An Employer of Record (EOR) acts as the legal employer for workers, handling HR responsibilities like payroll, taxes, and compliance, while the company directs the employees’ day-to-day tasks. This setup allows businesses to hire globally without establishing a local entity.
Hiring workers from Denmark offers benefits due to their high level of education, technical skills, and strong work ethic. Denmark is recognized for its “flexicurity” concept, which combines flexibility with job security. The country’s workforce is known for its productivity, innovation, and work-life balance.
Employment in Denmark has shown positive trends in recent years. According to the Danish government, the labor force comprises nearly 50% of the Danish population, which is higher than in most other countries. This presents significant opportunities for businesses looking to expand into the Danish market or tap into its skilled workforce.
To use an EOR in Denmark, there are 6 basic steps to follow to ensure proper setup:
- Find talent to hire in Denmark
- Compare using an EOR to setting up a legal entity in Denmark
- Get the information needed from your talent
- Choose an EOR provider with expertise in Denmark
- Communicate your hiring needs to the EOR
- Have the EOR set up the contracts and hiring procedure
An EOR manages payroll, taxes, and benefits administration, ensuring compliance with local laws and regulations, thus simplifying the employment process for companies.
Different labor laws in Denmark, such as those governed by collective bargaining agreements (CBAs), must be considered when hiring remotely. The hiring process in Denmark involves identifying talent, ensuring compliance with local employment laws, and executing contracts, typically facilitated by an EOR for companies without a local presence.
1. Find talent to hire in Denmark
To find talent to hire in Denmark, businesses should explore a variety of channels, emphasizing both local and global platforms. Some popular job boards and recruitment channels in Denmark include:
- Jobindex
- Jobnet
- Work in Denmark
- LinkedIn (which has a strong presence in Denmark)
Specialized recruitment agencies can also provide tailored solutions for industries requiring specific expertise. Partnering with career centers at top Danish universities can benefit entry-level positions or internships.
When searching for talent, consider Denmark’s strong sectors, such as renewable energy, biotechnology, and IT. Many Danish professionals are highly skilled, multilingual, and adaptable, which can benefit international businesses.
2. Compare using an EOR to setting up a legal entity in Denmark
When considering hiring employees in Denmark, you need to weigh the options of using an Employer of Record against setting up your legal entity. An Employer of Record offers a quicker, less complex route to hiring local staff, bypassing the need for a formal company presence. This approach suits companies looking to test the Danish market or expand quickly without significant upfront investment.
An EOR manages all local employment laws, tax, and compliance issues, assuming responsibility for hired employees. This setup allows companies to start operations in weeks, compared to the months required to establish a legal entity.
While setting up a legal entity in Denmark is relatively straightforward compared to some countries, it still involves complex registration processes and requires a deeper understanding of local laws and tax regulations. Although it can be more cost-effective for large-scale, long-term presence, it requires significant upfront investment and ongoing maintenance.
In comparison, using an EOR is generally less expensive. It involves less risk, making it a suitable option for small to medium-sized businesses or those in the initial stages of market exploration. It eliminates the need for a local expert or dedicated legal and tax teams, as the EOR handles these aspects.
Comparison of Employer of Record (EOR) vs. Setting Up a Legal Entity in Denmark
| Factor | Employer of Record (EOR) | Setting Up Legal Entity in Denmark |
|---|---|---|
| Setup Time | Weeks | Months |
| Initial Cost | Low | High (significant upfront fees) |
| Ongoing Cost | Moderate (EOR fees + employee costs) | Variable (operational costs, compliance, etc.) |
| Complexity | Low (EOR handles most administrative tasks) | Moderate (relatively straightforward but requires local expertise) |
| Control over Operations | Limited (company directs daily work, EOR handles employment) | Full (complete control over all aspects of business) |
| Compliance Management | Handled by EOR (payroll, taxes, social security) | Company Responsibility (requires understanding of local laws) |
| Language Barrier | Managed by EOR | Less of an issue (English widely spoken) |
| Scalability | Highly Flexible (easy to add or remove employees) | Less Flexible (changes may require legal procedures) |
| Local Expertise Required | Minimal (EOR provides guidance) | More extensive (need for local legal and tax advisors) |
| Suitable for | Market testing, small-scale operations | Long-term presence, large-scale operations |
| Risk | Lower (EOR assumes employer liabilities) | Higher (company bears all legal and financial risks) |
3. Get the information needed from your talent
To hire employees in Denmark, you’ll need their personal information, employment contract details, and tax-related information. Remember, it’s important to collect this data before the employee starts working.
Typically, you’ll need the following essential information:
- Employee’s full name
- Address
- Date of birth
- CPR number (Central Person Register number, which is the Danish equivalent of a social security number)
- Bank account details for salary payments
- Educational qualifications and work history
Additionally, you’ll need to provide a comprehensive job description, including title, duties, and place of work. In Denmark, while a written employment contract is not legally required, it’s strongly recommended that one be provided. Employees are legally entitled to receive, in writing, certain terms and conditions of employment no later than one month after the employment begins.
4. Choose an EOR provider with expertise in Denmark
When choosing an EOR provider to work with in Denmark, selecting one with deep expertise in the Danish market and a strong understanding of local labor laws is crucial to ensure compliance and smooth business operations. Consider the following factors:
- Experience managing employee onboarding, payroll, and legal compliance in Denmark
- Proven track record of working successfully with companies similar to yours
- Range of services offered, including visa and work permit support, benefits management, and payroll processing
- Technology platform and data security measures
- Pricing structure and transparency
- Commitment to staying up-to-date with Danish employment laws
Choose an EOR provider demonstrating a strong understanding of Danish employment practices, including the importance of collective bargaining agreements (CBAs) and the concept of “flexicurity.” Ensure they can provide comprehensive support for all aspects of employment in Denmark.
What are the best EOR providers to use in Denmark?
| EOR Provider | Why It’s a Good Fit for Denmark |
|---|---|
| Deel | – Extensive global coverage including Denmark – Automates tax document collection, payroll, and benefits – Ensures compliance with Danish labor laws and collective bargaining agreements |
| Remote | – Strong focus on compliance with Danish employment laws – Offers comprehensive benefits management, crucial for meeting Denmark’s statutory employee benefits requirements – Provides robust data security and IP protection |
| Oyster HR | – Supports hiring in 180+ countries, including Denmark – Provides employment contracts tailored to Danish labor laws – Offers comprehensive benefits management, essential for Denmark’s employee benefits system |
| Rippling | – Effortlessly hire, manage, and pay employees in Colombia – Simplifies onboarding and compliance with local laws – Provides integrated HR, IT, and finance management in one system |
Need more insights? Read: Best Employer of record in Denmark
5. Communicate your hiring needs to the EOR
Communicating your hiring needs to the EOR to ensure the process aligns with company goals and legal requirements is important. Providing a detailed job description, including title, responsibilities, required qualifications, and skills, is key.
Specify the job’s expected start date, location, and whether it’s remote or onsite. Outline the proposed salary, bonuses or commissions, and other compensation benefits. Clarify the contract type (full-time, part-time, or fixed-term) and detail the working hours, including any flexibility or shift requirements.
Discuss the company culture, growth plans, and how the position fits into future expansion. By accurately representing these aspects, the EOR can find the right talent and ensure legal and administrative compliance.
6. Have the EOR set up the contracts and hiring procedure
Once you have chosen which provider to work with and communicated your hiring needs, the EOR will set up the contracts and hiring procedure, ensuring compliance with local labor laws and employment practices.
The EOR drafts employment contracts that comply with Danish labor laws, including specific terms regarding job details, working hours, and termination procedures. They’ll also manage the necessary documentation for tax, social security, and payroll setup, adhering to mandatory withholdings and reporting requirements.
While a written contract is not legally required in Denmark, it’s strongly recommended. The EOR will ensure that the employee receives certain terms and conditions of employment in writing no later than one month after the employment begins, as required by Danish law.
The EOR will also register employment with relevant Danish authorities, assist in obtaining necessary work permits for foreign employees, and manage the onboarding process in accordance with Danish employment laws.
What help does an EOR provide in Danish payroll, taxes, and benefits administration?
An EOR in Denmark provides comprehensive support in managing payroll, taxes, and benefits administration, ensuring compliance with complex local laws. This includes:
- Calculating and processing employee salaries
- Withholding and paying income tax (which is progressive in Denmark, with rates up to 52.07% as of 2023)
- Managing Social Security contributions
- Handling the AM-bidrag (Labor Market Contribution) of 8%
- Administering statutory benefits such as paid annual leave (25 days per year)
- Ensuring compliance with collective bargaining agreements, which are common in Denmark
- Providing pay slips and yearly payment summaries
The EOR will manage the monthly payroll cycle, ensuring timely and accurate payments. They will also handle any additional benefits you offer, which can be important in Denmark for attracting and retaining top talent.
What labor laws do you need to consider when hiring in Denmark?
| Law / Regulation | Key Points |
|---|---|
| Employment Contracts | Not legally required but strongly recommended. Certain terms must be provided in writing within one month of employment. |
| Working Hours | Standard work week is 37-37.5 hours. Maximum 48 hours per week on average over 4 months, including overtime. |
| Minimum Wage | No statutory minimum wage. Wages typically set by collective bargaining agreements or individual contracts. |
| Paid Time Off | 25 days of paid annual leave. 11 public holidays. |
| Sick Leave | Employers typically required to pay sickness benefits for the first 30 days of illness. |
| Maternity and Parental Leave | Mothers: 4 weeks before and 14 weeks after birth. Fathers: 2 weeks within first 14 weeks. Shared 32 weeks parental leave. |
| Termination | Relatively flexible. Notice periods range from 1 to 6 months, depending on length of employment. |
| Collective Bargaining Agreements | Play significant role in setting employment conditions and wages. |
| Probation Period | No specific legislation, but up to 3 months can be agreed for salaried employees. |
| Social Security | Employers must contribute to social security and handle the AM-bidrag (Labor Market Contribution) of 8%. |
When hiring in Denmark, several key labor laws must be considered:
Employment Contracts
While not legally required, providing written employment contracts is strongly recommended. Employees must receive certain terms and conditions in writing within one month of starting employment.
Working Hours
The standard work week in Denmark is typically 37-37.5 hours, Monday through Friday. The maximum, including overtime, should not exceed 48 hours per week on average over a 4-month period.
Minimum Wage
Denmark does not have a statutory minimum wage. Wages are typically set through collective bargaining agreements or individual employment contracts.
Paid Time Off
Employees are entitled to 25 days of paid annual leave. There are also 11 public holidays in Denmark.
Sick Leave
Employees are entitled to sickness benefits, which employers are typically required to pay for the first 30 days of illness.
Maternity and Parental Leave
Mothers are entitled to 4 weeks of leave before the expected due date and 14 weeks after. Fathers are entitled to 2 weeks of leave within the first 14 weeks after birth. After this, parents have a shared entitlement to 32 weeks of parental leave.
Termination
Denmark has relatively flexible termination laws compared to other EU countries. Notice periods depend on the length of employment and can range from 1 to 6 months.
Collective Bargaining Agreements (CBAs)
CBAs play a significant role in Danish labor law. They often set wage standards, working hours, and other employment conditions.
Probation Period
While there’s no specific legislation on probation periods, a probationary period of up to 3 months can be agreed upon for salaried employees.
Understanding and complying with these laws is crucial for any company hiring in Denmark. The complexity of these regulations, particularly around collective bargaining agreements, can make compliance challenging for foreign companies. This is where an Employer of Record (EOR) can provide significant value, offering expertise in navigating these laws and ensuring full compliance with Danish employment regulations.
How does the hiring process work in Denmark?
The hiring process in Denmark typically involves the following steps:
- Job Posting and Recruitment: Companies advertise positions through various channels, including online job boards, social media, and recruitment agencies.
- Application Review: HR teams or recruiters review applications and resumes to shortlist candidates.
- Initial Screening: Often involves a phone or video interview to assess basic qualifications and cultural fit.
- In-depth Interviews: Qualified candidates are invited for more comprehensive interviews, which may include multiple rounds with different team members.
- Skills Assessment: Candidates might be asked to complete tests or practical assignments depending on the role.
- Reference Checks: Employers often contact previous employers or provide references.
- Job Offer: A formal job offer is extended, usually in writing.
- Contract Negotiation: The terms of employment are discussed and finalized.
- Contract Signing: Both parties sign the employment contract or agree to the terms of employment.
- Registration and Onboarding: The new employee is registered with relevant authorities and begins onboarding.
When hiring through an EOR in Denmark, many of these steps are managed or facilitated by the EOR provider, ensuring compliance with local regulations throughout the process.
Is Denmark a relatively easy country to hire employees remotely through an EOR?
Denmark is a relatively straightforward country for hiring employees remotely through an Employer of Record. While it has its complexities, several factors make it more manageable compared to some other countries:
Pros
Cons
While not the easiest country for remote hiring, Denmark’s transparent business environment and well-regulated labor market make it relatively straightforward with the right EOR partner. Companies can successfully navigate the complexities of employing workers in Denmark by working with an EOR with deep local expertise and a strong track record of compliance with Danish labor laws.
In conclusion, using an Employer of Record service in Denmark can significantly simplify hiring and managing employees in this dynamic market. By handling complex compliance issues, payroll, and benefits administration, an EOR allows you to focus on growing your business while minimizing risks associated with international expansion. With the right partner and a clear understanding of the local landscape, companies can effectively tap into Denmark’s talented workforce and expand their global footprint.
