What is an employment contract?

An employment contract is the written foundation of your working relationship. Yet many employees end up signing without understanding what they are accepting, or starting a job with no contract at all. This guide explains what an employment contract is, what it must contain by law, and what you as an employee should watch out for before you sign.

What is an employment contract?

An employment contract (also called an employment agreement or employment certificate) is a legally binding agreement between an employer and an employee. It sets out the basic terms of the employment: what you do, what you earn, when you work, and what happens when the relationship ends.

The contract protects both parties: the employer knows exactly what they have committed to, and the employee knows on what terms they are employed.

Are you entitled to a written employment contract?

Yes. Under the Employment Certificate Act (ansættelsesbevisloven), you as an employee are entitled to a written employment certificate if your predetermined or actual working time is more than 3 hours a week on average in a reference period of 4 consecutive weeks. The new law, which entered into force in July 2023, therefore also covers many part-time, hourly and loosely attached employees who under the previous rules were not entitled to a certificate (where the threshold was more than 8 hours a week and at least 1 month of employment).

The employer must provide the most important information no later than 7 calendar days after the work has begun, and the remaining information no later than 1 month after.

If your employer does not comply, you may be entitled to compensation.

What must an employment contract contain?

The Employment Certificate Act (which implements the EU directive on transparent and predictable working conditions) requires that the following information appears as a minimum:

Basic information (within 7 days)

• The parties' identity: the name and address of the employer and employee
• The address of the workplace (or a statement that the work is done mobile or from home)
• The job title and position
• The start of the employment
• Pay: basic salary, supplements and payment frequency
• Working time: the normal or average weekly working time
• Notice period or a reference to the applicable rules or collective agreement

Additional information (within 1 month)

• Any probationary period and its length
• The right to training paid by the employer
• Terms for overtime and payment for it
• Rules on on-call work, if relevant
• Any collective agreement governing the employment

7 things to check before you sign

1. Job title and duties

Watch whether the job description is too broad or too narrow. "Other incidental work" is a vague expression that can be used to impose tasks you have not foreseen.

2. Pay and supplements

• Is the pay stated as gross pay?
• Are there seniority-based pay rises?
• Are bonus and commission described precisely, including when they are calculated and paid?

3. Working time

• Is a fixed weekly working time stated, or is there flexible or variable working time?
• Is overtime paid, with a supplement, or taken as time off?
• What are the rules for working from home?

4. Probationary period

For salaried employees the lawful probationary period is up to 3 months, and during it the notice period is shorter (typically 14 days). For other employees, the Employment Certificate Act sets an upper limit on the probationary period. Check the length and the notice period during probation.

5. Notice period

The Salaried Employees Act's notice periods apply to salaried employees, but collective agreements and individual agreements can depart from them in the employee's favour. Check whether the contract follows the Salaried Employees Act or departs from it, and if so whether that is to your advantage or disadvantage.

6. Non-compete and customer clauses

Many contracts contain clauses that limit your right to work for competitors or contact customers after the employment. These clauses are governed by the Employment Clauses Act and apply to employees generally. For a non-compete clause to be valid, it requires, among other things:

• That it is agreed in writing
• That you hold a specially trusted position
• That you receive compensation (at least 40% of pay for a binding of up to 6 months and at least 60% for up to 12 months)
• That the clause binds for at most 12 months from leaving

Important: do not sign a contract with a non-compete clause without understanding its reach.

7. Confidentiality

Most contracts contain a confidentiality clause. It is generally acceptable, but check what is defined as confidential information and whether the duty applies after the employment ends and, if so, for how long.

The difference between an employment contract and a collective agreement

Many employees are covered by a collective agreement, an agreement negotiated between a trade union and an employer or industry organisation. The collective agreement sets minimum terms for pay, working time, holiday and much more.

Your individual employment contract can give you better terms than the collective agreement, but not worse. If your contract gives, for example, a shorter notice period than the collective agreement prescribes, it is the collective agreement's notice that applies.

Special rules for particular forms of employment

Salaried employees

The Salaried Employees Act applies to employees in commercial, office, technical and supervisory work. The law gives a number of protective rights, including the right to pay during illness and compensation for unfair dismissal.

Part-time employees

Part-time employees as a rule have the same rights as full-time employees, calculated proportionally, and may not be treated worse than comparable full-time employees.

Temporary agency workers

A temporary worker employed through an agency is formally employed by the agency but works at a user company. Special rules on equal treatment with the user company's own employees apply.

What happens if you have not received an employment contract?

Many people start a job without having received a contract. What are your options?

1. Ask for the contract in writing, and set a deadline for the employer
2. Document your pay via payslips, emails and bank transfers
3. Contact your trade union for help
4. Seek compensation: a missing or deficient employment contract can trigger compensation of up to 13 weeks' pay (up to 20 weeks' pay in aggravating circumstances), decided through the industrial-relations system or the courts

The absence of a written contract does not mean there is no employment relationship. You are still protected by the law.

Can an employment contract be changed?

Yes, but as a rule only with both parties' consent. The employer cannot unilaterally change essential terms such as pay, working time or position without giving notice of the change with your notice period (a so-called essential change of terms).

Changes of a non-essential nature, for example an internal reshuffle of tasks within the job description, can, however, normally be carried out without agreement.

Frequently asked questions

When must the employment contract be sent?

The most important terms must be given no later than 7 calendar days after the work has begun. The remaining information must follow no later than 1 month after.

Is an oral employment agreement valid?

An oral agreement is legally binding but very hard to prove. You are entitled to a written contract, and it is strongly recommended to have one.

What is a probationary period?

A probationary period is a period at the start of the employment where both parties can terminate the relationship with shorter notice. For salaried employees the probationary period is up to 3 months.

What is the difference between an employment contract and an employment certificate?

Employment certificate is the legal term for the document that documents the terms of employment. In everyday speech, "employment contract" and "employment certificate" are often used for the same thing.

Conclusion

An employment contract is an important legal document that protects both parties. You are entitled to the most important terms no later than 7 days after the work has begun, and you should always read the contract carefully, especially the sections on pay, working time, probation and any clauses on competition and confidentiality, before you sign.

---

The content of this article is for guidance only and does not constitute legal advice. Consult a lawyer or your trade union for advice on your specific situation.