Denmark

Employer of Record & PEO in Denmark

Hire & manage teams remotely in Denmark without a local entity. We handle HR compliance, payroll & taxes so you can focus on your business.

Native Language

Danish

GDP

$414.55 billion

Payroll Frequency

Monthly

Capital city

Copenhagen

GDP per capita

$70,769

Internet

Fast

Currency

Danish Krone (DKK)

Timezone

UTC +1

English Speaking

>80%

Population

5.82 Million

Employment Cost

High

Cost of Living

High

How NNRoad Employment & PEO Services Work?

NNRoad provides professional employment organization (PEO) & employer of record (EOR) services for companies looking to hire and manage teams in Denmark. Registering a legal entity in Denmark as a means for employment is an outdated practice that takes both time (months) and money (thousands of USD). NNRoad’s employer of record and PEO services enables companies to hire and manage employees in Denmark in full accordance with local labor laws in under a week.

Employer of Record in Denmark

Employer of Record (EOR) services are for companies who do not have a legal entity in Denmark, but who want to hire in Denmark. Employment and full liability are outsourced to NNRoad.

➊ You interviews & select the candidates you want to hire in Denmark.
➋ NNRoad arranges a local labor contract with your new employee.
➌ NNRoad arranges a service contract between your organization & NNRoad.
➍ NNRoad organizes, manages & processes  payroll in Denmark in full compliance with local employment laws.
➎ You maintain a normal working relationship and manage your team in Denmark while NNRoad manages payroll & HR liabilities.

  • Acting as employer of record
  • Signing of Employment Contract
  • On-boarding via dedicated customer portal, including background screening processes
  • Off-boarding processing/leave management
  • Assist and layout implications of Funktinærloven. Funktinærloven includes regulations on termination, maternity and pregnancy leave, commission, bonus pay-out, illness and on competition clauses and non-solicitation clauses
  • Complete payroll solution and statutory benefit administration

Payroll & PEO in Denmark

Professional Employment Organization (PEO) services are for companies who have a legal entity in Denmark, and want to outsource their payroll. Employment liabilities are shared between your organization and NNRoad.

➊ You interviews & select the candidates you want to hire in Denmark.
➋ NNRoad organizes, manages and processes payroll for your local employees in full compliance with local employment laws.
➌ You maintain a normal working relationship and manage your team in Denmark while NNRoad manages payroll & HR compliance.

  • Registering the necessary company and personnel information for payroll calculation in the payroll software and system
  • Monthly/Quarterly/Yearly Payroll Processing:
    • Holiday pay (mandatory)
    • ATP, AES, AUB Etc. (mandatory)
    • AES (mandatory)
  • Year-End Adjustment and Annual Declaration, if applicable

Advantages of NNRoad's Denmark Employment Services

  1. With EOR/PEO solutions you can manage client meetings, sales, quality control, marketing, R&D and customer support without a local company in Denmark.
  2. Pay as you go
  3. ​​Dedicated account manager – One point of contact for multiple locations
  4. Employment & termination processing
  5. Complete payroll solution and statutory benefit according to local laws
  6. With EOR/PEO solutions you can hire staff while waiting for the registration of your company in Denmark.
  7. NNRoad only works with professional locally licensed partners
  8. GDPR compliant
  9. NNRoad manages employee record timekeeping, bonus and allowance, expenses claims and personal leaves according to local law.
  10. NNRoad provides foreigner VISA application services, if needed

Employment Compliance in Denmark

Taxes & Payroll in Denmark

Employee Income Taxes:

An individual may be taxed in Denmark as if he or she has a full tax liability to Denmark, a limited tax liability to Denmark, or according to specific expatriate rules or work force hiring requirements.  

Tax Brackets

Taxes 

Income basis 

Tax rate 

State taxes: 

 

 

Bottom tax 

Personal income 

12.10% 

Top tax 

Personal income 

15% 

Local taxes: 

 

 

Municipal tax (average) 

Taxable income 

24.982% 

Labour market tax 

Personal income 

8% 

Share tax: 

 

 

DKK 0 to 57,200 

Share income 

27% 

More than DKK 57,200 

Share income 

42% 

Employer Costs in Denmark

Employer Contributions:

ATP (Pension) 

DKK 2,272 per year 

AUB 

DKK 2,791 per year 

AES 

DKK 215-5.157 per year, depending on the type of work and risk to the employee 

FIB (Financing of ATP contribution for those without a job due to sickness, maternity leave, or unemployment) 

DKK 592 per year 

Maternity leave fund 

DKK 1,150 per year 

AFU 

DKK 48 per year 

Occupational injury insurance 

Costs vary between DKK 1,176 and DKK 24,441 depending on the field of work that the insured employee is employed within, the number of employees that the employer intends to insure, and the specific insurance company. 

Employee Contributions:

ATP (Pension) 

DKK 1,135.80 per year 

Labor market contributions 

8% of the employee’s salary 

Working Hours and Overtime in Denmark

Working hours in Denmark are generally agreed upon in advance, and for the vast majority of areas, typical working hours are set at 37 hours per week. As an employee your working time must be more than eight hours per week to be a part of the Employers’ and Salaried Employees’ Act (in Danish: Funktionærloven). Working hours are primarily between Monday to Friday in the time frame between 6:00 am to 6:00 pm. 

Overtime is common in some jobs, and it can result in compensatory leave, which can be used to complement the 5-week yearly leave, or it can be paid as part of one’s salary. It’s critical that the contracts spell out clearly if overtime labor will be compensated or paid out as salary, as well as how overtime will be handled. 

Mandatory Contributions in Denmark

ATP Livslang Pension 

As a company, you must pay ATP contributions for your employees. Your employees will be eligible for ATP Livslang Pension if you report and pay ATP contributions. You pay two-thirds of the contribution, and the employee contributes the remaining third from his or her paycheck. The money goes to the ATP Livslang Pension, which will be given to the employee when he or she reaches the state retirement age. 

Arbejdsgivernes Uddannelsesbidrag (AUB) 

When you educate trainees, you ensure a high professional level on the job market as an employer. AUB’s mission is to provide work placements for students enrolled in vocational education programs. 

Labour Market Insurance (AES) 

The Labour Market Insurance (AES) evaluates industrial accident claims, pays compensation for occupational diseases, and collects AES payments through Samlet Betaling. 

AES collaborates with doctors, insurance companies, municipalities, trade unions, and lawyers to acquire data and guarantee the most up-to-date facts on which to make an industrial injury decision. Accidents at work must be reported by the employer, and occupational disorders must be reported by doctors and dentists. 

The Danish Labour Market Fund for Posted Workers 

The Danish Labour Market Fund for Posted Workers is a jointly and severally funded system that ensures that posted employees are paid while working in Denmark. All foreign employers who provide services to Danish workers must pay into the Fund in the same way as Danish firms do. This allows The Fund to pay wages and salaries to seconded employees who have not yet received their due salary. 

Maternity Leave Fund 

All Danish employers are obligated to contribute to the maternity leave fund. There are public as well as private maternity leave funds. 

Termination Laws and Severance Pay in Denmark

An employer must always have a serious reason for firing an employee; such as unfitness, cooperative problems or a condition in the organization which warrants dismissal (for instance work shortage, restructuring or cost-savings).  

If an employer is unsatisfied with an employee’s efforts, it is customary for the employer to issue one or more warnings so that the employee can fix the condition with which the employer is unhappy. 

The employment contract must specify the notice time that applies to both the employee and the employer. If the job is covered by a collective bargaining agreement, the termination notice for both parties usually follows the terms of the agreement. 

The employer’s notice period is stipulated as per the Act on Salaried Employees according to the following scheme: 

Duration of employment 

Notice period 

0-6 months 

1 month 

6 months – 3 years 

3 months 

3-6 years 

4 months 

6-9 years 

5 months 

9+ years 

6 months 

Agreed probationary period of max. 3 months 

14 days 

Agreed temporary assignment of max. 1 month 

No notice 

Severance pay

Although there is no comprehensive statutory rule on severance compensation, salaried employees who have been continuously employed for 12 to 17 years are entitled to a severance pay of one to three months’ salary if they are fired. 

Public Holidays in Denmark

  • New Year’s Day – January 1
  • Maundy Thursday – April 14
  • Good Friday – April 15
  • Easter – April 18
  • General Prayer Day – May 13
  • Ascension day – May 26
  • Pentecost – June 5
  • Whit Monday – June 6
  • Christmas Day – December 25-26

Paid Leave in Denmark

Employees are entitled to five weeks of vacation per year, which equates to 25 days. For each month of employment in a calendar year, employees are entitled to 2.08 days of paid vacation. Vacation will be accrued from September 1st to August 31st of the following year (12 months) and used between September 1st and December 31st of following year (16 months). 

The Danish Holiday Act has two alternative pay structures for vacation time. An employee has the option of receiving compensation during the holidays (i.e., payment of the regular salary or wages plus a 1% holiday supplement), or a holiday allowance of 12.5% of the employee’s salary or wages (blue-collar). The holiday allowance must be deposited with FerieKonto before it can be distributed to the employee. 

Employment Contract in Denmark

Employment Contract

Employers must provide employees with a formal employment contract within one month of the start of employment, if the employment is for more than one month and the employee’s weekly working hours are at least eight hours on average, according to the Employment Contract Act. 

As a minimum, the contract must include details on the following: 

  • Name and address of the employer and the employee; 
  • Address of the workplace; 
  • Description of the job content, or the designated title, rank, position or job category; 
  • Date of commencement of employment; 
  • Duration of employment (if the employment is not of indefinite duration); 
  • Entitlement to paid holiday, including whether the employee is entitled to holiday with pay or holiday allowance; 
  • Length of termination notice; 
  • Compensation and time of payment; 
  • Daily or weekly working hours; 
  • Any CBA that applies to the job position. 

The most frequent type of employment is that of a full-time employee, which typically entails a 37-hour work week and five weeks of yearly leave. An employee can also be hired on a part-time basis, which means they will work fewer hours per week than a full-time employee in a similar capacity. 

In Denmark, there are various types of temporary employment opportunities, including temporary labor and project work, among others. The only difference between this and regular employment is that the individual is only hired for a specific amount of time, which is defined in advance and contained in their contract. 

Probation Period

Probationary periods of up to three months are permitted for salaried staff. The employment can be terminated with 14 days’ notice by the employer and without notice by the employee during the probationary period, if the notice period expires during the probationary period, which must be clearly agreed upon. 

Types of Leaves in Denmark

Sick Leave

During sick leave, salaried employees are entitled to their full compensation, including bonuses. Employees are entitled to 30 days of paid sick leave per year. Under an individual employment agreement or the equivalent collective agreement, an employee who is not covered by the Salaried Employees Act may be entitled to compensation while on sick leave. According to the Danish Act on Sickness Benefits, an employee who has no statutory or contractual entitlement to pay during sick leave may be eligible to sickness benefits. 

The first 30 days of sickness are paid by the employer if the employee has been employed for eight weeks and worked at least 74 hours. After the employer period, if the relevant conditions are met, the municipality will reimburse or cover the sickness benefit, including that the employee has been employed and worked for at least 240 hours in the previous six calendar months, and that the employee has worked for at least 40 hours in at least five of those months. 

The sick pay is determined by the employee’s hourly wage and weekly working hours. Sickness benefits are currently paid at a rate of DKK4,460 per week, or DKK120.54 per hour. 

Maternity and Paternity Leave

From four weeks before expected labor to 14 weeks after childbirth, female paid employees are entitled to 50% of their wages during maternity leave. Employees may be entitled to full pay during some of their maternity leave, depending on specific employment agreements or collective bargaining agreements. Employers who pay maternity leave salaries may be eligible for reimbursement through the Danish government’s Udbetaling Danmark. Employees must have been employed for at least 13 weeks and 120 hours to be eligible for maternity benefits. 

Biological fathers and employees (male or female) who are legally, but not biologically, the child’s parents are entitled to two weeks of paid paternity leave within 14 weeks of the birth of their child. 

Immigration Laws in Denmark

Denmark has different work visas and permits for work. These apply mainly to citizens outside of the European Union. They need to apply for a visa to stay for up to 90 days and if they want to stay longer, they need a residence permit.

Citizens of Nordic nations such as Finland, Iceland, Norway, and Sweden do not need a work or resident permission to enter the country.

Citizens of the European Union (EU) and the European Economic Area (EEA) also don’t need a visa to live, work, or study in Denmark. However, they would need to meet the immigration rules set by the Danish Immigration Service and the Danish Agency for International Recruitment and Integration.

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