Denmark 's dynamic job market, underpinned by a robust mining sector and a rapidly expanding services industry, positions it as a compelling destination for hiring. The urban migration has shifted the workforce away from traditional agriculture, strengthening industrial contributions to the GDP. With economic resilience showcased through a recovery in GDP per capita, Denmark  offers a fertile ground for business investment. 

The country's diverse talent pool, especially skilled in sectors like mining, manufacturing, and services, aligns well with global business needs. Denmark 's competitive labor market provides a strategic advantage for companies in search of high-quality talent at reasonable costs, making it an ideal locale for expanding or initiating global operations.

What you need to know before hiring employees in Denmark 

Job market in Denmark

• Despite global economic challenges, Denmark's labor market has shown exceptional resilience. In 2023, employment reached a historic high with 2.98 million people employed, marking a 2% increase from the previous year. This growth exemplifies Denmark's strong economic fundamentals and ability to sustain job creation.
• Denmark stands as the third most competitive country in the world, according to the World Economic Forum’s Global Competitive Report 2021. This status attracts substantial investment and talent, particularly benefiting small and medium-sized enterprises that form the backbone of the Danish economy.
• With ongoing labor shortages in critical sectors such as engineering, IT, healthcare, and finance, Denmark offers fertile ground for skilled professionals seeking robust career opportunities. The demand extends to industrial, construction, and hospitality sectors, highlighting diverse entry points into the job market.
• The employment structure is balanced with about two-thirds of the workforce in the private sector and one-third in the public sector, reflecting the country’s well-developed welfare system. This balance provides stability and a variety of job opportunities across different fields.
• In response to the evolving economic landscape, Denmark’s job market continues to adapt, offering a progressive environment for businesses to thrive. The focus on addressing skill gaps and enhancing employee competencies aligns with the nation's strategic goals to foster economic growth and innovation

Denmark Hiring Trends

For 2024, the hiring trends in Denmark reflect a stable and resilient economic environment, driven by several key factors:

• Denmark’s economic stability, marked by a low unemployment rate of 4.83%, is expected to bolster hiring, particularly in the thriving services sector, which includes finance, healthcare, and IT.
• The country's robust trade surplus and export-oriented economy will continue to generate employment opportunities, especially in industries like chemicals, agricultural products, and machinery, maintaining their strong performance.
• Inflation, which peaked at 8.53% in 2022, is projected to stabilize around 2%. This stabilization will likely create a more predictable financial environment, facilitating better salary planning and workforce expansion.
• Technological advancements and digital transformation are set to drive increased hiring in IT and digital services, addressing the growing demand for sophisticated technological solutions and customer service innovations.
• Denmark’s high Human Development Index and quality of life will continue to attract and retain top talent, making it easier for businesses to find and hire skilled professionals.
• Government initiatives and public investments in infrastructure and renewable energy projects are expected to create new job opportunities, particularly in construction and green technologies, supporting sustainable economic growth.

How to hire employees from Denmark 

1. Set up an entity in the country

Engaging employees directly in Denmark without a local entity involves navigating the country's detailed business and tax regulations. To establish a sustainable presence and ensure compliance, it is advisable to set up a local entity such as an Anpartsselskab (ApS) or Aktieselskab (A/S), and register with the Danish Business Authority (Erhvervsstyrelsen). This process includes obtaining a Central Business Registration (CVR) number. 

While the process can be intricate and requires careful planning, obtaining professional guidance or legal support can facilitate a seamless establishment, allowing the business to operate efficiently in Denmark.

2. Hire independent contractors

Hiring independent contractors in Denmark offers flexibility and may be economically advantageous for businesses requiring specialized expertise or temporary assistance on projects. To engage contractors effectively, companies should draft comprehensive agreements that clearly detail the project scope, timeline, compensation terms, and mutual obligations. It is essential to comply with Danish labor laws to avoid any misclassification of their employment status. Independent contractors in Denmark are responsible for their own tax and social security contributions, which simplifies payroll processes for the hiring organization.

3. Partner with an EOR in the country

Partnering with an Employer of Record (EOR) in Denmark can simplify the hiring and management of employees, particularly for companies that do not have a local presence. An EOR handles all legal responsibilities, payroll, taxation, and human resources tasks, allowing businesses to focus on their core operations. This partnership is particularly beneficial for companies looking to test the Danish market without establishing a full local entity or for those needing to quickly integrate talent in line with local employment laws. Utilizing the expertise of an EOR helps businesses effectively meet their staffing needs while ensuring full compliance with Denmark's complex regulatory landscape.

Employment Laws You Must Know Before Hiring in Denmark 

Compliance risk while hiring in Denmark 

Compliance risks while hiring in Denmark include strict adherence to labor laws, accurate classification of workers, timely tax and social security contributions, and adherence to workplace regulations. Failure to comply can result in legal penalties, financial liabilities, and reputational damage, making it crucial for businesses to ensure full regulatory compliance.

Key Aspects of Denmark n Labor Law:

Employment Contract: In Denmark, employment contracts should be issued to all employees, detailing terms and conditions within one month of employment commencement. Employees working over 8 hours weekly for more than a month must receive a written statement of employment terms. While civil law governs these contracts, Denmark's EU membership mandates adherence to EU directives. The official currency is the Danish kroner (DKK), and the official language is Danish. Compliance with these regulations ensures clear employment terms and legal protection for both parties.

Working Hours: In Denmark, the typical work week consists of five days, with employees working an average of 37.5 hours. The Working Time Directive Act stipulates a maximum allowable workweek of 48 hours, averaged over a four-month period

Overtime: Overtime is capped at 48 hours per week, including any extra hours worked beyond the standard 37-hour week. The overtime pay rate varies from 150% to 200% of the usual pay, as determined by the relevant Collective Bargaining Agreement. Unless specified in such an agreement, overtime compensation is not required.

Minimum Wage: Minimum wages are established by the Collective Bargaining Agreements specific to each sector. Additionally, for foreign nationals employed in Denmark, the government mandates a yearly minimum salary of 465,000 DKK for 2023 under the pay-limit scheme.

Payroll laws in Denmark  

In Denmark, the payroll is typically processed on a monthly basis, with employers required to disburse payments on a consistent day each month, prior to the month's end.

Employment benefits in Denmark 

Leave Policies in Denmark 

Paid Time Off:

In Denmark, full-time employees are entitled to 25 working days of paid leave annually, accruing at 2.08 days per month. Often, employers provide an additional five days of leave as a bonus. The leave system includes three weeks of main holiday and two weeks of residual holidays.

Under the Danish Holiday Act, employees are either compensated with their regular salary plus a 1% holiday supplement during their leave or receive a holiday allowance of 12.5% of their wages, which is common for blue-collar workers. This allowance is managed by FerieKonto, ensuring it's available for payout when employees take their leave.

Paid leave is accrued from September 1 to August 31 each year, with a total of 16 months available to use the leave; for instance, leave accumulated from September 1, 2022, to August 31, 2023, can be used until December 31, 2023, although this requires employer approval.

Employees must use at least 20 days of leave annually, but can carry over any unused days to the next year. If an employee is unable to take their accrued leave due to special circumstances before the end of the period, they may transfer up to four weeks of paid holiday to the next holiday period.

Public Holidays:

There are 10 national holidays in Denmark.

Sick Days:

The Salaried Employees Act along with most Collective Agreements ensure that employees typically receive their normal salary while they are sick. Employers are responsible for covering the first 30 days of sickness. After this period, the compensation continues to be paid by the employer, who then seeks reimbursement for the amount equivalent to the sickness benefits from the local municipality.

Employees can receive sickness benefits for up to 22 weeks within a nine-month timeframe. To qualify for these benefits, workers must have been employed continuously for at least eight weeks prior to their sickness and must have worked at least 74 hours during those eight weeks. Additionally, employers are required to report any employee sickness to the municipality within a designated time frame.

Maternity Leave:

Mothers are eligible for four weeks of maternity leave prior to their due date, with the possibility of extended leave if specified in their employment terms. Post-birth, the maternity leave structure includes 24 weeks divided as follows:

• Two weeks of parental benefits immediately after birth.
• Eight weeks of parental benefits within the child’s first 10 weeks.
• Fourteen weeks of parental benefits available before the child’s first birthday, with the option to defer five weeks of this leave until the child is nine years old under certain conditions.

Starting May 1st, 2024, parents of twins or more live-born children, as well as adoptive parents of two or more children who were born at the same time and are under one year old at the time of adoption, will be granted an additional 13 weeks of leave.

Full-time employees, defined as those working 37 hours per week and earning over DKK 19,728 monthly, are entitled to a maximum unemployment benefit of DKK 4,550 per week before taxes during their leave in 2023.

Employees must work at least 40 hours per month for three months to be eligible for maternity or parental leave.

Paternity Leave:

Fathers or co-mothers are granted 24 weeks of parental leave following the birth of their child, broken down as follows:

• Two weeks of mandatory leave immediately following the birth.
• Twenty-two weeks of leave that can be flexibly scheduled during the first year of the child's life, although there are provisions for special circumstances.

Out of the 24 weeks, nine weeks are designated for use within the first year and cannot be transferred to the other parent. The remaining 13 weeks may be transferred to the mother and must be used before the child's first birthday, with the possibility of extension or postponement up until the child is nine years old, depending on certain conditions.

These rules are designed to ensure that both parents can take time off to participate actively in the early and essential stages of their child’s upbringing.

Public Health Insurance 

In Denmark , public health insurance is primarily managed through EsSalud (Social Health Insurance), funded by payroll contributions from employers and employees. This system provides a broad range of healthcare services, including medical, surgical, pharmaceutical, and hospital care for employees and their dependents. Additionally, Denmark  offers the Comprehensive Health Insurance Scheme (SIS), aimed at the uninsured population, particularly those who are poor or extremely poor. SIS ensures access to various preventive and curative services, making healthcare more inclusive. Both systems play crucial roles in ensuring that a significant portion of the Denmark vian population has access to necessary medical services.

Filing tax in Denmark 

Income Tax:

In Denmark, employee income tax consists of several components. The national or state tax is set at 12.10%, and there is a bottom tax rate of 15%. For higher earners, there's an additional top tax of 15% applied to any income portion exceeding 588,900 DKK. Employees also pay a local tax at a rate of 8.00%, a labour market tax of 24.971%, and an average municipal tax. Additionally, share tax is levied along with a church tax, which averages 0.92% and is only applicable to members of the Danish State Church (Lutheran). Upon registration in Denmark, individuals are required to specify their church membership status to determine whether the church tax should be applied.

Other Tax and Social Security Contributions:

In Denmark, employers make various contributions to social security and other employee benefits. Annually, they contribute 2,376 DKK per full-time employee for Mandatory Social Security (ATP). They also contribute approximately 5,334 DKK towards public social security schemes and about 5,000 DKK for industrial injuries insurance, which can vary significantly depending on the industry. Additionally, employers contribute 1,350 DKK to the Maternity Leave Fund and 1% of payroll costs to the same. A holiday bonus, which accrues each month and is paid out in May, amounts to 14,026 DKK plus an additional 1%. These contributions collectively form a significant part of the total employment cost for employers in Denmark.

Business culture in Denmark  

Business culture in Denmark is distinct and knowing its nuances can significantly enhance professional interactions and operations:

• Danish workplaces emphasize flat organizational structures, encouraging open communication and collaboration across all levels.
• Prioritizing work-life balance, Denmark offers flexible working hours and values personal time, contributing to high job satisfaction.
• Being punctual is highly regarded, reflecting respect and efficiency in professional settings.
• Decision-making processes are often collaborative, seeking consensus and valuing diverse input from team members.
• Professional interactions are typically informal, with a focus on first names and direct communication, fostering a friendly and approachable work environment.

Top sectors to hire from in Denmark 

1. Public Administration

The public administration sector, encompassing education and health, is Denmark's largest employer. As of Q2 2023, nearly 940,000 people were employed in this sector, highlighting strong hiring opportunities in public services, education, and healthcare

2. Trade and Transport

Trade and transport sectors are significant employers with over 735,000 employees as of Q2 2023. This sector is vital for logistics, retail, and supply chain roles, making it a key area for hiring.

3. Manufacturing, Mining, and Quarrying

The manufacturing, mining, and quarrying industries continue to be essential for Denmark’s economy. Increased employment in 2023 underscores the demand for skilled labor in production, engineering, and resource extraction.

4. Private Sector

The private sector employs the most people in Denmark, with nearly two million employees as of Q2 2023. This sector offers diverse opportunities across various industries, reflecting Denmark’s robust business environment.

5. Municipal Government

The municipal government sector employed over 500,000 people in Q2 2023. This sector provides substantial hiring opportunities in local governance, public services, and community development.

Top cities to hire from Denmark 

When considering top cities in Denmark for recruiting talent, these urban centers stand out for their economic activity, educational institutions, and sectoral strengths:

1. Copenhagen

As Denmark's capital and largest city, Copenhagen is a hub for business, finance, and technology. It offers a diverse talent pool and is home to many multinational companies, startups, and educational institutions.

2. Aarhus

Aarhus, Denmark's second-largest city, is renowned for its strong educational institutions and vibrant tech scene. It is a key city for hiring in IT, engineering, and research sectors.

3. Odense

Odense, located on the island of Funen, is a significant center for robotics and manufacturing. The city’s innovative environment and skilled workforce make it ideal for tech and industrial roles.

4. Aalborg

Aalborg is known for its strengths in information technology, telecommunications, and energy sectors. Its universities and research centers contribute to a highly educated workforce, perfect for high-tech and engineering hires.

Hire in Denmark  compliantly with Gloroots

Gloroots, as an Employer of Record (EOR) in Denmark , offers a streamlined solution for businesses aiming to establish and expand within the Denmark n market. Our EOR platform enables rapid onboarding of candidates, facilitating swift operational setup while maintaining adherence to both local and international regulatory standards. Tailored to support businesses of varying sizes, Gloroots alleviates the complexities involved in payroll management, benefits administration, and tax obligations, removing the need to set up a local entity. This service empowers companies to efficiently assemble and oversee a remote workforce in Denmark . For further details on how Gloroots can assist with your recruitment needs in Denmark , please reach out to us.

Frequently Asked Questions 

What are the key employment laws I need to know when hiring in Denmark?

When hiring in Denmark, it's crucial to be aware of key employment laws, including the Danish Holiday Act, which mandates paid annual leave, and the Salaried Employees Act, which governs employment terms for salaried workers. Additionally, employers must provide a written statement of employment terms to employees working over 8 hours weekly within one month of employment. Compliance with the Working Environment Act, which ensures safe working conditions, is also essential.

Can I hire independent contractors in Denmark, and what should I consider?

Yes, you can hire independent contractors in Denmark. It’s important to draft comprehensive agreements outlining the scope of work, timeline, compensation, and obligations. Ensure compliance with Danish labor laws to avoid misclassification risks. Independent contractors are responsible for their own taxes and social security contributions, simplifying payroll processes for your organization.

What are the benefits of using an Employer of Record (EOR) in Denmark?

Using an EOR in Denmark simplifies the hiring process by managing all legal responsibilities, payroll, taxation, and HR tasks. This is particularly beneficial for companies without a local presence, allowing them to focus on core operations while ensuring full compliance with Danish regulations. An EOR facilitates quick onboarding, compliance with local laws, and reduces administrative burdens, making it an efficient solution for entering the Danish market