Legislation and agencies

Primary and secondary legislation

What are the main statutes and regulations relating to employment?

The regulation of the employment relationship in Denmark is somewhat fragmented, and unlike other jurisdictions, there is no general piece of legislation that governs the employment relationship. This stems from the tradition in Denmark where employment terms and conditions are determined by collective agreements.

As a general principle the regulation of the employment relationship is divided into two branches – collective labour law and individual labour law. The rules governing the employment relationship therefore derive from a variety of sources, including statute, collective agreements, and the individual employment contract.

Collective agreements cover a large percentage of the Danish labour market, and these agreements are typically negotiated for a three-year period. The collective agreements will lay down minimum standards for all aspects of the employment relationship include pay, benefits overtime and working conditions.

There are several legislative provisions that regulate the individual employment relationship for specific groups of employees. The Salaried Employees Act is one of the main provisions and sets out minimum provisions for salaried employees (generally referred to as white collar workers). The Salaried Employees Act contains certain mandatory rights relating to notice periods, severance pay and compensation for unjust termination.

Additionally, there are individual pieces of legislation that apply to all workers, such as the Holiday Act, which governs holiday entitlement, the principles for taking holiday and calculation of holiday allowance. In addition, there is the Danish Childcare Leave Act, the Equal pay Act, the Anti-Discrimination Act, and the Act on Restrictive Covenants which all contain minimum statutory requirements.

Protected employee categories

Is there any law prohibiting discrimination or harassment in employment? If so, what categories are regulated under the law?

European Council Directive 2000/78/EC (27 November 2000), which establishes a general framework for equal treatment in employment and occupation, was implemented in Denmark by the Anti-discrimination Act.

In general, employers cannot discriminate against employees or applicants directly or indirectly on the grounds of age, disability, race, colour, sexual orientation, religious belief, political orientation or national, social or ethnic origin.

In addition, there are several pieces of legislation prohibiting discrimination due to gender, including the Equal Treatment Act, the Equal Pay Act and the Childcare Leave Act.

Enforcement agencies

What are the primary government agencies or other entities responsible for the enforcement of employment statutes and regulations?

There is no primary government agency responsible for the enforcement of employment regulation in Denmark. If there is a dispute between an employer and employee which cannot be resolved between the parties, the dispute would have to be determined by a court or by arbitration (subject to the jurisdiction clause). Industrial disputes involving trade unions would be determined by an industrial tribunal.

The Danish Ministry of Employment is responsible for policy formulation and the drafting of legislation in relation to labour law. This ministry is supported by the Working Environment Authority and the Danish Agency for Labor Market and Recruitment.

The Working Environment Authority is responsible for enforcing the Working Environment Act, which sets out various obligations relating to health and safety in the workplace. The Working Environment Authority has the power to inspect workplaces and can enter a workplace without a court order. If the Working Environment Agency identifies any breaches of working environment legislation, it can impose fines and penalties.

The Danish Agency for Labour Market and Recruitment is responsible for implementing and following up on employment policy in Denmark, including recruitment of foreign labour.

Worker representation

Legal basis

Is there any legislation mandating or allowing the establishment of employees’ representatives in the workplace?

In Demark, the legal basis for worker representation derives from both legislation and collective agreements. The representation of employee’s interests takes place takes place through the following:

  • workplace trade union representation;
  • co-operation committees (the Information and Consultation of Employees Act and collective agreements);
  • health and safety committees (the Working Environment Act), and;
  • employee participation at board level (the Companies Act).

 

Provisions regarding employee participation and works councils are contained in many of the collective agreements. The main agreement concerning employee participation is the Cooperation Agreement between the Danish Employers Confederation and the Danish Confederation of Trade Unions. According to the Cooperation Agreement, a works council must be established if the number of employees within a geographical unit of a company is 35 or more.

The Information and Consultation of Employees Act which implemented the EU Directive on informing and consulting employees, replicates the requirement for a works council to be established in a company with 35 or more employees.

If the employer is a multinational company under the scope of the EU Directive on European Works Councils, the Danish Act on European Works Councils will also apply. The Act on European Works Councils includes specific obligations for companies or groups employing at least 1,000 employees in Denmark and at least 150 employees in two other EU member states. The purpose of the Act is to improve employees’ rights in connection with information and consultation in enterprises undertaking activities in several member states.

Furthermore, pursuant to the Danish Working Environment Act there is a requirement to elect one or more health and safety representatives and establish a health and safety committee if the company employs more than 10 people. The number of representatives will be dependent upon the size of the organisation. Special rules apply to temporary or mobile work sites.

Employee elected representatives enjoy protection against dismissal and other detrimental treatment based on their status as employee representatives.

Powers of representatives

What are their powers?

Pursuant to the Information and Consultation of Employees Act, an employer is required to inform employees about the company’s development, working conditions, and business decisions. The Information and Consultation Act provides that employees have the right to be consulted on the above issues. The information and consultation rights, however, do not restrain an organisation’s power to make decisions without employee agreement.

Health and safety representatives are responsible for occupational health and safety in a company, together with the company’s management. The health and safety representative must help to ensure a good working environment and prevent health and safety problems. Health and safety representative are also responsible for promoting awareness of individual, and collective, health and safety issues with management and their colleagues.

Background information on applicants

Background checks

Are there any restrictions or prohibitions against background checks on applicants? Does it make a difference if an employer conducts its own checks or hires a third party?

Background checks are permissible in Denmark; however, they are subject to the rules contained within the General Data Protection Regulation (GDPR) and the Danish Data Protection Act.

Specific background checks such as criminal record checks and credit checks are permitted in specific circumstances, subject always to GDPR compliance, and regardless of whether the check is undertaken by the employer or a third party. If checks are undertaken by a third party, there may be a requirement to enter into a data processing agreement to ensure data is processed in compliance with the GDPR.

Credit checks are only permitted if they are relevant to the employee’s position, for example, if an employee holds a position of trust, or for those applying for specific positions such as financial controllers, finance managers and those who have other financial responsibility and/or access to a company’s funds. If the credit check is not justified then it will be unlawful. It should also be noted that the mere fact that an employee has access to company funds will not necessarily in itself be justification for a credit check. The employee’s consent is always required to carry out a credit check.

Employers must have a lawful basis to process information on a employees’/prospective employees’ criminal record. Lawful processing could, for example, include where the check is necessary for compliance with a legal obligation to which the employer is subject, for instance, where the employee will be in direct contact with children under the age of 15 years old as part of their job. Criminal record checks can also be undertaken where they are deemed necessary to protect the legitimate business interests of the company and are relevant to the role, for example, to ensure the safety of business and customer information where it is clear from the role that checking is required (ie, such as those in senior positions with financial responsibility (eg, managing directors and chief financial officers)).

In Denmark, private criminal record checks can only be obtained by the individual to whom the record relates to, and the check is done via the police. Therefore, it is the employee/prospective employee that must submit and obtain their own criminal record check.

Medical examinations

Are there any restrictions or prohibitions against requiring a medical examination as a condition of employment?

The Act on Use of Health Data in the Labour Market contains restrictions on the right to ask or use medical information as a condition of employment. Typically, an employer may only request such health data to determine if an applicant has a condition that will adversely impact their ability to undertake the role in question.

The use of medical examinations will only be permitted in very limited circumstances and for specific roles. Generally, this would be in situations where pharmaceutical companies work with various allergenic substances and prospective employees would be offered a medical examination to identify and highlight the potential the risk of developing allergies. If an employee agrees to undertake a medical examination, the results will be the employee’s ‘property’; thus, the information will not be disclosed to the employer, unless the employee consents to the disclosure.

The Act on Use of Health Data in the Labour Market does not regulate access to medical records or medical examinations that are aimed at determining whether an employee has the necessary abilities to perform the job; such examinations would generally require another legal basis. For example, the Medical Examination of Seafarers and Fishermen Order contains legal provisions that permit employers to seek medical information prior to employment, with the purpose of ensuring that employees are medically fit for duty on board and do not pose a danger to others.

Further, the Working Environment Act sets out a provision in which the labour minister may lay down regulation regarding medical examinations for employees in sectors or jobs where there are associated health and safety risks. Employees who, for example, may be exposed to a certain level of ionizing radiation during employment must undergo a medical examination in order to assess their suitability for the respective job.

Employers should therefore not, by default, submit all job applicants, or even those shortlisted, to medical questions and examinations and should only do so where there are established grounds for requesting such information.

An employer would only be able to refuse to hire an applicant based on medical information if the medical evidence suggested that the applicant could not undertake the role and/or there were genuine health and safety concerns.

Likewise, an employer would only be able to refuse employment if an applicant refused to submit to a medical examination if there is a legitimate ground for the employer requiring the information.

Employers should also be conscious of disability issues that may come to light in pre-employment medical screening and should be mindful of withdrawing a job offer, particularly if the disability does not prevent the candidate from undertaking the role in question. If a prospective employee has a disability, an employer will have an obligation to consider what adjustments could be made to ensure the applicant can undertake the role rather that refusing to hire them. A refusal to hire based on a disability could result in a disability claim.

Drug and alcohol testing

Are there any restrictions or prohibitions against drug and alcohol testing of applicants?

There is no explicit legislation or rules prohibiting, or even dealing with, drug and alcohol testing of employees or job applicants. However, like all other pre-screening tests or checks an employer will be required to comply with its obligations pursuant to the GDPR when undertaking drug or alcohol tests. The results of an alcohol or drugs test will be regarded as health data and will therefore be deemed sensitive or a special category of data pursuant to the GDPR.

In principle, an employer could ask an applicant to submit to drug and alcohol testing; however, the employer would need to demonstrate legitimate and reasonable grounds for doing so. This would likely be difficult at the pre- employment stage and will only be likely to be justified on health and safety grounds. The employer should ensure that an impact assessment is undertaken to look at the impact of the drug and alcohol testing on applicants and whether there are less intrusive ways in which the data could be captured.

In principle, an employer could refuse to hire an employee who does not submit to a test; however, the employer would have to should ensure that they have legitimate grounds for processing the data in the first place to do so.

Hiring of employees

Preference and discrimination

Are there any legal requirements to give preference in hiring to, or not to discriminate against, particular people or groups of people?

Employers cannot discriminate against employees or applicants directly or indirectly on the grounds of age, disability, race, colour, sexual orientation, religious belief, political orientation or national, social or ethnic origin. As of 1 July 2022, it is also prohibited to ask an employee about their age during the recruitment process. Given the general protection against discrimination, there is no legal requirement to take positive action (ie, affirmative action) in Denmark.

The Act on Gender Equality provides that public committees, commissions and similar bodies set up by a minister for the purpose of laying down rules or for planning purposes of importance to the society, should wherever possible have an equal composition of women and men. However, there is no legal requirement for such bodies to have an equal composition; the Act on Gender Equality instead contains procedural rules, which among other things, provides that authorities or organisations which suggest members of committees should suggest candidates of both genders. If more than one seat is to be filled an equal number of women and men must be suggested for the seat, and in the case of an uneven number of members, only one more of one gender than of the other gender may be suggested.

As per 1 January 2023, stricter requirements apply to state-owned companies, and certain larger private sector employers for setting targets and drawing up policies to promote a more equal gender distribution at management and board level.

Written contracts

Must there be a written employment contract? If yes, what essential terms are required to be evidenced in writing?

The law in this area was updated in 2023 by the new Employment Certificate Act and applies to employment relationships commencing on or after the 1 July 2023. The purpose of the legislation was to implement the European Directive on Transparent and Predictable Working Conditions (2019/1152) with the aim to create greater clarity and transparency in employment relationships.

Pursuant to the Employment Certificate Act, there is a requirement to provide employees who work more than three hours per week (calculated as an average over a four-week reference period) with a statement of written terms. The Employment Certificate Act also applies if no guaranteed paid hours are set prior to the commencement of the employment relationship.

The following information must be provided within the first seven days of employment:

  • name and address of employer and employee;
  • location of the workplace;
  • job title;
  • date of commencement of employment;
  • in the case of fixed-term contracts, the expected duration of the term;
  • the employee’s rights regarding holidays and holiday pay;
  • the length of the notice periods for both parties;
  • salary details, allowances, and other salary components (eg, pension contributions, along with salary payment dates);
  • normal daily or weekly working hours; and
  • details of which collective agreements or other agreements govern the employment relationship.

 

Furthermore, no later than one month after the employment relationship has commenced the employer must also provide the following information:

  • if the employee is an agency worker (an employee who works through an agency which provides employees to companies), the identity of the company which the employee performs work for;
  • rights of the employee with respect to paid holiday or other paid leave;
  • notice periods;
  • details of any training the employer offers;
  • indication of collective agreements or agreements governing the employment relationship; and
  • information relating to insurance schemes, etc, for which the employer is responsible.

 

An employer is also prohibited from preventing an employee from undertaking secondary employment, unless the secondary employment is incompatible with the existing employment relationship (eg, it is in competition or for health and safety reasons).

If an employer violates the provisions of the Employment Certificate Act, the courts can award compensation of up to 13 weeks’ salary (20 weeks if there aggravating factors). However, court practice shows that the average award will be up to 25,000 Danish kroner.

Fixed-term contracts

To what extent are fixed-term employment contracts permissible?

Fixed-terms contracts are permissible in Denmark and in principle there is no legal limit as to the duration or number of successive contracts. However, the Salaried Employees Act states that the prolongation of a fixed-term contract can only be justified on objective grounds, for example, a delay in a project deadline. If a fixed-term contract is prolonged more than once, it will generally be deemed an indefinite employment relationship.

Pursuant to the Act on Fixed-Term Employment, an employer is prohibited from treating a fixed-term employee less favourably compared to a permanent employees based on the grounds of their fixed-term status, unless the differential treatment can be objectively justified.

Probationary period

What is the maximum probationary period permitted by law?

The new Employment Certificate Act provides that a probationary period can be no longer than six months. However, this does not apply to employees covered by the Salaried Employees Act, the provisions of which state that probation periods can be no longer than three months and continue to apply.

The probation period for employees covered by a collective agreement will be catered for in the relevant collective agreement.

Classification as contractor or employee

What are the primary factors that distinguish an independent contractor from an employee?

There is no statutory definition of an independent contractor or an employee and therefore the factors distinguishing an employee from an independent contractor have been determined by the courts.

The definition is an important one as generally the employer will be liable for tax withholding obligations for employees, while there is no such withholding obligation for independent contractors. Furthermore, there is a general principle that an employer will normally be vicariously liable for the acts of its employees; however, not for those of an independent contractor.

The following factors would be considered by the courts in determining the nature of the relationship:

  • Mutuality of obligation: in an employment relationship the employer is obliged to offer work and the employee is obliged to undertake work. In an independent contractor relationship, the company will have no obligation to offer work and the contractor will have discretion to accept or reject work.
  • Personal service: this is a feature of an employment relationship, whereas an independent contractor will normally be able to appoint a substitute. An unfettered right of substitution is a compelling indicator of independent contractor status; however, it is not determinative.
  • Amount of control: in an employment relationship an employer will determine the way the work should be performed, the hours of work, etc, and managers will actively manage the performance of employees. A contractor will, on the other hand, be free to decide when and how the work will be undertaken.
  • Provision of equipment and uniform: in an employment relationship the company will provide all the necessary equipment for the employee to undertake the role. A contractor would be responsible for providing their own equipment.
  • Holiday entitlement: employees will accrue and be paid for holidays, whereas independent contractors will not.
Temporary agency staffing

Is there any legislation governing temporary staffing through recruitment agencies?

The Temporary Agency Workers Act governs the recruitment of agency workers through temporary staffing workers agencies and implemented the European Temporary Agency Workers Directive (2008/104/EC).

The Temporary Agency Workers Act ensures the principle of equal treatment between temporary agency workers and a company’s direct employees. The Temporary Agency Workers Act applies to all temporary agency workers who have a contract of employment with a Danish (or a foreign employment agency) and who are stationed by the employment agency to an end-user company in Denmark, on a temporary basis, to carry out work under the end user’s direction and supervision. In essence, for the Temporary Agency Workers Act to apply a tri-party relationship must exist.

The principle of equal treatment, pursuant to the Temporary Agency Workers Act, means that the employment agency must ensure that the temporary agency worker, during the assignment, has, as a minimum, the same terms and conditions of employment (with respect to working time, overtime work, breaks, rest periods, night work, holiday, public holidays and pay) as would have applied if the temporary agency worker had been employed directly by the end-user company to carry out the same work as the end-user company’s own employees.

The Act prohibits the temporary agencies’ use of successive stationing of the temporary agency worker without a justifiable reason. The prohibition is to ensure that no circumvention of the user company’s seniority-based terms of employment, if any, can take place. Moreover, the temporary agency worker is, upon request to the employment agency, entitled to receive information on the terms and conditions of employment which the temporary agency worker under the principle of equal treatment, has a right to during the stationing.

Foreign workers

Visas

Are there any numerical limitations on short-term visas? Are visas available for employees transferring from one corporate entity in one jurisdiction to a related entity in another jurisdiction?

There are no limitations on the number of short-term visas that can be granted.

Employees transferring from one jurisdiction to another who require a visa will need to obtain a visa under one of the visa schemes. It is possible for companies to speed the visa process up by being approved under the fast-track scheme. The fast-track scheme is aimed at larger companies who have a genuine need for highly qualified foreign employee from countries outside the EU/EEA or Switzerland. If the company has more than 10 full time employees and fulfils several other conditions, it can be certified to utilise the scheme.

If a company is approved under the fast-track scheme, then the foreign employee can get a provisional permit for a quick job start, providing, however, that the employee already has legal access to Denmark. If the employee does not have immediate legal access, a quick procedure for a permit is activated. Furthermore, the fast-track scheme gives the employee the possibility of alternately working in Denmark and abroad without loss of permit. There is a fee for applying for fast-track status.

On 17 November 2023, new rules were introduced that made it possible for foreign nationals to work in Denmark for short periods without a work and residence permit. Pursuant to the new rules, an individual must be employed in a company established abroad that is affiliated with a company in Denmark that employs at least 50 employees. The new rules allow an employee to work in Denmark for two separate work periods (of a maximum of 15 working days each) within a 180-day period. Between each work period the individual must stay outside of Denmark for at least 14 days. Furthermore, there is also the requirement that the individual must be able to enter and legally stay in Denmark, either as a citizen of a visa free country or because they have been issued a visa for the purpose of using the new exemption rule. There are certain limitations to these rules for work within certain sectors.

Spouses

Are spouses of authorised workers entitled to work?

If a worker has been granted a residence permit to work, it is possible for an accompanying family member to be granted a residence permit. An accompanying family is classed as a spouse, civil partner, cohabiting partner, child under the age of 18, or other family member. The general rule is that accompanying family members are entitled to work without having to apply for a work permit.

General rules

What are the rules for employing foreign workers and what are the sanctions for employing a foreign worker who does not have a right to work in the jurisdiction?

The Danish immigration framework is complex and consists of national, international and EU law, in addition to various trade agreements. The provisions relating to the employment of foreign nationals stem from the Danish Aliens Act and the Danish Integration Act with associated orders.

The rules applicable to the employment of foreign nationals will be dependent upon their nationality and skills.

EU citizens are free to work in Denmark without a work permit, subject to certain conditions. EU citizens working in Denmark must, however, register to work in Denmark to receive an EU residence document. Citizens of Finland, Iceland, Norway, and Sweden are free to enter, live, study and work in Denmark without a visa or residence permit.

Generally, other foreign nationals will require a work and residence permit to reside and work in Denmark. There are several work and residence schemes in Denmark, the most common being the fast-track scheme, the pay limit scheme and the positive list scheme.

The pay limit scheme provides a work and residence permit based on the salary and terms and conditions of employment. To obtain a work and residence permit under this scheme, an individual must be employed with an annual salary that meets the minimum pay limit threshold, which is regulated annually on 1 January. The 2024 pay limit amount is 487,000 Danish kroner. In addition, there are other conditions for this scheme, including that the salary must be paid into a Danish bank account and employment terms must correspond to Danish standards.

The positive list scheme can be used by skilled workers and those with higher education to obtain a work permit. To obtain a visa under this scheme, the job that the individual will undertake must appear on one of the positive lists (the skilled worker list or the higher education list)

The positive lists for skilled works and individuals with higher education are updated every year based on the professions for which there is a shortage of qualified individuals in Denmark. There is no pay limit requirement for a visa pursuant to this scheme; however, salary and terms and conditions must correspond to Danish standards for the that role. In addition, the salary must be paid into a Danish bank account. Certain specific roles will also require Danish authorisation.

The consequences of employing a foreign worker who does not have the right to work in Denmark can result in a fine, and in rare cases, imprisonment. The fine level is between 10,000 Danish kroner to 30,000 Danish kroner per employee per month in which the breach has occurred. The fine level of fine will be determined by the facts of the case and whether there are any aggravating factors. In addition, the employee can also face fines, imprisonment, and deportation with a ban on future entry to Denmark and other member states.

In addition, if a foreign company intends to temporarily perform work or services in Denmark, a notification must be made to the Register of Foreign Service Providers (RUT). Failure to register with RUT will result in fines being issued by the Danish Working Environment.

Resident labour market test

Is a labour market test required as a precursor to a short or long-term visa?

In general, there is no resident labour market test in Denmark as a precursor to a short- or long-term visa.

However, certain conditions apply for individuals with special qualifications, for example, specialised chef roles. To obtain a visa as a specialised chef, pursuant to the special individual qualification visa, the individual must have special individual qualifications necessary to carry out the job that they have been offered. In addition, the chef and the offered job must be related in such a close way that others cannot readily carry out the job. This test would therefore require some analysis of the local job market.

Terms of employment

Working hours

Are there any restrictions or limitations on working hours and may an employee opt out of such restrictions or limitations?

The Danish Working Environment Act and the Act on Implementation on Parts of the Working Time Directive, regulate working hours and both Acts implement the provisions of the Working Time Directive.

The Working Environment Act stipulates that an employee is entitled to 11 hours of rest in any 24-hour period. The Act provides that an employee is entitled to one day and night off (35 hours in total) per week.

The Act on Implementation on Parts of the Working Time Directive states that during a period of four months, the average working weekly (seven days) hours may not exceed 48 hours. In special limited circumstances, employers and employees may choose to opt out of the Working Environment Act.

In addition, the Act on Implementation on Parts of the Working Time Directive stipulates that employees working more than six hours per day are entitled to a break. The break must be long enough for the employee to receive adequate rest.

Many collective agreements provide for other arrangements for working hours and reference periods for the calculation of working hours.

New legislation will come into force on 1 July 2024 which will introduce a requirement for employees to register their working hours. The purpose of this legislation is to ensure compliance with rules regarding rest periods and maximum weekly working hours because of the EU Court of Justice’s decision in Case 55/18. There are exemptions to the time registration requirement, and the exemptions will apply to (1) employees whose working hours cannot be measured or determined in advance, due to special features of the work performed, or (2) employees who have the authority to make independent decisions or who undertake managerial functions.

In addition, the new legislation also introduced the possibility of an op-out from the maximum 48-hour working rules in collective agreements. Employees will have to give their consent to the opt out and the average weekly working hours must not exceed 60 hours, calculated over a four-month reference period. Provided that employers adhere to general principles for the protection of employees’ safety and health, it can also be agreed in collective agreements, that the reference period can be extended up to 12 months. The extended reference period, however, must be based on objective and technical reasons and for the organisation of work.

The option to utilise the ‘opt out’ is limited to employees covered by collective agreements covering those who undertake on-call work and who perform critical societal functions, such as hospital employees, utilities, etc.

An employee who has entered an ‘opt-out’ agreement can retract their consent at any time with reasonable notice with no consequences.

Overtime pay – entitlement and calculation

What categories of workers are entitled to overtime pay and how is it calculated?

There is no statutory right to overtime per se, and overtime will generally be regulated in collective agreements. The collective agreements vary on the calculation of overtime and what allowances should be paid.

Salaried employees not covered by a collective agreement, will have overtime regulated in the individual employment contract.

Overtime pay – contractual waiver

Can employees contractually waive the right to overtime pay?

Agreement can be made with employees not covered by a collective bargaining agreement to waive overtime. It is common practice for salaried employees’ contracts to include a provision that overtime will be expected and will not be compensated for, as generally overtime will have been considered when setting the salary.

The general principle is that it will not be permissible to waive the right to overtime with an employee covered by a collective bargaining agreement. Any agreement in breach of a collective bargaining agreement will generally be unenforceable and risks a dispute with the union and the imposition of financial penalties.

Vacation and holidays

Is there any legislation establishing the right to annual vacation and holidays?

The Danish Holiday Act covers all employees in Denmark and entitles employees to 25 days holiday per year. The holiday accrual year runs from 1 September to 31 August (the following year) and holiday accrues at 2.08 days per month to be taken consecutively. The period for taking holiday runs from 1 September to 31 December (the following year); meaning the holiday accrual year (12 months) and the holiday taking year (16 months) are different periods.

Salaried employees maintain their normal monthly salary for periods of holiday. However, hourly-paid employees receive holiday allowance of 12.5 per cent calculated on all salary components which is paid into the holiday fund (FerieKonto). Collective bargaining agreements may specify different holiday allowance percentages and requirements to make payments to a different holiday fund.

Sick leave and sick pay

Is there any legislation establishing the right to sick leave or sick pay?

The Salaried Employees Act governs the right to sick leave and pay for salaried employees. In Denmark, sickness absence is deemed a genuine absence and salaried employees are entitled to full salary for periods of absence.

Different rules will apply for employees covered by a collective bargaining agreements and rules for sick leave and payment will be dealt with by the relevant collective bargaining agreement.

Other employees (those not covered by a collective agreement or the Salaried Employees Act) may be entitled to sickness benefit paid during the first 30 days of sickness. The employer pays the sickness benefit to the employee and claims reimbursement from the municipality.

Leave of absence

In what circumstances may an employee take a leave of absence? What is the maximum duration of such leave and does an employee receive pay during the leave?

Pregnancy leave, maternity leave, paternity leave and parental leave

Pregnant women are entitled to four weeks’ pregnancy leave prior to the expected date of birth. The pregnancy leave period is shortened if the employee gives birth prior to the end of the four weeks. If the employee gives birth later than expected, the maternity leave is extended accordingly. The mother also has a further entitlement of 10 weeks of maternity leave following the birth of the child.

The father (or the co-mother) is entitled to two weeks of continuous paternity leave immediately after the birth.

The mother and the father then have an additional entitlement to 32 weeks of parental leave each. The parental leave can be extended by eight or 14 weeks, meaning that 40 or 46 weeks’ parental leave can be taken.

 

Government benefits during leave

Parents are jointly entitled to maternity benefit for 48 weeks following the child's birth. Out of these 48 weeks of leave with maternity benefit, each parent, is in principle, entitled to 24 weeks of leave with maternity benefit. The 24 weeks of leave with maternity benefit is split between the parents, with a total of 11 weeks earmarked for each parent; the remaining 13 weeks can be freely transferred between the parents.

 

Period of remuneration from the employer

The Salaried Employees Act contains rules on the right of female salaried employees to receive half pay for four weeks before the expected birth date and 14 weeks after the birth. Male employees and employees who are not covered by the Salaried Employees Act, are not legally entitled to any salary from the employer during periods of leave.

 

Reimbursement

Many employers choose to pay a salary to employees, due to the rules on reimbursement. To the extent that an employer pays a salary during absence due to pregnancy, as regards childbirth maternity and parental leave, the employer is entitled to a reimbursement. This consists of the maternity benefit that the employee would have been entitled to from the public sector (Udbetaling Danmark) and the maternity fund which the employer contributes to (for instance, barsel.dk).

It is mandatory for all companies to pay contributions to a maternity fund.

 

Other leave of absence

There are also additional rights to leave including leave for care for a child who needs to be hospitalised, caring for a family member who is disabled, seriously ill or dying, bereavement leave if a child under 18 dies, and five days’ annual carer’s leave to look after, help or accompany children, parents, spouse/partner or another person living in the same household.

Any right for the employee to receive a salary during such leave will depend on the type of leave, whether the employment is covered by a collective bargaining agreement and/or whether the employee is employed privately or in the public sector.

Mandatory employee benefits

What employee benefits are prescribed by law?

There are no benefits prescribed by legislation and the provision of benefits will be regulated by the individual contract and/or the relevant collective bargaining agreement.

Part-time and fixed-term employees

Are there any special rules relating to part-time or fixed-term employees?

Danish law promotes the principle of equal treatment for employees on fixed-term contracts and part-time workers. The Fixed-Term Employment Act and the Part-Time Employment Act applies the equal treatment principle for workers who are not covered by a collective bargaining agreement.

The Fixed-Term Employment Act regulates fixed-term employment relationships. Fixed-term contracts are permissible in Denmark; however, the general principle is that they can only be renewed once, following which the employment will be deemed permanent, unless there are objective reasons for the continuous renewals (ie, such as a project extension). In addition, the Act prohibits employers from treating fixed-term workers less favourably than permanent workers in connection with employment terms, unless such treatment can be objectively justified.

The Part-Time Employment Act prohibits direct and indirect discrimination on the grounds of an employee’s part time working. The Act also provides for a compensatory award if an employee is dismissed for requesting to work part time.

Part-time employees who are salaried employees and who work more than eight hours a week will also enjoy protection pursuant to the Salaried Employees Act.

Public disclosures

Must employers publish information on pay or other details about employees or the general workforce?

The Act on Equal Pay for Men and Women requires companies with 35 employees, and at least 10 employees of each sex within the same job category, to compile reports every three years for the relevant subset of employees. This requirement applies to both public and private sector employers. The statistics compiled by the employer should be reported to Statistics Denmark. There is no prescriptive form for the reporting of the statistics; however, the report should contain such detail that it is possible to undertake a meaningful comparison of wages between men and women. Alternatively, pursuant to section 5(4) of the Act on Equal Pay for Men and Women, an employer may, with employee agreement, prepare a report containing a description of the terms which are significant to gender pay in the company including details of any specific equal pay orientated initiatives the company undertakes/will undertake. The Act on Equal Pay for Men and Women provides for penalties if companies fail to undertake their reporting obligations; however, enforcement is rare.

Companies with shares in a regulated market must prepare an annual remuneration report, providing a summary of individual members of the management and board of directors’ renumeration packages for the most recent financial year.

Post-employment restrictive covenants

Validity and enforceability

To what extent are post-termination covenants not to compete, solicit or deal valid and enforceable?

The Restrictive Covenants Act regulates the use of post-employment restrictions.

The Restrictive Covenants Act completely prohibits the use of non-solicitation clauses for employees and any attempt to include a clause in the contract will be unenforceable.

The use of non-compete and non-solicitation of customer clauses, are permissible, subject, however, to the prescriptive rules as set out in the Restrictive Covenants Act.

Non-compete clauses are only enforceable for employees who hold a ‘very trusted position’. The employment contract must specify the responsibilities which justify the application of a non-complete clause. Non-compete clauses will generally be justified where the employee will have access to business-sensitive information which could be used by a competitor to gain an advantage. Non-compete clauses are unenforceable if a company terminates an employee’s employment for redundancy or reorganisation, or if the termination is unjust.

Non-solicitation clauses are enforceable provided that they relate to customers/suppliers with whom the employee had a business relationship within the 12 months prior to the termination date. Upon termination, the employee must be presented with a list of customers/suppliers to who the non-solicitation clause applies to.

The terms of the restrictions should be clearly set out in the contract of employment and non-compete and non-solicitation restrictions are only enforceable once an employee has been employed for six months.

A non-compete or non-solicitation clause can only be imposed for a maximum of 12 months; however, a six-month limit applies if the contract contains both a non-compete and a non-solicitation clause.

Managing directors are, in the main, not covered by the Restrictive Covenant Act and therefore the terms of any post-termination restrictions can be agreed between the parties in the contract of employment. Managing directors, are, however, covered by the provision that a non-compete clauses will not apply if the managing director is dismissed on the grounds of redundancy/re-organisation.

Post-employment payments

Must an employer continue to pay the former employee while they are subject to post-employment restrictive covenants?

The Restrictive Covenant Act provides that an employer is obligated to pay compensation to the employee for the period of any restrictive covenants; if no compensation is payable, the restrictions will be unenforceable. Managing directors are exempt from this provision.

Compensation is made up of a one-off minimum payment of two month’s salary (the minimum compensation), payable with the final salary payment, plus monthly payments for the remainder of the restrictive period. The compensation is calculated at either of 40 or 60 per cent of the employee’s total salary. The amount varies depending on the length of the restrictive covenant and whether more than one restriction is imposed. The compensation is reduced if the employee finds alternative employment during the restrictive period.

The one-off payment represents compensation for the first two months and is payable regardless of the employee taking up new employment elsewhere.

 If the employee is bound by a single restriction lasting up to six months, the employee is entitled to compensation of 40 per cent of salary, reduced to 16 per cent (from and including the third month following the effective date of termination) if the employee takes up alternative employment during the restrictive period.

If the employee is bound by a single 12-month restriction, or a combined restriction of six months, the employee is entitled to a minimum of 60 per cent of salary reduced to 24 per cent if the employee takes up employment elsewhere during the restrictive period.

Employees covered by restrictive covenants are obligated to find suitable employment during the restrictive period and will lose the entitlement to compensation from the third month if it can be established that the employee has failed to search for alternative employment.

Liability for acts of employees

Extent of liability

In which circumstances may an employer be held liable for the acts or conduct of its employees?

Employers will be vicariously liable for the acts of their employees where the employee’s behaviour can be linked to the performance of the employees’ duties. Employers may have a defence to such claims if it can be evidenced that (1) the employee was acting without authorisation (express/implied) from the employer, (2) the employee placed themselves outside their normal duties or they acted for purposes not connected to work. The courts, however, are generally reluctant to discharge an employer from its liability.

Taxation of employees

Applicable taxes

What employment-related taxes are prescribed by law?

Employers in Denmark have three main withholding tax obligations.

Income tax (A-tax) must be deducted at source at the applicable rates as set by the Danish tax authority (SKAT).

In addition, all employees must pay labour market contributions equating to 8 per cent of their salary. This must be deducted at source and paid by the employer.

Lastly, employees are employers are obligated to pay into the Danish labour market supplementary pension scheme (ATP). The employer is required to pay two-thirds of the total amount of ATP with the employee responsible for the remaining third. The ATP level for 2024 for full-time employees is 297,000 Danish kroner.

Employee-created IP and confidential business information

Ownership rights

Is there any legislation addressing the parties’ rights with respect to employee inventions?

The Employee Invention Act regulates the rights in connection with employee inventions. The general principle is that inventions created by the employee as a result of the work performed during the course of their employment will be assigned to the employer.

Employees will only be entitled to compensation for the assignment of an invention if the value of the invention exceeds what the employee may be reasonably expected to produce, based on the terms of employment. In considering the level of compensation the courts will consider (1) the value of the invention, (2) the significance of the invention for the employee, (3) the employee’s terms of employment and (4) the significance of the employees’ services for the invention.

If the employee’s role and duties are to come up with new ideas and solutions and, thus there is an element of invention in relation to the employee's job content, then the court will consider this as a material factor when determining whether an employee is entitled to compensation.

Trade secrets and confidential information

Is there any legislation protecting trade secrets and other confidential business information?

The Trade Secrets Act came into force in 2018, implementing the Trade Secrets Directive. The Trade Secrets Act contains rules on the protection against illegal acquisition, use and disclosure of trade secrets.

The Trade Secrets Act prohibits an employee from making or attempting to gain knowledge or information on trade secrets in an improper manner or seeking to make any gain from such knowledge.

The unlawful acquisition, use and disclosure of trade secrets is punishable by a fine or imprisonment.

Data protection

Rules and employer obligations

Is there any legislation protecting employee privacy or personnel data? If so, what are an employer’s obligations under the legislation?

The General Data Protection Regulation (GDPR) and the Danish Data Protection Act apply to the processing of employee data. Thus, it is the same set of rules governing the processing of employee data as the processing of all other personal data.

Companies must adhere to the principles relating to processing of personal data pursuant to article 5 of the GDPR and the processing must be lawful in accordance with article 6 and 9 of the GDPR.

The Danish Data Protection Act contains certain rules which are specific to processing data in employment relationships. It follows from section 12(1) that processing of employee data can take place if the processing is necessary to comply with the data controller’s or the data subject’s labour law obligations or in accordance with other rights as stipulated in legislation or collective agreements. Further, it follows from section 12(2) that the processing of employee data can also take place if the processing is necessary for the purpose of the data controller’s legitimate interest, unless the data subject’s interests or fundamental rights and freedoms take precedence.

Additionally, other Danish legislative provisions contain rules relating to the processing of employee data. For example, pursuant to section 5(2) in the Danish Anti-Discrimination Act, an employer may not request information about an applicant’s age during a job application process.

Privacy notices

Do employers need to provide privacy notices or similar information notices to employees and candidates?

Employers are obliged to provide information to employees and candidates regarding the processing of personal data in accordance with article 13 and 14 of the GDPR. There are no rules on the shape or form of such privacy notice; however, the information must be provided in a clear and easily understandable manner. An employer must also be able to document that the employee has received the information on data processing.

To comply with the above duty to provide information, it is important that the employer takes active steps to provide the information to the employee or candidate. It will not be sufficient to have the information on a website, intranet or similar, which the employee must find on their own.

Employee data privacy rights

What data privacy rights can employees exercise against employers?

Employees have the same GDPR rights as other data subjects. This means that employees are entitled to access the personal data held by an employer in accordance with article 15 of the GDPR. Employees also have the right to rectification (article 16 of the GDPR), the right to erasure (article 17 of the GDPR), the right to restriction of processing (article 18 of the GDPR), the right to data portability (article 20 of the GDPR), the right to object (article 21 of the GDPR) and the right to not be subject to a decision based solely on automated processing (article 22 of the GDPR).

Business transfers

Employee protections

Is there any legislation to protect employees in the event of a business transfer?

Denmark implemented the Acquired Rights Directive by virtue of the Employees Rights on Transfer of Undertakings Act.

The Employees Rights on Transfer of Undertakings Act contains mandatory provisions on information and consultation. There is a duty to inform, and if measures are proposed, to consult, affected employees about a business transfer. The consultation obligation only arises if the measures are proposed in connection with the transfer. The transferee and transferor can be joint and severally liable for a failure to inform and consult.

Pursuant to the Employees Rights on Transfer of Undertakings Act, a transferee assumes all rights, obligations and liabilities towards employees in the same way as the old employer (transferor). Therefore, employees have the right to transfer on the same, or comparable terms, with continuity of employment. The transfer of employment happens automatically and if an employee does not wish to transfer, they must object to the transfer following which their employment will terminate by reason of the employee’s resignation.

The general principle is that all rights and obligations transfer, including collective bargaining agreements. However, the Employees Rights in Transfer of Undertakings Act does allow for the transferer to renounce the collective agreement which must be done within prescribed timelines. The consequence of renouncing a collective agreement is that the transferee will not be bound by the collective agreement; however, the terms of the collective agreement will form part of the employees’ individual terms and conditions until the expiry of the relevant collective agreement.

The dismissal of employees for reasons related to a business transfer will be unjust unless the transferer can show that it had an economic, technical, or organisational reason entailing changes in the workforce.

Termination of employment

Grounds for termination

May an employer dismiss an employee for any reason or must there be ‘cause’? How is cause defined under the applicable statute or regulation?

The general principle according to Danish law is that an employer has the right to decide if an employment relationship should be terminated. However, this general principle has been eroded over time, by legislation and provisions of the collective agreements.

There is formal concept or definition of ‘cause’ in Danish law; however, many of the collective agreements contain provisions that a dismissal should be ‘fair’. Section 4(3) of the basic agreement between the Danish Employers Confederation (DA) and the Danish Confederation of Trade Unions (LO), for example, states that a termination of employment will be considered unfair if there is no reasonable cause, either in the conditions of the employer, or in the behaviour of the employee, or in any other conditions relating to the employee. This rule has been used for similar provisions in collective agreements not covered by DA/LO.

A similar provision is also contained within section 2(b) of the Salaried Employees Act, meaning that the dismissal of a salaried employee will be unfair if an employee is dismissed for reasons which (1) cannot be reasonably considered as caused by the circumstances of the employer or (2) by the behaviour or circumstances of the employee.

According to the Salaried Employees Act, a salaried employee must have one year’s service to be able to make a claim for unjust termination. Many collective agreements contain services requirements for employees to make an unjust termination claim.

In addition, there are statutory provisions which protect certain individuals against dismissal. For example, it is unlawful to dismiss an employee who is pregnant or has taken/due to take a period of pregnancy-related leave (including parental/paternity leave) or to dismiss an employee because of their union membership.

Notice requirements

Must notice of termination be given prior to dismissal? May an employer provide pay in lieu of notice?

Notice must be given prior to dismissal unless the employee is dismissed for gross misconduct. Notice periods are governed by either collective agreements, the employment contract, or the Salaried Employees Act.

The Salaried Employees Act contains different notice periods for the employer and employee. Employer notice periods are between one and six months based on the employee’s length of service. An employee’s notice period according to the Salaried Employees Act is one month, unless prolonged. To the extent that the employee’s notice is prolonged, the employer’s notice according to the Salaried Employees Act is prolonged by the same period.

The Salaried Employees Act does permit a shorter employer’s notice period for termination in circumstances where an employee has been off sick for 120 days within a 12-month period. Certain conditions apply to rely to this rule, including that the rule must be specifically included in the employee’s contract.

It is permissible to make a payment in lieu of notice; however, this is not common practice in Denmark. The more common approach, if an employer does not wish for the employee to work during the notice period, is to release the employee from the obligation to work during the notice period. During the release period the employment relationship subsists, meaning that the employee receives all normal pay and benefits and is also bound by the loyalty duty, preventing the employee from working for a competitor. During the release period the employee is free to take up alternative employment and the employer can offset any salary earned from other employment after the third month of the notice period.

Dismissal without notice

In which circumstances may an employer dismiss an employee without notice or payment in lieu of notice?

An employer can dismiss an employee without any notice obligations if the employee is in gross or serious breach of contract. There is no statutory definition of what constitutes a serious breach of contract, and this will be determined on a case-by-case basis; however, behaviour such as, fraud, theft, harassment, breach or loyalty or confidentiality obligations would be considered a fundamental breach of contract.

Generally, an employer should terminate the employment for a fundamental breach without delay to ensure there is no argument that the employer has acquiesced the breach.

Severance pay

Is there any legislation establishing the right to severance pay upon termination of employment? How is severance pay calculated?

There is no general legislation establishing an employee’s right to severance pay upon termination of employment. Many collective agreements contain severance pay provisions in the event of termination of employment.

The Salaried Employees Act also contains severance payment provisions and salaried employees are entitled to statutory severance payments if they have been continuously employed by the same employer for at least 12 years.

The severance payment according to section 2(a) of the Salaried Employees Act are as follows:

  • length of service 12–17 years: two months’ pay; and
  • length of service 17 years+: three months’ pay.

 

In the case of unjust termination, the courts can award compensation of up to one to six months’ salary (depending on length of service), in accordance with section 2(b) of the Salaried Employees Act.

Procedure

Are there any procedural requirements for dismissing an employee?

There is no requirement to have prior approval from a government agency to terminate an employee’s employment.

Collective bargaining agreements may set out the procedure to be followed in a dismissal situation. However, apart from in a mass redundancy situation, there are no statutory procedures to follow for dismissing an employee.

The courts will, however, consider the overall procedure followed in a dismissal situation when assessing whether a dismissal was fair. In cases of less serious conduct, employees should generally receive a warning about their behaviour/performance and be given an opportunity to improve before a dismissal takes place.

Employee protections

In what circumstances are employees protected from dismissal?

Salaried employees and most employees covered by a collective agreement have the right not to be unfairly dismissed.

Certain employees are protected from dismissal by virtue of their status, for example, due to membership or lack of membership of a union (Freedom of Association in the Danish Labour Market Act), being an elected trade union representative or health and safety representative (Working Environment Act) or being an employee board member (Companies Act).

In addition, there are other legislative provisions which make employee dismissals unlawful that are related to either the circumstances of the employees or the employee’s protected characteristics. These legislative provisions include discrimination (Anti-Discrimination Act), unequal pay (Equal Pay Act) and unequal treatment (Equal Treatment for Men and Women Act), pregnancy, paternity and parental leave (Childcare Leave Act), national service (Leave of Absence During National Service Act), transfer of undertakings (Employees’ Rights on Transfer of Undertakings Act).

Mass terminations and collective dismissals

Are there special rules for mass terminations or collective dismissals?

The rules in the Mass Redundancies Act will apply if an employer proposes to dismiss, within a 30-day period: (1) at least 10 employees in a company which normally employs more than 20 but less than 100 employees, or (2) at least 10 per cent of the total number of employees employed in the company if the company employs at least a 100 but less than 300 employees, and (3) at least 30 employees in a company that normally employs at least 300 employees.

If the Mass Redundancies Act applies, employers are obligated to negotiate with employee representatives. The aim of the negotiations is to, if possible, avoid or mitigate the number of redundancies. Employers must provide the employee representatives with all relevant information relating to the dismissals and to provide the employee representatives with a written statement of the reasons for dismissals, the number of employees to be made redundant, the total number of employees who are normally employed by the company and the period in which the dismissal will be affected. A copy of this information should also be sent to the Regional Labour Market Council.

According to the Mass Redundancies Act, collective dismissals must not take place until 30 days after the employee representatives have been informed of the redundancy situation. If the number of dismissals is at least 50 per cent of the total number of employees, the 30-day period is extended to eight weeks.

Collective agreements may provide for other rules.

Class and collective actions

Are class or collective actions allowed or may employees only assert labour and employment claims on an individual basis?

If several employees have similar claims against an employer, they can choose to pursue the case as a class action instead of bringing individual lawsuits. The conditions for filing a class action are:

  • that the basis of the claims of the same;
  • that the claims can all be pursued in Denmark;
  • that the court where the class action is brought is competent to deal with one of the claims;
  • that the class action is deemed to be the most appropriate way to deal with the claims;
  • that the participants in the class action can be identified and notified of the matter in an appropriate manner; and
  • that a group representative can be appointed.

 

The court will assess whether the above conditions are met.

Mandatory retirement age

Does the law in your jurisdiction allow employers to impose a mandatory retirement age? If so, at what age and under what limitations?

It is generally not permissible to impose mandatory retirement ages in Denmark and such provisions are prohibited in accordance with the Anti-Discrimination Act. However, certain exemptions apply to this provision, and mandatory retirement ages are permissible for judges, priests, military personnel and employees in the correctional service.

Dispute resolution

Arbitration

May the parties agree to private arbitration of employment disputes?

Employers and employees may agree to private arbitration in the event of an employment dispute. If arbitration is to be used this should be expressly provided for in the contract.

Employee waiver of rights

May an employee agree to waive statutory and contractual rights to potential employment claims?

The general principle is that statutory rights cannot be waived and any attempt to do so in an employment contract would be invalid.

However, it is permissible upon termination of employment for an employer and employee to enter into a separation agreement in which the employee waives any right to pursue a claim against the employer in consideration for compensation. Compensation can be a severance payment or another form of consideration such as no offsetting of salary during the release period, outplacement, or a reference.

The terms of a separation agreement should be fair and reasonable to ensure that the employee does not later to seek to have it set aside based on unjust terms.

Limitation period

What are the limitation periods for bringing employment claims?

According to section 4 of the Limitation Act, the main limitation period for employment claims is five years from the date of a dismissal or alleged breach. The main limitation period can be extended by a maximum of 10 years in circumstances where the employee has no knowledge of the claim during the main five-year period.

Update and trends

Key developments and emerging trends

Are there any emerging trends or hot topics in labour and employment regulation in your jurisdiction? Are there current proposals to change the legislation?

The Danish Parliament has approved the abolition of the great prayer day from 1 January 2024. This means that the former public holiday will now become a normal working day.

The legislation introduces a salary supplement for employees who receive a fixed monthly salary in recognition of the employees’ annual working hours being increased. Employees with a fixed salary will receive a fixed supplement of 0.45 per cent of their annual salary, calculated on the fixed annual salary, pension contributions and other allowances and benefits. Bonuses and commission payments will not be included in the calculation.

The salary supplement is accrued monthly and can be paid monthly or settled together with the holiday supplement (ie, twice a year with the salary for the months of May and August). If the salary supplement is not paid monthly, it will have to be settled proportionally upon termination of employment.

Hourly paid employees who work on the great prayer day will receive their usual hourly rate for the working hours in the normal way.

Coronavirus

What emergency legislation, relief programmes and other initiatives specific to your practice area has your jurisdiction implemented to address the pandemic? Have any existing government programmes, laws or regulations been amended to address these concerns? What best practices are advisable for clients?

Law stated date

Correct on

Give the date on which the information above is accurate.