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The employment relationship
Country specific laws
What laws and regulations govern the employment relationship?
The main sources of Danish employment law are:
- collective bargaining agreements;
- individual employment contracts; and
- case law.
Who do these cover, including categories of worker?
Different types of worker are usually distinguished by the type of work which they perform. A rough distinction can be made between white collar employees (eg, salaried employees), blue collar employees and managing directors.
White collar employees are covered by the Salaried Employees Act, which covers only this type of employee. A white collar employee can, for example, be an individual who works in trade, is engaged in buying, selling or office work, or whose job requires technical or clinical assistance.
In many cases, white collar employees are also covered by a collective bargaining agreement.
No acts govern only blue collar employees. The terms and conditions of the blue collar employment relationship are therefore covered by mandatory legislation applying to all types of employee, collective bargaining agreements and individual employment contracts.
Typically, managing directors are not subject to mandatory legislation or collective bargaining agreements. The terms and conditions of their employment relationships are set out in an individual employment contract.
Are there specific rules regarding employee/contractor classification?
An employee is an individual who is obliged to perform services in a dependent working relationship. The work performed by the employee is bound by instructions regarding working time, place of work and details of work, which are issued by the employer. The employee is integrated into the working environment, with the use of work space, tools, company premises and facilities.
By contrast, a contractor or freelancer works independently and is not integrated into the principal’s working environment. A contractor is typically paid for a specific piece of work. The extent to which an individual is bound by instructions is indicative of whether a freelance worker is really self-employed or is in fact an employee. A contractor would normally be registered with a CVR number (unique identifier for a business in Denmark's Central Business Register) and issue an invoice for work completed.
Must an employment contract be in writing?
Yes, this follows from the Employment Certificates Act. All employers must provide employees with a contract describing 10 specific employment conditions, as well as all material terms.
The employee is entitled to tax-free compensation if the employment contract does not contain the required information.
Are any terms implied into employment contracts?
A duty of loyalty is implied in all employment relationships. The employee must be loyal and is not allowed to perform any acts which could potentially be harmful to the employer’s business or compete with the employer. This also applies during the notice period, even if the employee is put on gardening leave. This rule applies regardless of whether any post-employment restrictive covenants apply.
Are mandatory arbitration/dispute resolution agreements enforceable?
Not taking into account collective bargaining agreements – which have their own rules regarding dispute resolution – a mandatory dispute resolution can be agreed in employment contracts and would be considered enforceable overall, unless it is considered to be unfair. Since arbitration – unlike the court system – must be paid for by the parties and cannot be appealed, such provisions are valid only in chief executive officer contracts.
How can employers make changes to existing employment agreements?
Smaller changes can be implemented with a short notice period of, for example, 14 days.
As regards significant changes, the employer must give notice corresponding to the employees individual notice period. This applies to changes in salary, work descriptions, working hours and workplace, among others. The parties can agree on the changes to have effect immediately (or within a shorter notice period).
Is a distinction drawn between local and foreign workers?
Local and foreign workers must be treated equally.
Non-EU and non-EEA residents require a residence permit to be employed.
Foreign employees posted to work in Denmark by a foreign company temporarily providing a service in Denmark are covered by the Danish Act on Posting of Workers. This means that the employee is covered by the rules of the country that the employee is posted from. However, the employee is assured some minimum rights concerning working conditions. The posted employee has the same rights as Danish citizens to:
- health and safety;
- workplace discrimination;
- equal rights and pay for men and women; and
- some regulations on working hours.
Further, the employee is assured the minimum rights arising from the Holiday Act if the holiday regulations in the home country are less generous.
Foreign employees working directly for a Danish company have the same rights as Danish workers. The rights depend on whether the foreign employee is covered by an individual contract, the Salaried Employees Act or a collective bargaining agreement.
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