Employer of Record (EOR) Services in Denmark
Start Hiring in Denmark
Hiring in Denmark at a glance
Denmark is globally recognized for its high standard of living, strong labor protections, and innovation-driven economy. As a leader in renewable energy, life sciences, shipping, and ICT, Denmark consistently ranks among the world’s most competitive and business-friendly countries.
Its workforce is highly skilled, English-proficient, and unionized, with a strong emphasis on collaboration and equality in the workplace. Denmark’s “flexicurity” model balances employer flexibility with employee security, making it a unique labor environment within Europe.
However, expanding into Denmark comes with challenges. Employers must navigate collective bargaining agreements (CBAs), high social security contributions, and detailed tax rules. Setting up a local entity requires time and significant administrative effort, particularly to comply with Danish labor law, holiday rules, and pension schemes.
Partnering with an Employer of Record (EOR) like Gloroots enables companies to hire in Denmark quickly and compliantly, bypassing entity setup while ensuring adherence to payroll, tax, and employment law requirements.
What are the key facts about Denmark’s economy and workforce?
Denmark is a high-income, innovation-driven economy with one of the world’s most competitive labor markets. It has a GDP per capita exceeding USD 70,000, driven by strong exports, digitalization, and sustainable industries.
Economic Highlights
- Green Energy Leadership: Denmark is a pioneer in wind energy and renewable technologies.
- Life Sciences & Pharma: Home to Novo Nordisk, Lundbeck, and Leo Pharma, Denmark is a biotech and healthcare hub.
- Shipping & Logistics: Maersk, the world’s largest container shipping company, is headquartered in Copenhagen.
- ICT & Digital Economy: Copenhagen and Aarhus are hotspots for software development, AI, and gaming.
- Design & Creative Industries: Globally recognized for architecture, fashion, and digital design.
Workforce Highlights
- Highly Educated: Denmark ranks among the top OECD countries in tertiary education attainment.
- English Proficiency: One of the highest in Europe, making it easy for global companies to operate.
- Unionized Labor: Over 65% of employees are union members, and collective agreements play a central role in setting pay and benefits.
- Talent Hubs:
- Copenhagen – finance, ICT, biotech, creative industries.
- Aarhus – ICT, gaming, and research.
- Odense – robotics and advanced manufacturing.
- Aalborg – renewable energy and engineering.
Denmark’s labor market combines flexibility with strong employee protections, making compliance critical for foreign employers.
With Gloroots EOR, companies can quickly access Denmark’s talent pool while staying compliant with collective agreements, payroll laws, and tax regulations.
What is the work culture and talent pool like in Denmark?
Denmark’s work culture is defined by trust, collaboration, and equality. The country is famous for its “flexicurity model,” which combines flexible hiring and termination policies for employers with strong social protections for employees. This balance makes Denmark an attractive market for both companies and workers.
Work Culture Traits
- Flat Hierarchies: Danish workplaces favor open communication and consensus-based decision-making. Employees expect autonomy and transparency.
- Work-Life Balance: With a standard 37-hour workweek, Denmark consistently ranks among the top countries for work-life balance. Flexible schedules and remote work are widely accepted.
- Trust & Responsibility: Managers place high trust in employees, expecting self-motivation and accountability.
- Collective Bargaining: Salaries, benefits, and working conditions are often determined by collective agreements (CBAs) between unions and employer associations.
- Innovation & Sustainability: Denmark invests heavily in R&D, with employees encouraged to focus on green technologies, digital innovation, and efficiency.
Talent Strengths
Denmark’s workforce excels in:
- ICT & Software Development (Copenhagen, Aarhus).
- Life Sciences & Pharma (Copenhagen, Medicon Valley region).
- Green Energy & Engineering (Aalborg, Odense).
- Shipping & Logistics (Copenhagen, Esbjerg).
- Creative & Design Industries (fashion, architecture, digital design).
Hiring Hubs
- Copenhagen – finance, biotech, ICT, and creative industries.
- Aarhus – ICT, digital gaming, and university-led R&D.
- Odense – robotics, automation, and advanced manufacturing.
- Aalborg – renewable energy, wind power, and engineering.
Q: What is the process of setting up an entity in Denmark?
Denmark consistently ranks among the easiest countries in Europe to do business, but employers must still navigate corporate registration, tax setup, and labor law compliance before hiring. The most common business form for foreign companies is the Private Limited Company (ApS).
Steps to Set Up an Entity in Denmark
- Choose a Business Structure
- Options: ApS (Private Limited Company), A/S (Public Limited Company), branch office, or representative office.
- ApS is the most common for foreign investors due to limited liability and flexible setup.
- Share Capital Requirement
- Minimum share capital: DKK 40,000 (~EUR 5,400) for an ApS.
- Register with the Danish Business Authority (Erhvervsstyrelsen)
- File incorporation documents, articles of association, and shareholder details.
- Registration usually completed within 1–2 weeks.
- Obtain a CVR Number
- The Central Business Register (CVR) assigns the company’s identification number.
- Register for Taxes with SKAT (Danish Tax Authority)
- Register for corporate tax, VAT (25%), and employer obligations.
- Open a Corporate Bank Account
- Required for depositing share capital and running payroll.
- Employment Compliance
- Register as an employer with SKAT and ATP (Labor Market Supplementary Pension Fund).
- Ensure compliance with the Danish Salaried Employees Act, Holiday Act, and relevant collective bargaining agreements (CBAs).
Timeline
Setting up an ApS entity in Denmark usually takes 2–4 weeks, including bank account setup and tax registration.
For companies looking to enter the market quickly, this setup may cause delays. With Gloroots EOR, you can hire employees in days while staying compliant.
Entity Setup vs. EOR in Denmark
Q: What are the main benefits of using Gloroots as an Employer of Record in Denmark vs. setting up your own entity?
While setting up a Private Limited Company (ApS) in Denmark offers full control and long-term presence, it requires capital investment, administrative oversight, and strict compliance with CBAs (collective bargaining agreements). For companies looking for quick, flexible, and compliant entry, working with Gloroots EOR provides significant advantages.
Benefits of Using Gloroots EOR in Denmark
- Faster Hiring: Onboard employees in days, bypassing the 2–4 week entity setup process.
- No Capital Requirement: Avoid the DKK 40,000 (~EUR 5,400) share capital deposit needed for an ApS.
- Compliance with CBAs: Gloroots ensures all contracts align with applicable collective bargaining agreements, which govern wages, working hours, and benefits.
- Payroll & Tax Management: Full compliance with SKAT (tax authority), ATP (Labor Market Supplementary Pension Fund), and social contributions.
- Benefit Administration: Access to statutory and market-driven benefits tailored for Denmark’s workforce.
- Immigration Support: Guidance on work permits and residence permits for non-EU hires.
- Scalable Expansion: Ideal for testing the Danish market or hiring niche talent without committing to entity setup.
- Risk Reduction: Minimized exposure to fines or disputes related to labor law or payroll compliance.
Direct Entity vs. Gloroots EOR in Denmark
Q: What are the key employment laws in Denmark that employers should know?
Denmark’s labor market is unique because it is governed less by statutory law and more by collective bargaining agreements (CBAs) between unions and employer associations. While laws like the Danish Salaried Employees Act and Holiday Act provide a framework, CBAs play a decisive role in shaping pay, benefits, and working conditions.
Core Employment Law Provisions in Denmark
- Employment Contracts
- Written contracts are mandatory for employees working more than 8 hours per week for at least 1 month.
- Contracts must outline job duties, salary, working hours, leave, and notice periods.
- Working Hours
- Standard working week: 37 hours (as set by most CBAs).
- The EU Working Time Directive applies, with a maximum of 48 hours per week (including overtime).
- Overtime
- No statutory overtime rate. Compensation is governed by CBAs or contracts.
- Typically, overtime is paid at 1.5x or 2x regular pay or compensated with time off.
- Minimum Wage
- Denmark has no statutory minimum wage.
- Minimum wages are set by CBAs, usually ranging between DKK 110–130/hour (EUR 15–18/hour) depending on industry.
- Annual Leave
- Under the Holiday Act, employees earn 2.08 days of paid leave per month, totaling 5 weeks per year.
- Leave accrues and can be taken within the same year (concurrent holiday system).
- Public Holidays
- Employees are entitled to 11 public holidays, though pay on holidays depends on the applicable CBA.
- Sick Leave
- Employers must pay sick leave for the first 30 days (known as “employer period”).
- After this, benefits are paid by the municipality, provided eligibility conditions are met.
- Maternity & Paternity Leave
- Maternity Leave: 4 weeks before birth + 14 weeks after birth.
- Paternity Leave: 2 weeks within the first 14 weeks.
- Parental Leave: Up to 32 weeks, shared between parents, often with state reimbursement.
- Termination
- Notice periods depend on length of service (1–6 months under the Salaried Employees Act).
- Unjustified dismissals can be contested at labor courts.
Employment Laws: Direct Entity vs. Gloroots EOR in Denmark
Q: What visas and work permits are required for working in Denmark?
As an EU and Schengen member, Denmark applies different rules for EU/EEA citizens and non-EU nationals. Immigration processes are regulated by the Danish Agency for International Recruitment and Integration (SIRI).
Key Work & Residence Permits in Denmark
- EU/EEA & Swiss Citizens
- No visa or work permit required.
- Must register with the Danish Agency for International Recruitment (SIRI) if staying longer than 3 months.
- Fast-Track Scheme
- Designed for companies certified by SIRI.
- Allows non-EU employees to start work immediately after entry.
- Categories include researchers, highly paid employees (minimum DKK 480,000/year ~ EUR 64,000), and short-term assignments.
- Positive List Scheme
- For workers in shortage occupations such as engineering, IT, healthcare, and teaching.
- Grants residence and work permits aligned with labor market needs.
- Pay Limit Scheme
- For employees offered a job with an annual salary above DKK 480,000 (~EUR 64,000).
- No labor market test required.
- EU Blue Card
- For highly skilled workers with a higher education degree and an annual salary above DKK 480,000 (~EUR 64,000).
- Valid for up to 4 years.
- Trainee & Researcher Permits
- Specific schemes exist for interns, PhD candidates, and researchers.
- Dependants
- Spouses, partners, and children can accompany primary permit holders.
- Dependants may also work in Denmark.
Employer Obligations
- Must provide a written job offer/contract compliant with Danish law.
- Ensure salaries and benefits meet collective bargaining agreements (CBAs) or minimum pay thresholds.
- Register employees with SKAT (Tax Authority) and ATP (Labor Market Pension).
- Cover recruitment compliance costs, including documentation.
How Gloroots Helps with Visas in Denmark
Managing immigration in Denmark requires navigating salary thresholds, shortage lists, and CBA compliance. Gloroots simplifies this process by:
- Advising on visa eligibility (Fast-Track, Positive List, Pay Limit, EU Blue Card).
- Sponsoring employees via Gloroots’ local entity, removing the need for your company to obtain certification.
- Application Management: Preparing and submitting applications to SIRI.
- CBA Compliance: Ensuring salaries and benefits meet collective agreement requirements.
- Dependent Support: Assisting family members with residence and work permits.
- Fast Onboarding: Employees can start work quickly through Gloroots’ existing setup.
With Gloroots as your Employer of Record in Denmark, you can hire foreign talent without immigration delays or compliance risks.
Q: What are the risks of misclassification in Denmark?
In Denmark, distinguishing between employees and independent contractors is critical. Misclassification occurs when companies hire a contractor but treat them like an employee — for example, by setting fixed working hours, controlling their tasks, or providing employee-like benefits.
The Danish Labour Market Authority and the Danish Tax Agency (SKAT) closely monitor employment relationships. Misclassification can lead to retroactive taxes, social contributions, penalties, and even legal disputes.
Criteria for Employee vs. Contractor Classification
- Control – Employees work under employer supervision; contractors manage their own work.
- Integration – Employees are integrated into company structure; contractors remain independent.
- Tools & Resources – Employees use company equipment; contractors provide their own.
- Payment Terms – Employees receive a salary; contractors are paid per project or invoice.
- Economic Dependence – Employees depend on one employer; contractors typically work with multiple clients.
Penalties for Misclassification
- Back Payment of Taxes & Social Contributions – Employer may be liable for unpaid ATP contributions, holiday pay, and pension.
- Employee Rights Liability – Misclassified workers may claim entitlements such as paid leave, notice, and severance.
- Fines & Sanctions – SKAT can impose fines for unpaid taxes and restrict business activities.
- Union & Legal Action – Trade unions may take disputes to labor courts, leading to reputational risks.
How Gloroots Mitigates Misclassification Risk
Gloroots ensures workers are properly classified by offering compliant contracts and payroll management under its Employer of Record (EOR) model. This ensures companies avoid tax penalties, disputes with unions, and liability for unpaid benefits.
Misclassification Risks: Direct Entity vs. Gloroots EOR in Denmark
Use our Misclassification Risk Calculator to assess your risk in Denmark.
Q: How does an EOR help you run payroll in Denmark?
Payroll in Denmark is tightly regulated by SKAT (Danish Tax Authority) and linked to the ATP (Labour Market Supplementary Pension Fund) and collective bargaining agreements (CBAs). Employers must ensure proper salary payments, tax withholding, and pension contributions, while also aligning with union agreements.
Payroll Compliance Requirements in Denmark
- Pay Frequency
- Most employees are paid monthly, usually at the end of the month.
- Tax Withholding (PAYE)
- Employers must withhold A-tax (income tax) and AM-bidrag (labour market contributions, 8%) from salaries.
- Taxes are reported and remitted via eIndkomst, Denmark’s real-time income reporting system.
- ATP (Labour Market Supplementary Pension)
- Mandatory contribution for all employees.
- Employers and employees both contribute (~DKK 284 per year from employees and ~DKK 568 from employers for full-time work).
- Holiday Pay
- Employees accrue 2.08 days per month (5 weeks annually).
- Employers must calculate and transfer holiday pay to the Danish Holiday Account or a holiday fund, depending on CBAs.
- Pension Contributions
- CBAs often mandate occupational pension schemes, typically totaling 12–18% of gross salary, split between employer and employee.
- Other Employer Contributions
- Employers pay into several funds (maternity, training, and industrial injury insurance).
- The total burden is usually 12–14% on top of gross salary.
- Reporting Requirements
- All salaries, taxes, and contributions must be reported monthly to SKAT via eIndkomst.
How Gloroots Simplifies Payroll in Denmark
Gloroots ensures:
- Accurate PAYE deductions and real-time reporting to SKAT.
- ATP and pension contributions are calculated and filed correctly.
- Holiday pay administration is fully compliant with the Holiday Act.
- Collective bargaining agreement alignment for wages and benefits.
- Localized payslips in Danish and English.
- Compliance risk reduction with Danish tax and labor authorities.
With Gloroots’ payroll management, companies avoid costly compliance mistakes and ensure employees are paid correctly.
Payroll Compliance: Direct Entity vs. Gloroots EOR in Denmark
Q: How does tax compliance work in Denmark?
Denmark has one of the world’s highest tax rates, but also one of the most transparent and digitized systems. Employers must correctly withhold employee income tax (PAYE), pay social security contributions, and manage mandatory pensions. Compliance is overseen by SKAT (Danish Tax Authority) and requires real-time reporting through the eIndkomst system.
Income Tax Rates in Denmark (2025)
- Taxes include municipal tax (~24–25%), state tax, and an additional 15% top tax on high incomes.
- Denmark’s system is progressive, and effective rates vary by municipality.
Social Security & Employer Contributions
Denmark’s social security system is primarily tax-funded, so contributions are relatively low compared to other EU countries.
- ATP (Labour Market Supplementary Pension)
- Employer pays ~DKK 568/year per full-time employee.
- Employee pays ~DKK 284/year.
- Occupational Pensions (CBA-mandated)
- Total: 12–18% of gross salary.
- Typically split: 8% employer, 4% employee.
- Other Employer Contributions
- Employers must contribute to funds covering maternity, training, and industrial injury insurance.
- Combined, these add ~12–14% on top of gross salary.
Reporting Requirements
- Real-Time Filing: All tax and social contributions must be reported monthly via eIndkomst.
- Annual Reconciliation: Employees receive a pre-filled tax return from SKAT for confirmation.
Tax Compliance: Direct Entity vs. Gloroots EOR in Denmark
Q: What benefits and entitlements do employees in Denmark receive?
Employees in Denmark enjoy some of the most comprehensive benefits in Europe. While the Holiday Act and Salaried Employees Act set minimum standards, most benefits are negotiated under collective bargaining agreements (CBAs), which cover the majority of the workforce.
Statutory & CBA-Based Benefits in Denmark
- Annual Leave
- Employees earn 2.08 days per month (25 days or 5 weeks annually).
- Leave accrues and can be taken concurrently in the same year under the Holiday Act.
- Public Holidays
- Employees are entitled to 11 public holidays. Pay depends on the applicable CBA.
- Sick Leave
- Employer pays sick leave for the first 30 days (employer period).
- Thereafter, employees may receive sickness benefits from the municipality.
- Maternity Leave
- 4 weeks before birth + 14 weeks after birth (total 18 weeks).
- Benefits partially covered by the state.
- Paternity Leave
- 2 weeks, usually within the first 14 weeks after childbirth.
- Parental Leave
- Up to 32 weeks shared between parents, with partial wage compensation from the state.
- Many CBAs extend this with higher pay.
- Pensions
- In addition to state pensions, CBAs mandate occupational pensions (12–18% of gross salary, split 8% employer / 4% employee).
- Healthcare
- Universal healthcare is tax-funded.
- Many employers provide private health insurance for faster access to specialists.
- Other CBA Benefits
- Training allowances, meal subsidies, transportation benefits, and additional holiday pay (feriefridage).
Non-Statutory (Market-Driven) Benefits
- Flexible and remote work arrangements.
- Wellness programs and gym memberships.
- Professional development and education subsidies.
- Stock options and performance bonuses (common in ICT and startups).
Gloroots ensures that your employees in Denmark receive all mandatory benefits while helping you design competitive, market-driven packages aligned with global best practices.
Employee Benefits: Direct Entity vs. Gloroots EOR in Denmark
Q: What’s involved in hiring and onboarding employees in Denmark?
Hiring in Denmark requires compliance with the Danish Salaried Employees Act, the Holiday Act, and often collective bargaining agreements (CBAs). Employers must ensure contracts are compliant, payroll is registered with SKAT, and benefits like pensions and holiday pay are properly managed.
Steps in Hiring & Onboarding Employees in Denmark
- Job Advertising & Recruitment
- Employers must comply with anti-discrimination laws.
- Job portals like Jobindex, Work in Denmark, and LinkedIn are widely used.
- Employment Contracts
- Written contracts are required for employees working more than 8 hours/week for over 1 month.
- Must include role, salary, benefits, probation, and termination rules.
- Registration with Authorities
- Employees must be registered with SKAT for tax withholding.
- Employers must enroll them in ATP (pension fund) and other mandatory schemes.
- Payroll & Benefits Setup
- Payroll must account for PAYE taxes, ATP contributions, pension contributions, and holiday pay.
- If a CBA applies, employers must include additional entitlements (e.g., training, extra holidays).
- Onboarding & Orientation
- Employers should introduce employees to company policies, CBAs, and workplace rights.
- Health & safety training is required under Danish law.
- Probation Periods
- Commonly 3 months, though CBAs may specify different terms.
- During probation, notice periods are shorter (typically 14 days).
Challenges for Foreign Employers
- Navigating CBAs, which vary by sector and define minimum wages, pensions, and leave.
- Ensuring correct holiday pay administration under Denmark’s concurrent holiday system.
- Managing payroll in compliance with SKAT reporting and eIndkomst.
- Avoiding disputes by drafting contracts that reflect both statutory law and union agreements.
With Gloroots EOR, companies can onboard employees in days while Gloroots manages contracts, payroll, pensions, and compliance with CBAs.
Hiring & Onboarding: Direct Entity vs. Gloroots EOR in Denmark
Q: How do you successfully manage a workforce in Denmark?
Managing employees in Denmark requires aligning with its flexicurity model — combining employer flexibility with employee protections. A strong focus on trust, equality, and union involvement defines the Danish workplace. Employers who respect these cultural and legal frameworks are more likely to build high-performing, engaged teams.
Best Practices for Workforce Management in Denmark
- Understand the Role of CBAs (Collective Bargaining Agreements)
- CBAs govern wages, pensions, working hours, and leave for most employees.
- Employers must comply with the relevant industry agreement, even if not directly unionized.
- Embrace Flat Hierarchies
- Danish workplaces emphasize openness, consensus, and equality.
- Managers are expected to be approachable and involve employees in decision-making.
- Work-Life Balance is Central
- Standard workweek is 37 hours, with generous parental leave and 5 weeks of annual leave.
- Flexible schedules and remote work are widely accepted.
- Trust & Autonomy
- Employees expect independence in performing tasks. Micromanagement is discouraged.
- Invest in Training & Development
- Lifelong learning is a cultural priority, with many CBAs requiring employer funding for training programs.
- Supporting professional development improves retention.
- Health & Safety Compliance
- Employers must comply with the Danish Working Environment Act, ensuring safe working conditions, risk assessments, and employee well-being.
- Union Relations
- Around 65% of employees are unionized, and unions are influential in workplace negotiations.
- Maintaining good communication with unions prevents disputes.
How Gloroots Supports Workforce Management in Denmark
Gloroots helps companies manage their Danish workforce by:
- Administering payroll, ATP, pensions, and tax filings.
- Ensuring compliance with CBAs and the Danish Holiday Act.
- Managing statutory benefits like parental leave and sick pay.
- Supporting probation, termination, and redundancy in compliance with law and union rules.
- Offering guidance on additional benefits to remain competitive in Denmark’s talent market.
- Providing cultural onboarding to help integrate international employees.
With Gloroots as your EOR in Denmark, employers can focus on strategy and growth while ensuring compliance and employee satisfaction.
Q: What are the key steps and requirements in terminating employees in Denmark?
Termination in Denmark is shaped by the Salaried Employees Act, the Holiday Act, and collective bargaining agreements (CBAs). Denmark’s “flexicurity model” allows relatively easy termination procedures, but employers must respect notice periods, severance pay, and fair process requirements.
Termination Process in Denmark
- Grounds for Termination
- Employees may be terminated due to redundancy, restructuring, or performance-related reasons.
- Dismissals must not be discriminatory and can be contested before labor courts if deemed unfair.
- Notice Periods (Salaried Employees Act)
- Based on length of service:
- <6 months → 1 month
- 6 months–3 years → 3 months
- 3–6 years → 4 months
- 6–9 years → 5 months 9 years → 6 months
- Based on length of service:
- Probationary Periods
- Typically 3 months, during which the notice period is only 14 days.
- Severance Pay
- Applies to salaried employees with long tenure:
- 12 years → 1 month’s salary
- 15 years → 2 months’ salary
- 18 years → 3 months’ salary
- Some CBAs provide enhanced severance terms.
- Applies to salaried employees with long tenure:
- Special Protections
- Employees on maternity/paternity leave, union representatives, or those close to retirement enjoy stronger protection against dismissal.
Q: What is the offboarding process in Denmark?
- Final Payroll Settlement
- Includes outstanding salary, unused holiday pay, and severance (if applicable).
- Holiday Pay
- Must be transferred to the Holiday Account or paid directly if employment ends.
- ATP & Pension Contributions
- Final contributions must be calculated and reported.
- Return of Company Assets
- Employers must ensure collection of laptops, phones, ID cards, and other assets.
- Exit Documentation
- Employers are required to issue a certificate of employment if requested.
Termination & Offboarding: Direct Entity vs. Gloroots EOR in Denmark
Q: What costs and financial planning do you need with an Employer of Record in Denmark?
Hiring in Denmark is high-cost but high-value, given its strong labor protections and extensive benefits. Employers must plan for gross salaries, social contributions, pension obligations, holiday pay, and severance liabilities.
With Gloroots as your Employer of Record, you avoid the complexity of managing payroll, ATP, pensions, CBAs, and tax filings directly. Instead, you pay a transparent EOR fee on top of salaries, giving you clarity and compliance.
Typical Employer Costs in Denmark
- Base Salary: Among the highest in the EU. For skilled white-collar roles, average annual salaries range from DKK 480,000–650,000 (~EUR 64,000–87,000).
- Employer Social Contributions: Relatively low direct social contributions (~1%–2% of salary), but significant pension and fund payments.
- Occupational Pensions: Mandatory under most CBAs, totaling 12–18% of gross salary (employer typically pays 8%).
- ATP Contributions: ~DKK 568/year per full-time employee (employer share).
- Holiday Pay: 5 weeks annually, accrued and managed via Holiday Account.
- Sick Leave: Employer covers first 30 days, then municipality takes over.
- Severance: Up to 3 months’ salary for long-serving employees (12+ years).
- Entity Setup (Direct Employers only): DKK 40,000 (~EUR 5,400) share capital, plus legal, payroll, and compliance overhead.
Benefits of Using Gloroots EOR
- No entity setup costs — skip the DKK 40,000 capital requirement.
- Transparent pricing — salary + EOR fee.
- Payroll automation — PAYE, ATP, pensions, and holiday pay fully managed.
- Compliance guarantee — avoid penalties for CBA or tax mismanagement.
- Faster onboarding — hire in days, not weeks.
- Scalability — cost-effective for pilot hires, niche specialists, or expansion projects.
Direct Entity vs. Gloroots EOR: Cost & Financial Planning in Denmark
Q: What challenges might you face, and how do you solve them using EOR in Denmark?
Denmark’s workforce is highly skilled and globally attractive, but compliance with labor laws and collective agreements (CBAs) makes hiring complex. Foreign employers face challenges ranging from payroll management to high employment costs.
Key Hiring Challenges in Denmark
- Complex Collective Bargaining Agreements (CBAs)
- Over 65% of Danish employees are covered by CBAs.
- CBAs regulate minimum wages, pensions, overtime, and holiday pay.
- High Employment Costs
- While direct social contributions are low, pensions, holiday pay, and sick leave significantly raise total employment costs.
- Tax & Payroll Compliance
- Employers must manage PAYE, ATP, pensions, and holiday accounts through eIndkomst.
- Errors in reporting lead to fines from SKAT.
- Immigration & Work Permits
- For non-EU employees, employers must meet salary thresholds (DKK 480,000+) and Positive List requirements.
- Employee Protections
- Danish employees enjoy strong protections, including long notice periods, severance pay for senior employees, and union representation.
- Talent Competition
- Denmark’s ICT, life sciences, and green energy sectors face talent shortages, making it crucial to offer competitive benefit packages.
How Gloroots EOR Solves These Challenges
- CBA Compliance: Gloroots ensures employment contracts meet union and legal requirements.
- Payroll & Tax Simplification: Manages PAYE, ATP, and pensions via payroll compliance.
- Faster Market Entry: Onboard employees in days instead of waiting weeks for entity setup.
- Immigration Support: Handles Fast-Track, Positive List, and Pay Limit work permits.
- Cost Transparency: Provides clear pricing (salary + EOR fee) without hidden compliance costs.
- Competitive Benefits: Access to global employee benefits tailored to Denmark’s labor market.
- Risk Mitigation: Avoids misclassification, payroll errors, and union disputes.
Hiring Challenges: Direct Entity vs. Gloroots EOR in Denmark
<table><tr><th>Challenge</th><th>Direct Entity Setup</th><th>Gloroots EOR</th></tr><tr><td>Compliance with CBAs</td><td>Employer must navigate union rules independently</td><td>Gloroots ensures contracts align with CBAs</td></tr><tr><td>Payroll & Tax Filing</td><td>Employer files PAYE, ATP, pensions via eIndkomst</td><td>Gloroots automates payroll & compliance</td></tr><tr><td>Employment Costs</td><td>Employer calculates pensions, holiday pay, and severance</td><td>Gloroots integrates all costs into payroll</td></tr><tr><td>Immigration</td><td>Employer applies for permits with SIRI</td><td>Gloroots supports visa applications & fast-track schemes</td></tr><tr><td>Employee Protections</td><td>Employer liable for long notice and severance rules</td><td>Gloroots manages terminations lawfully</td></tr><tr><td>Scalability</td><td>Entity setup is slow and costly</td><td>Gloroots enables hiring in days</td></tr></table>
Conclusion
Denmark offers a world-class talent pool, a strong innovation-driven economy, and one of Europe’s most flexible yet secure labor markets. However, employers must navigate collective bargaining agreements (CBAs), payroll compliance, and high employment costs when hiring locally.
Setting up a local entity in Denmark requires capital investment, compliance expertise, and time. For companies looking to scale quickly and compliantly, Gloroots as your Employer of Record (EOR) provides the ideal solution:
- Hire in days, not weeks without entity setup.
- Stay compliant with CBAs, SKAT, and ATP requirements.
- Offer competitive employee benefits.
- Manage payroll, pensions, and taxes through Gloroots’ global payroll platform.
- Focus on business growth while Gloroots handles compliance.
Gloroots makes hiring in Denmark simple, compliant, and scalable.
Frequently asked questions
