Employment certificate vs. contract: the difference

Two documents, two names, and a lot of confusion among employers and employees. What is the difference between an employment certificate and an employment contract? When is the employee entitled to one rather than the other? And what did the changes to the employment-certificate law that came into force in 2023 mean?

This article gives you a clear answer, and explains what you as an employer need to have in place to comply with the law.

What is an employment certificate?

An employment certificate is a written document that the employer is legally required to give to a new employee. It is governed by the Act on Employment Certificates and Certain Working Conditions (LOV no. 501 of 16/05/2023, which implements the EU directive on transparent and predictable working conditions).

The employment certificate serves as documentation of the employment relationship: it is the employer's written confirmation of the agreed terms. It is one-sided, it is issued by the employer, and is not necessarily signed by both parties.

What is an employment contract?

An employment contract is a mutual agreement, a contract in the classic contract-law sense, entered into and signed by both parties (employer and employee).

An employment contract can contain everything an employment certificate contains, plus:

• Non-compete clauses
• Non-solicitation (customer) clauses
• Confidentiality clauses
• Special bonus schemes
• Probation terms with specific conditions

In practice, many companies use the employment contract as the primary document, and thereby also meet the requirement for an employment certificate if it contains all the mandatory information.

The legal difference

	Employment certificate	Employment contract
Legal nature	One-sided document	Bilateral agreement
Signature	Not necessarily mutual	Requires signature from both parties
Requirements	Mandatory minimum standard	More flexible, can contain extra terms
Protection	Documents the agreement	Creates and documents the agreement
Purpose	Meet the employment-certificate law	Fully govern the employment relationship

Short version: All employment contracts can function as employment certificates, but not all employment certificates are full contracts.

When are you entitled to an employment certificate?

Under the law, an employee is entitled to a written employment certificate if:

1. The employment is expected to last more than 1 month, and
2. The average weekly working time exceeds 3 hours

If both conditions are met, the employer is obliged to hand over an employment certificate.

When must the certificate be handed over?

The law (2023) sets stricter requirements for the deadline than the former law. The employer must now hand over:

• The most important information about the terms of employment: within 7 calendar days of the start of employment
• The remaining information (for example training rights and social security schemes): within 1 month of the start of employment

Previously all information only had to be given within 1 month. The change reflects the EU directive's requirement for greater transparency early in the employment.

The 2023 changes to the employment-certificate law

In 2023 the Folketing adopted a new Act on Employment Certificates and Certain Working Conditions (LOV no. 501 of 16/05/2023), which implemented the EU directive 2019/1152 on transparent and predictable working conditions. The law came into force on 1 July 2023 and brought several important changes:

New information requirements

Employers must now provide information about:

• Training and skills development, any rights to it
• Identity of the user undertaking, in the case of temporary agency work
• Leave, including maternity/parental leave, holiday and other paid leave
• Any right to overtime and payment for it
• Termination procedure, details of the procedure and notice
• Social security schemes, which social institutions receive contributions (for example ATP)

Ban on exclusivity clauses

The new law prohibits employers from preventing employees from having side jobs with other employers ("parallel employment"), unless there is an objective reason.

Stronger right to predictable working conditions

Employees with variable working hours (for example zero-hours contracts) have gained a stronger right to know their working time in good time, and a right to request more predictable terms after 6 months.

Right to a reply on a request for changed terms

After 6 months' employment, an employee can request more favourable terms of employment (for example a fixed number of hours). The employer has a duty to reply to the request in writing no later than 1 month after.

What must the employment certificate contain?

The law (§ 3) requires that this information is stated:

Within 7 calendar days

1. The employer's and employee's name and address
2. The address of the workplace
3. Job title and a short description of the work
4. The start of the employment relationship
5. The expected duration of the employment (for fixed-term employment)
6. The duration and conditions of any probation period
7. Salary, supplements and other forms of remuneration
8. Payment times for the salary
9. Normal daily and weekly working time

Within 1 month of the start

1. Any rights to training
2. Applicable collective agreement (if relevant)
3. Notice periods for both parties
4. Holiday and holiday allowance
5. Sick-pay scheme
6. Social contributions and to which institutions

Consequences of a missing employment certificate

If the employer does not hand over an employment certificate, or it is deficient, the employee can be entitled to compensation, regardless of whether the deficiencies have affected them concretely.

The compensation is typically:

• Up to 13 weeks' pay for serious breaches
• Up to 20 weeks' pay in aggravating circumstances

A claim for compensation is brought before the courts or in labour arbitration. Trade unions often assist their members in such cases.

Always use an employment contract, not just a certificate

Even though the law only requires a certificate, we strongly recommend that you enter into a mutual employment contract with all employees. The reason is simple: a contract creates clarity and can prevent disputes.

A good employment contract should contain:

• All the mandatory employment-certificate information
• Clear terms for probation and termination
• Provisions on overtime and time off in lieu
• A confidentiality clause (especially with access to trade secrets)
• A non-compete and/or non-solicitation clause (for a relevant role)
• A description of the role's tasks and area of responsibility
• Terms for home working (where relevant)

When is only an employment certificate used?

An employment certificate, without the mutually signed contract form, is typically used for:

• Short-term temporary work and temporary positions
• Casual staff (hourly without fixed hours)
• Young people under 18 in part-time employment
• Seasonal staff

Here a simple, one-sided employment certificate is practical and legally sufficient, but it is still wise to obtain the employee's signature as confirmation.

Special rules for certain industries and collective agreements

Many collective agreements contain their own requirements for employment certificates, for example a requirement for specific wording of seniority calculation, salary placement, and rights during illness. Always check the applicable collective agreement before you issue an employment certificate.

Public employees are moreover subject to special rules under the civil-servant legislation and the relevant collective agreement.

Frequently asked questions

Can an employment certificate replace an employment contract?

Legally, an employment certificate can meet the minimum requirements of the law. But it does not protect the employer against disputes over terms that are not agreed explicitly, a mutual contract is always preferable.

What happens if the employee does not sign the employment certificate?

The employer's obligation is to hand over the certificate. If the employee refuses to sign, the employer should document the delivery (for example via email with a read receipt).

Do the rules apply to foreign employees?

Yes. Foreign employees working in Denmark are protected by Danish employment law, including the employment-certificate law. The certificate can be issued in English if the employee does not understand Danish, but it must contain the same information.

Must I issue a new certificate on salary increases or job changes?

Yes, if there are material changes to the terms of employment, the employee must be notified in writing. The easiest solution is an addendum to the existing contract.

What is the difference between probation and notice period?

The probation period is a period, typically 3 months, in which both parties can terminate the relationship with shorter notice (usually 14 days). Notice periods after probation follow the law or the collective agreement and are typically 1-6 months depending on seniority.

Conclusion

Employment certificate and employment contract overlap in practice, but they are not the same. The law sets the minimum standard, but a well-drafted employment contract with mutual consent protects both parties far better.

With the 2023 changes, the requirements have been tightened: more information must be given faster. Review your current templates and make sure they meet the new rules.

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The content of this article is for guidance only and does not constitute legal advice. The employment-certificate law is complex, and collective-agreement provisions can affect the requirements. Consult an employment lawyer or HR consultant if in doubt.