Hiring in Denmark: Employment law essentials for first-time employers

Denmark is an attractive destination for international businesses. It has a highly educated workforce, a strong reputation for innovation and established clusters in industries including renewable energy, life sciences, engineering and technology.

But hiring in Denmark can also challenge some of the assumptions international employers bring with them.

There is no statutory minimum wage, for example. Many employment conditions are shaped by collective bargaining agreements rather than a single labour code. And while Denmark is known for labour market flexibility, employers still need to navigate specific requirements around contracts, working hours, holiday, termination and payroll.

For businesses considering expansion and preparing to make their first Danish hire, understanding this framework early can make market entry considerably smoother.

Why is hiring in Denmark different?

One of the most important concepts for international employers to understand is the Danish labour market model, often described as flexicurity.

The model combines a relatively flexible labour market with a strong social safety net and active labour market policies. Employers generally have more flexibility to adjust their workforce than in some European jurisdictions, while employees benefit from unemployment protection and collectively negotiated employment conditions.

Collective bargaining is therefore particularly important.

Rather than relying on legislation to determine every aspect of employment, Danish employers and trade unions negotiate collective bargaining agreements, known as overenskomster. These agreements can establish conditions covering areas such as:

• Minimum rates of pay
• Standard working hours
• Overtime
• Occupational pensions
• Sick pay
• Notice periods
• Other employment benefits
• Employer and employee details
• Place of work
• Job title or description
• Employment start date
• Duration for temporary employment
• Salary and payment frequency
• Normal working hours
• Holiday entitlement
• Notice and termination provisions
• Applicable collective bargaining agreements

This leads to one of the first surprises for many international employers.

5 things you should know before hiring in Denmark

Employers need to understand Denmark's written employment contract requirements, the role of collective agreements, working time and holiday rules, termination protections and payroll obligations. Companies recruiting employees from outside the EU may also need to navigate Danish residence and work permit requirements.

Here are five employment law essentials to understand before making your first hire.

1. Understand Denmark's employment contract requirements

Written employment documentation is an important part of Danish employment compliance.

Under Denmark's Employment Certificates Act (Ansættelsesbevisloven), employees who meet the relevant conditions must receive written information explaining the essential terms of their employment.

Following changes introduced in 2023 to implement the EU Directive on Transparent and Predictable Working Conditions, employers must provide certain essential information shortly after employment begins, with additional information following within the statutory timeframe.

Depending on the employment arrangement, documentation can include:

The legislation also introduced additional protections around areas such as probation, parallel employment, mandatory training and predictable working conditions.

For international employers, the practical lesson is straightforward: prepare a Denmark-specific employment contract before the employee starts work.

Contracts should also clearly identify any collective agreement that applies.

Although international businesses may operate in English, employers should consider whether Danish-language documentation is appropriate so employees can clearly understand their employment conditions.

2. Collective agreements can be as important as legislation

Understanding Danish employment law means understanding what legislation doesn't determine.

Collective agreements play a major role in establishing everyday employment conditions. A company covered by an agreement may therefore have obligations beyond the statutory minimum.

For example:

A 37-hour working week, for example, is common in Denmark, but employers should distinguish common practice or collectively negotiated conditions from statutory requirements.

The same applies to occupational pensions. Denmark has statutory pension arrangements such as ATP, but occupational pension contributions are frequently determined through collective agreements or employment contracts.

Before making a first hire, employers should therefore ask three questions:

1. Does a collective bargaining agreement apply to our business or employee?
2. What additional employment conditions does it establish?
3. How do those conditions affect our proposed salary and benefits package?

This assessment is particularly important when budgeting for expansion. Looking only at base salary can underestimate the true cost of employing someone in Denmark.

3. Plan for working time, holiday and time registration

Working time is another area where statutory requirements and Danish workplace norms overlap.

Under Danish working-time rules, average weekly working time is generally limited to 48 hours, including overtime, calculated over the applicable reference period.

Employees are also entitled to minimum daily and weekly rest periods.

In practice, many Danish employees work around 37 hours per week, often because this is established through collective agreements.

Employers also need a system for recording working time. Since 1 July 2024, Danish employers have been required to operate an objective, reliable and accessible system that enables employees' daily working time to be registered, subject to limited exemptions.

For a company entering Denmark, this means time tracking should be part of the employment infrastructure from the beginning rather than something introduced after the workforce grows.

How much annual leave do employees receive in Denmark?

Under the Danish Holiday Act (Ferieloven), employees generally accrue five weeks of paid holiday per year, equivalent to 25 days for an employee working five days a week.

Denmark uses a concurrent holiday system, allowing employees to take holiday relatively soon after it is earned.

Employers should understand:

• How holidays are accrued
• Whether employees receive salary during holiday or holiday pay
• How holiday supplements apply
• Rules governing the main holiday period
• Whether a collective agreement provides additional entitlements

These details should be reflected correctly in contracts, payroll and HR systems.

4. Know the rules around notice and termination

Denmark's flexible labour market does not mean employers can terminate employment without considering local rules.

For many office-based and professional employees, the Salaried Employees Act (Funktionærloven) is particularly important.

Employees covered by the Act can include people working in areas such as administration, sales, technical roles and certain supervisory positions, provided the statutory conditions are met.

Employer notice periods generally increase with length of service.

Different rules can apply during a valid probationary period and to employees outside the scope of the Salaried Employees Act.

Collective agreements may also establish separate requirements.

Employers should additionally consider whether a dismissal has an appropriate justification and whether protections relating to discrimination, parental leave, employee representation or other protected circumstances apply.

Larger-scale redundancies can trigger additional consultation and notification requirements.

The practical takeaway is not that termination in Denmark is unusually difficult. Rather, employers should identify which legal and contractual framework applies to the employee before making a termination decision.

5. Build payroll and employer contributions into your hiring budget

The cost of hiring in Denmark extends beyond gross salary.

Employers need processes for withholding and reporting employee taxes and administering statutory contributions.

One important component is the 8% labour market contribution (AM-bidrag), which is deducted from employee income before other income tax calculations.

Employers may also encounter contributions and schemes including:

• ATP - Denmark's supplementary labor market pension
• AES - Occupational injury-related contributions
• AUB — Employer contributions supporting vocational training
• Barsel.dk — Parental leave-related employer contributions
• Holiday administration

Several employer contributions are administered through Denmark's Samlet Betaling system.

The exact cost of employment will depend on factors including salary, occupation, collective agreement coverage, pension arrangements and benefits.

For expansion planning, HR and finance teams should therefore model the total employment cost, rather than comparing Danish salaries with salaries in an existing market.

What should companies decide before making their first Danish hire?

Employment law is only one part of the expansion decision.

Before issuing an offer, CEOs and HR leaders should determine how the company intends to employ people in Denmark.

Questions to consider include:

• Are we establishing a long-term Danish operation?
• Do we need a Danish subsidiary or branch?
• How many employees do we expect to hire?
• Do we have local payroll and HR infrastructure?
• Does a collective agreement apply?
• Will we recruit Danish/EU employees or sponsor talent from outside the EU?
• Is this a permanent expansion or an initial market test?

Companies employing people directly may need appropriate Danish registrations and payroll infrastructure.

Businesses temporarily sending employees to Denmark should separately investigate whether Denmark's Register of Foreign Service Providers (RUT) requirements apply.

What about employees from outside the EU?

Nationality matters when planning immigration.

Nordic and EU/EEA citizens operate under different mobility rules from employees arriving from outside the EU/EEA.

For eligible non-EU employees, Denmark offers several work permit routes. These include the Pay Limit Scheme for employees earning above a specified annual threshold and the Fast-Track Scheme available through qualifying SIRI-certified employers.

Salary thresholds and immigration requirements are updated periodically, so employers should check the current rules published by the Danish Agency for International Recruitment and Integration (SIRI) before making an offer dependent on immigration approval.

Should you establish an entity or use an Employer of Record?

Not every company hiring in Denmark needs the same operating model.

Establishing a Danish entity can make sense when a business is committed to a substantial, long-term presence and expects to build a larger local workforce.

An Employer of Record (EOR) in Denmark can provide an alternative when a company wants to employ people in country without immediately establishing its own local employing entity.

The EOR becomes the legal employer and typically manages areas such as:

• Local employment contracts
• Payroll
• Statutory deductions and contributions
• Benefits administration
• Employment compliance
• Relevant immigration and mobility support

The client company continues to manage the employee's day-to-day responsibilities and performance.

An EOR can be particularly useful when a business is testing a new market, making a small number of strategic hires or mobilising people for a defined project. An entity may become more appropriate as the workforce and commercial presence mature.

Neither model is automatically better. The right choice depends on hiring volume, expansion strategy, risk profile, cost and how quickly the organisation needs people on the ground.

Airswift has supported international organisations with workforce deployment in Denmark, including complex energy projects requiring recruitment, mobility and employment support.

That experience reinforces an important lesson: successful expansion is rarely just about finding talent. The employment infrastructure around that talent matters too.

Frequently asked questions about hiring in Denmark

Is there a statutory minimum wage in Denmark?

Denmark does not have a statutory national minimum wage.

Instead, minimum rates of pay are commonly established through collective bargaining agreements between trade unions and employer organisations.

That does not mean employers can ignore local salary expectations. Before hiring, businesses should determine whether a collective agreement applies to their organisation, industry, or employees, and benchmark compensation against Danish market practice.

It is one reason simply adapting an employment contract from another European market can create problems.

What is the standard working week in Denmark?

A 37-hour week is common, particularly under collective agreements. Statutory working-time rules generally limit average weekly working time to 48 hours, including overtime, over the applicable reference period.

How much annual leave do Danish employees receive?

Employees generally accrue five weeks of paid holiday per year under the Danish Holiday Act.

Can a foreign company hire employees in Denmark without establishing an entity?

Potentially. One option is to use an Employer of Record, which legally employs workers in Denmark while the client organisation manages their day-to-day work.

Do non-EU employees need a work permit?

In many cases, yes. Denmark offers several residence and work permit routes, including the Pay Limit and Fast-Track schemes. Employers should check current SIRI requirements for the individual employee.

Preparing for your first hire in Denmark

Denmark's employment system is flexible, but it rewards employers that understand how legislation, collective agreements and workplace practice fit together.

Before making a first hire, establish which rules apply to the role, prepare compliant employment documentation, understand the total employment cost and decide whether direct employment or an EOR better supports your expansion strategy.

Getting those foundations right makes it easier to focus on the part that matters most: finding the people who can make your Danish expansion successful.

For a deeper look at payroll, benefits and employment conditions, explore Airswift's Guide to Hiring in Denmark.

Organisations who are ready establish their workforce can also connect with our Employer of Record specialists to find out more about how we can support your expansion into Denmark.