duty to provide suitable alternative employment.

Until the expiry of the notice period, employees are entitled to receive their normal base salary, variable salary (commission, bonus, etc.) and their usual benefits, such as insurance and pensions. Employees are required to continue working for the employer under the usual conditions during the notice period, unless they are released from their duties or put on gardening leave, which the employer may choose at its discretion. If the employee is released from his or her duties, the employer may – as a general rule – offset any income earned from another employer during the notice period against the current salary.

The parties may choose to conclude a severance agreement outlining the rights and obligations resulting from the termination. There are no particular formalities required. This approach is mainly taken by companies to mitigate specific legal risks, for company policy reasons, or both.

Payment in lieu of notice is generally inconsistent with the employment law framework and is typically not recommended for a number of reasons.

In the event of the employee's material breach of the employment, the employer can terminate the employment without notice or with notice at the employer's discretion.

iii Redundancies

The principles and rules applicable to dismissals (see Section XII.i and ii) also apply to redundancies, with the exception of the special rules applicable to collective redundancies mentioned below.

The execution of collective redundancies must take place in accordance with the Act on Collective Redundancies (implementing Directive 98/59/EC), which sets forth a specific mandatory information and consultation procedure before the final decision to proceed.

The Act applies where redundancies within 30 days exceed: 10 employees in undertakings employing between 20 and 100 employees; 10 per cent of the employees in undertakings employing between 100 and 300 employees; or 30 employees in undertakings employing more than 300 employees.

Under the said Act the employer must, at the earliest possible time, notify the Regional Employment Council and initiate consultations with the employees or their representatives for the purpose of reaching an agreement to either avoid or limit redundancies, and to alleviate the effects, for example by reallocating or retraining the affected employees.

If the employer proceeds with the redundancies after consultation, the employer must notify the Regional Employment Council, and the redundancies will be effective no earlier than 30 days (in some cases eight weeks) after such notification.

In the event that the mandatory procedure is not followed, the employer may be liable to pay compensation payments to the affected employees and possibly a fine.

Special rules on collective redundancies are often set forth in collective agreements.