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  • By Travis Kliever
  • Updated March 4, 2024
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Travis Kliever
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Travis is a global business development advisor. He has spent the last 14 years supporting business establishment and development in North America, Southeast Asia, and throughout the world. With multiple degrees from the University of Oregon, Travis currently splits his time between the US, and Bali, Indonesia. At RemotePad, Travis writes about remote work, hiring internationally and PEO/EOR business models.
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Employer of Record (EOR) in Denmark

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A Denmark EOR enables you to hire specialist employees in Denmark quickly and in full compliance with the law.  Read our in-depth guide to learn how a Denmark EOR works and which Denmark EOR is best for your business.

What is a Denmark Employer of Record (EOR)?

With a thriving Northern European economy, Denmark is a popular destination for businesses looking to expand into Europe or hire specialist talent. 

An Employer of Record (EOR) allows you to hire employees in Denmark without setting up an entity or subsidiary there. The Denmark EOR is responsible for hiring, payroll management, benefits administration, and ensuring compliance with local labor laws. This leaves you the freedom to focus on your core business activities. 

The Top Three Denmark EORs

HorizonsWith Horizons, clients companies can easily hire employees in Denmark, in full compliance with the law. With in-house recruitment and visa support, Horizons offers a complete Denmark hiring solution.
Swapp AgencySwapp Agency is a leading EOR, specializing in employment support in the Nordic countries. In addition to EOR, they provide relocation and co-working support, ensuring you have everything you need to set up your Denmark team.
RemoteRemote is a respected global Employer of Record, hiring employees in more than 100 countries, including Denmark. They also offer a jobs/talent acquisition website known as Remote Talent. 

Denmark at a Glance

Key facts for anyone thinking of hiring in Denmark include:

  • Population: Denmark has an estimated population of 5.8 million.
  • Currency: The official currency is the Danish Krone (DKK).
  • Capital: Copenhagen is the capital city.
  • Languages Spoken: Danish and English are widely spoken.
  • GDP: Denmark’s GDP stands at approximately USD 350.1 billion.

Why Choose an EOR in Denmark?

Why would a company use an EOR solution, rather than setting up their own subsidiary in Denmark?

  1. Streamlined Expansion: An EOR in Denmark can expedite your expansion process by handling all aspects of hiring and compliance, ensuring a smooth transition into the Danish market.
  2. Local Expertise: EOR providers have extensive knowledge of Danish labor laws and employment regulations, reducing the risk of legal complications.
  3. Focus on Core Business: By outsourcing HR and payroll functions to an EOR, you can concentrate on your organization’s primary objectives without getting bogged down by administrative tasks.
  4. Access to Danish Talent: EORs often have an extensive network in Denmark, making it easier for your business to tap into the best local talent.

Understanding Employment in Denmark

As in any country, hiring in Denmark is affected by local employment laws and attitudes.

A European concept, sometimes called “flexicurity,” characterizes employment in Denmark — emphasizing flexibility with job security. Furthermore, the Danish labor force comprises nearly 50% of the population, a higher percentage than in many other countries.

Danish employees have access to welfare programs and benefits in case of unemployment, making it an attractive destination for workers and businesses.

Key Employment Laws in Denmark

To successfully navigate the Danish job market, it’s essential to be aware of key employment laws, including:

  • Danish Salaried Employees Act: This comprehensive law covers all white-collar employees and includes regulations on hiring, contracts, termination, benefits, and other employment aspects.
  • Danish Act on Restrictive Covenants: This law introduces the concept of restrictive covenants in employment contracts.
  • The Danish Holiday Act governs the number of holidays employees are entitled to, including compulsory and accrued holidays.
  • Differential Treatment Act: This law prohibits discrimination based on age, skin color, disability, and more.

Timings, Holidays, and Leave Policies in Denmark

Understanding work hours, holidays, and leave policies is crucial for both employers and employees:

  • Statutory Working Hours: The standard workweek in Denmark is 37 hours, typically from Monday to Friday between 6:00 a.m. and 6:00 p.m., with a 30-minute lunch break.
  • Rest Period: Breaks are mandatory for shifts exceeding 6 hours, and the length varies depending on the purpose of the break.
  • Public Holidays: Denmark observes several national holidays, including New Year’s Day, Good Friday, and Christmas Day, among others.
  • Maternity and Paternity Leave: Denmark offers up to 50 weeks of parental leave, with options for mothers and fathers to share.
  • Sick Leave and Annual Leave: Employees are entitled to 30 days of paid sick leave and 2.08 days of paid leave per month, accumulating to five weeks of paid holidays annually.

Contractors vs. Full-time Employees

Denmark’s well-educated workforce includes a substantial percentage of the population, making various employment types available. Full-time employees receive comprehensive benefits under the Danish Salaried Employees Act, but part-time, temporary, and agency workers are also recognized and entitled to similar benefits. The distinction among employment types is relatively minimal in Danish law.

Scope of Negotiating Terms

Employees in Denmark have the right to negotiate their compensation, a standard step in the recruitment process. Negotiations are common, especially for higher-level positions where candidates’ preferences often influence the final compensation package.

Probation and Termination

In Denmark, there are no specific rules regarding the duration of probation, which is typically defined in employment contracts and rarely exceeds six months. Termination in Denmark is relatively straightforward compared to other European countries. Unless protected by a fair dismissal clause or the Salaried Employees Act, employees can be terminated without notifying a trade union or employment agency. Specific protections apply to employees on parental leave, minority groups, and union representatives.

Payroll Compliance and Taxes

Setting up payroll in Denmark must comply with local laws and include required benefits and provisions. Taxation is a critical aspect, with specific regulations to follow:

  • Taxation ID: The SE Number, issued by the Danish Customs and Tax Administration (SKAT), is essential for tax purposes.
  • Choosing a Payroll System: When choosing a payroll system, one should consider local benefit and provision requirements and employee types.
  • Acquisition of Employee Information: Secure IT systems are necessary for efficiently storing and retrieving employee data.
  • Employer Taxation: Corporate tax in Denmark is 22%.
  • Employee Taxation: Income tax rates vary, with two structures based on income levels.
  • Sales Tax: Denmark imposes a 25% sales tax.

Recruitment in Denmark

Recruitment in Denmark follows a process that has become increasingly standardized across countries, thanks to the Internet and online job portals. Here’s a step-by-step overview of hiring in Denmark:

  1. Job Description: The process typically begins with developing a detailed job description, which is crucial for attracting the right candidates.
  2. Job Posting: The job description is posted on the company’s website, job portals, and professional networks like LinkedIn.
  3. Application Screening: HR teams review applications as they arrive or after the submission deadline.
  4. Selection Process: Shortlisted candidates may undergo written tests, technical interviews, and interviews with HR teams and senior management.
  5. Background Checks: The final candidates undergo background checks before extending formal offers.

Hiring candidates online through job portals and social media is common in Denmark, but the sheer volume of applicants can overwhelm HR teams. This is where an EOR partner becomes invaluable, handling hiring, contract development, onboarding, and other HR functions.

EOR Alternative: How to Set Up a Subsidiary in Denmark

Those who need a more substantial presence in Denmark, might consider setting up a local entity or subsidiary.

Setting up a subsidiary in Denmark is relatively straightforward, involving the following steps:

  1. Choose Business Type: Decide on the type of business, whether partnership, private, or public.
  2. Select a Unique Name: Choose a distinctive name for your subsidiary.
  3. Register with Danish Business Authority: Register your company to obtain a CVR number.
  4. VAT Registration: If your business exceeds revenue thresholds, register for VAT.
  5. Start Hiring: With your subsidiary established, you can hire employees in Denmark.

Note, however, that this process can be much more expensive than using an EOR, and requires your ongoing management of payroll and compliance. 

Choose the Best Denmark EOR for You

Expanding your business into Denmark offers incredible opportunities but comes with complex labor laws, taxation, and compliance requirements. An Employer of Record in Denmark can be your trusted partner, simplifying the process, ensuring compliance, and allowing you to focus on your core business activities.

FAQs

An EOR in Denmark is a professional service provider that acts as your local employer, handling hiring, payroll, and compliance with Danish labor laws on your behalf.

Employing an EOR streamlines your expansion process, provides local expertise, and allows you to focus on your core business while ensuring compliance.
Important Danish employment laws include the Danish Salaried Employees Act, the Act on Restrictive Covenants, and the Danish Holiday Act, among others.
Hiring in Denmark involves developing a job description, posting it on job portals, screening applications, conducting interviews, and performing background checks.
Establishing a subsidiary in Denmark allows your business to tap into a thriving economy, a highly skilled workforce, and a strategic European location.

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