Employment law 101: the employer's duties

Do you employ staff in Denmark? Then you are subject to extensive employment legislation that governs everything from the first employment contract to the day the employee leaves the business. Employment law is one of the areas that most often creates conflicts and compensation claims, typically because employers have not had control of the rules from the start.

This guide gives you the basic overview of your duties and rights as an employer in Denmark.

The most important legislative framework

Danish employment law is governed by a combination of:

• The Act on Employment Certificates (a requirement for a written employment contract)
• The Salaried Employees Act (applies to salaried employees: office, commercial and warehouse staff, etc.)
• The Holiday Act (holiday and holiday pay)
• The Equal Treatment Act (prohibition of discrimination)
• The Equal Pay Act (equal pay regardless of gender)
• The Act on maternity and parental leave
• The Working Environment Act (safety at work)
• Collective agreements (which can supplement or replace the law)

Many industries are also governed by collective agreements via unions and employers' associations. If your company is covered by a collective agreement, the agreement is to a large extent decisive.

Duty 1: Employment contract (employment certificate)

Requirement: Under the Act on Employment Certificates and Certain Working Conditions (2023), all employees with more than 3 hours of weekly working time on average (measured over 4 weeks) are entitled to written information about the terms of employment, the most important information no later than 7 calendar days after the start of work, and the rest no later than 1 month after.

What must the contract contain?

• The name and address of the employer and employee
• Place of employment and the nature of the work
• Job title
• Date of employment
• Duration (fixed-term or ongoing)
• Salary, supplements and payment time
• Daily/weekly working hours
• Notice period (or a reference to the law)
• Holiday matters
• Any probation period
• Pension matters

Consequence of a missing contract: The employee can claim compensation (up to 13 weeks' pay, or up to 20 weeks in aggravating circumstances) before the courts, or in the labour-law system if a collective agreement applies.

LegalDock's employment contract template meets all requirements and can be adapted to your company.

Duty 2: Salary and terms

Danish law does not set a general minimum wage, that is primarily governed by collective agreements. But there are requirements for:

• Salary at agreed times, typically monthly
• A written payslip on payment
• Equal pay, women and men in the same position are entitled to the same salary (the Equal Pay Act)
• Overtime pay, depends on the contract and any collective agreement

Duty 3: Holiday

The Holiday Act gives all employees the right to 5 weeks of holiday a year. The most important rules:

Holiday accrual and taking

• Holiday is accrued on an ongoing basis in the holiday year (1 September to 31 August)
• Employees accrue 2.08 days of paid holiday per month of employment
• Holiday can be taken in the holiday-taking period from 1 September to 31 December the following year (16 months) or carried over/paid out under special conditions

Holiday pay

• Employees accrue holiday pay, typically paid to FerieKonto or a holiday account under the collective agreement
• The employee's holiday allowance: 12.5% of the salary

Agreement on holiday

• The employer sets the holiday timing with 3 months' notice (summer holiday) and 1 month's notice (other holiday)
• The employee can require 3 weeks' continuous holiday in the period 1 May to 30 September

Duty 4: Illness

When an employee is ill, the employer has:

• A duty to pay salary during the statutory sickness-benefit period (or the period in the collective agreement)
• The right to request a medical certificate after 3 sick days (can be agreed from day 1)
• A duty to start sickness follow-up (a sickness conversation) no later than 4 weeks after the first sick day

Sickness-benefit reimbursement

The company can seek reimbursement from the municipality for salary paid during illness, typically from day 31. The reimbursement corresponds to the public sickness-benefit rate.

Dismissal due to illness

An employee can be dismissed due to illness, but it requires fair grounds and can trigger compensation. If the 120-day rule is agreed in the contract (the Salaried Employees Act § 5(2)), a salaried employee can be dismissed with 1 month's notice after 120 sick days within 12 months.

Duty 5: Dismissal and termination

Dismissal of employees is governed by both the Salaried Employees Act and the employment contract.

Notice periods for salaried employees

Length of employment	Employer's notice
Under 6 months	1 month
6 months to 3 years	3 months
3 to 6 years	4 months
6 to 9 years	5 months
Over 9 years	6 months

For employees who are not salaried employees, the notice period is set in the contract or collective agreement (typically 14 days to 3 months).

Fair dismissal

If the employee has been employed for more than 9 months (salaried employees: 12 months), fair grounds for dismissal are required. Fair grounds can, for example, be:

• Operational reasons (redundancies, restructuring)
• The employee's performance or cooperation problems
• Persistent illness

Under the Salaried Employees Act § 2b, the compensation for an unfair dismissal can be up to 6 months' salary (at at least 15 years' seniority; 3 months at age 30, 4 months at at least 10 years). Under some collective agreements the compensation can, however, be up to 52 weeks' salary.

Summary dismissal (immediate termination)

Summary dismissal is the most serious sanction and requires material breach, for example theft, sexual harassment, repeated violations. Summary dismissal without sufficient grounds is expensive: compensation plus any salary in the notice period.

Duty 6: Equal treatment and non-discrimination

It is unlawful to discriminate against employees or applicants on the basis of:

• Gender and pregnancy
• Race, ethnic origin, religion
• Age
• Disability
• Sexual orientation

A breach of the equal-treatment principle can lead to compensation of up to 9-12 months' salary.

Rights as an employer

Employers naturally do not only have duties, you also have rights:

The right to manage

You have, as a starting point, the right to manage and distribute the work, to decide what is to be done and how. The right to manage is limited by agreements and legislation, but is a central foundation of Danish labour law.

Probation period

In the first 3 months of employment (typically) you can dismiss with a shorter notice and without a requirement of fair grounds. The probation period must appear in the employment contract.

Non-compete and non-solicitation clauses

You can enter into agreements on non-compete and non-solicitation clauses that limit the employee's options after leaving. These are governed by the Employment Clauses Act (ansættelsesklausulloven), make sure they meet the law's requirements (compensation, a specially trusted position, maximum duration) and are reasonable in scope.

Pitfalls, the most expensive mistakes

1. No employment contract Compensation of up to 13 weeks' pay. Avoided with five minutes' work.

2. Unfair dismissal A lack of documentation for warnings and conversation minutes is the typical reason for losing cases.

3. Incorrect holiday handling Holiday pay that is not paid correctly leads to claims from FerieKonto and any fines.

4. Summary dismissal on a weak basis Summary dismissal requires solid documentation. Always consider legal advice before a summary dismissal.

5. Discrimination in hiring Job postings that discriminate (for example "young and energetic") can lead to complaints to the Board of Equal Treatment.

Good habits as a responsible employer

• Create and keep employment contracts for all employees
• Document warnings and conversations in writing
• Hold regular employee conversations
• Keep track of holiday and illness in a system
• Update contracts when terms change
• Seek legal advice before you dismiss an employee in cases of doubt

Frequently asked questions

What is the difference between a salaried employee and a non-salaried employee?

Salaried employees are staff in office work, commerce or similar, they are covered by the Salaried Employees Act, which gives stronger rights. Hourly-paid skilled and unskilled workers are typically not salaried employees.

Can I dismiss during probation without grounds?

Yes, during probation you can dismiss with shorter notice (typically 14 days) and without a requirement of fair grounds, but only if probation is agreed in the contract.

What happens if I do not pay holiday pay correctly?

The employee can claim the amount via FerieKonto, and the company can be fined for a lack of payment.

Can I require a medical certificate from day 1?

Yes, if it appears in the employment contract. Otherwise you can require a medical certificate after 3 sick days.

Is it lawful to have part-time employees on zero-hours contracts?

Zero-hours contracts (roster staff without guaranteed hours) are in a legal grey area. There is a requirement that the actual employment appears in the terms, and the employee must be secured rights corresponding to the actual working time.

Conclusion

Good employment-law practice does not only protect employees, it protects you as an employer against expensive disputes. Invest time in the right contracts and procedures from the start, and you avoid the mistakes that cost companies millions every year.

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The content of this article is for guidance only and does not constitute legal advice. Employment law is a complex area, seek professional assistance in cases of doubt, especially in connection with dismissals.