Payroll and Benefits Guide Denmark
Last updated: May 03, 2023
Contributions
Employer
Employer Payroll Contributions
|
2,271.00 DKK (annually) for full time employee |
Mandatory Social Security (ATP) |
|
5,300.00 DKK |
Public social security schemes (estimated) |
|
5,000.00 DKK |
Industrial injuries insurance (estimated) |
|
1,350.00 DKK |
Maternity Leave Fund |
|
1% |
Holiday Bonus (accrued each month & paid out in May). |
|
11,921.00 DKK +1% |
Total Employment Cost |
Employee
Employee Payroll Contributions
| 1,135.80 DKK p.a. | Social Security (ATP) |
Employee
Employee Income Tax
National/ State Tax
|
12.10% |
Bottom Tax |
|
15% |
Top Tax (15% of part of the top tax base Exceeding 568,900) |
Local Tax
|
8.00% |
Labor Market Tax |
|
24.971% |
Municipal Tax (average)
|
Share Tax
|
27.00% |
up to 58,900 DKK – (highly paid expat workers might also be eligible for a lower tax rate of 27% for up to 84 months.) |
|
42.00% |
58,900 DKK and above |
Church Tax
| 0.669% |
Church tax average Church tax average, Church tax is imposed by municipalities and is only charged for members of the Danish State Church (Lutheran). When registering in Denmark, all individuals should explicitly state if they should not be comprised. |
Employer taxes
Minimum Wage
General
No law in Denmark mandates minimum wage. The minimum wage is decided through collective bargaining agreements in each sector.
However, The Danish government has set the government fees and minimum salary for foreign nationals working in Denmark under the pay-limit scheme for 2023.
Denmark’s minimum gross salary increased to 465,000 DKK per year under the pay-limit scheme.
MINIMUM WAGE (PER MONTH)
Payroll
Payroll Cycle
The payroll cycle in Denmark is generally monthly and employers must make payments on the same day of each month before the end of the month.
13th Salary
In Denmark, it is not a legal requirement to pay a 13th-month salary payment, however, employers are known to offer employees bonuses.
Working Hours
General
According to the Working Time Directive Act, the maximum average working hours are 48 hours per week, calculated as an average over four months. A general working week for a Danish employee is five days, working on average 37.5 hours per week.
Overtime
A maximum of 48 hours can be worked per week including overtime.
Overtime hours in excess of 37 hours a week are paid at an overtime compensation rate of between 150.00% and 200.00% of the employees’ regular pay rate, depending on the collective bargaining agreement in place. Overtime pay is not mandatory unless stated in a collective agreement.
Working Week
Monday-Friday
Leave
Paid Time Off
In Denmark, the standard paid leave entitlement for full-time employees is 25 working days per year, accrued at the rate of 2.08 days of paid leave for each month of service. It is common to give fibe additional days’ leave as an added benefit.
The Danish Holiday Act operates with two different systems for pay during holidays. An employee is either entitled to pay during the holiday (i.e., payment of the usual salary or wages) and a supplement of 1% (holiday supplement), or a holiday allowance consisting of 12.5% of the employee’s salary or wages (blue-collar). The holiday allowance must be deposited with FerieKonto so that the money is available to be paid out to the employee.
The paid leave entitlement is accumulated from 1st September through to 31st August. However, the period for taking leave has been extended by four months and is thus 16 months in total. This means that the leave earnt from 1 September 2020 to 31 August 2021 may be taken up to and including 31 December 2021. This is still subject to approval from the employer.
Holidays are divided into 3 weeks which are called the main holiday, and additional 2 weeks which are called residual holidays.
Workers must use at least 20 days per year, any remaining can be carried over to the following year.
If special circumstances prevent the employee from taking accrued paid holiday before the holiday period expires, then up to four weeks of paid holiday can be transferred to the next holiday period.
Sick Days
Salaried employees are entitled to receive full salary during sick leave due to illness or injury as follows:
- The first 30 days of sickness are usually paid by the employer (the employer period). For employees who are not entitled to full salary during sickness, this only applies if the employee has been continuously employed by the employer for the last eight weeks and has worked for at least 74 hours.
- After the employer period, the municipality will reimburse or cover the sickness benefit if the relevant conditions are met, including that the employee has been in employment and has worked for at least 240 hours within the latest six calendar months, and that during at least five of those months has been employed for a minimum of 40 hours each month.
The sickness benefit is calculated based on the employee’s hourly pay and weekly working hours.
Maternity Leave
A pregnant employee is entitled to 18 weeks of maternity leave, four weeks preceding the due date, and 14 weeks after the birth, where the first two weeks are mandatory.
Employees who meet statutory eligibility requirements are covered by the Danish Salaried Employees Act and are entitled to 50.00% of their regular salary from the employer from four weeks before the expected date of birth until 14 weeks after the actual date of delivery.
Paternity Leave
The father is entitled to take two weeks of paternity leave during the mother’s 14-week period of maternity leave. There is no legal obligation for the employer to pay salary during paternity leave. However, it is common practice in Denmark under collective agreements and under some individual agreements that employees receive full salary from the employer for a certain period during leave.
Parental Leave
Following the initial 14 weeks of maternity leave, each parent has the right to take up to 32 weeks of leave. This time can be extended by either eight or 14 weeks. However, this will decrease the amount of parental allowance received monthly. One of the parents may choose to defer between eight to 13 weeks of leave which can be kept for a continuous period before the child is one.
During the parental leave (14 weeks after receiving the child), adoptive parents are entitled to leave to the same extent and regulation as biological parents.
Other Leave
In Denmark, employees between 18 and 30 are liable to be called up for the national military or civil service by ballot, while both men and women can volunteer for national service. The normal period of service is four months. Employees must be granted leave by the employer during national service and are protected against dismissal regarding requesting or taking such leave.
Termination
Termination Process
Employers can terminate a fix term contract for the following reasons – business, personal or worker’s’ misconduct. It requires notice and a written explanation for the termination. If the reason is misconduct, a warning needs to be given and the employee gets a chance to explain actions.
The date of resignation/termination must be reported in the month the employee resigns.
Notice Period
In accordance with the labor law in Denmark, the notice period is dependent on the length of employment. In general, the notice period is determined by the Act of Employment or by the Collective Bargaining Agreement. The Act of Employment stipulates:
0 – 3 months of service = 14 days’ notice
3 – 6 months of service = 1 month’s notice
6 months – 3 years of service = 3 months’ notice
3 – 6 years of service = 4 months’ notice
6 – 9 years of service = 5 months’ notice
More than 9 years of service = 6 months’ notice
The allowance must include:
- Salary
- Benefits
- Fixed supplements
- The company pension share
No vacation allowance or pension of the allowance is calculated and the allowance has a tax benefit of 8.800 DKK.
Employee notice during the probation period is two weeks, thereafter, one month notice. It can, however, be agreed that the notice increases in line with the employer.
Severance Pay
Employees who have been continuously employed for 12 or 17 years are entitled to severance pay corresponding to one month or three months’ salary if the employer terminates the employment.
Probation Period
The probationary period in Denmark is dependent on the type of role and is stipulated within the employment agreement. In general, probation periods are up to three months.
Common Benefits
General
Monthly health Insurance contributions, pension schemes (5-10% of base salary employer contribution), transportation allowance, and mobile phone allowance.
VISA
VISA
Danish law provides many options for employers of foreign nationals.
Denmark is a member of the European Union (EU) and the Schengen Area. Nationals of Finland, Iceland, Norway, and Sweden are free to reside, study and work in Denmark. However, suppose the employee is an EU/EEA or Swiss citizen and intends to live in Denmark for more than three months. In that case, the employee must apply for a registration certificate at the International Citizen Service or the State Administration (in Danish: “Statsforvaltningen”) upon arrival in Denmark.
Employers must meet the new threshold for new work permits under the pay limit scheme. As of Jan 1st, 2022, extensions of existing work permits may continue to use salaries from the initial application.
If the employee is a citizen of a country outside the EU/EEA or Switzerland, the employee must apply for a residence and work permit before entering Denmark. Suppose the employee already resides legally in Denmark. In that case, the employee can submit their application for a residence and work permit at newtodenmark.dk, at a Danish police station, or the Citizen Centre of the Danish Agency for International Recruitment and Integration.
With effect from May 2023, the Schengen Area countries will begin implementing a new digital system (EES) to track the entry and exit of non-EU citizens at their borders.
VAT
General
The standard rate of VAT in Denmark is 25.00%.
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Payroll and Benefits Guide
in Denmark
What’s covered in this guide:
- Employer/employee contributions
- Minimum wage
- Working hours
- Visa requirements
And more...
Public Holidays Calendar
| Day | Date | Holiday | Notes |
|---|---|---|---|
| Sunday | Jan-1 | New Year’s Day | |
| Thursday | Apr-6 | Maundy Thursday | |
| Friday | Apr-7 | Good Friday | |
| Sunday | Apr-9 | Easter Monday | |
| Friday | May-5 | General Prayer Day | |
| Thursday | May-18 | Ascension Day | |
| Monday | May-29 | Whit-Monday | |
| Monday | Dec-25 | Christmas Day | |
| Tuesday | Dec-26 | St Stephen’s Day |
Is there a maximum length for a fixed-term contract?
There are no limits on the length of a fixed-term contract or the number of times it can be renewed, but the contract has to be tied to an objective criteria like the completion of a particular task or the arrival of a certain event.
How is the industrial injury insurance calculated?
Hi, thank you for your question. To answer, the industrial injury insurance is calculated based on the type of industry, number of employees the employer has, and the insurance company used to facilitate the insurance policy.
How does the optional pay account process work?
Hi, The optional pay account (free choice account) is for employees who have a collective agreement and are covered by the Agreement for Trade, Transport and Service, or the National Agreement for shops. It is an employer contribution of 6% (7% starting March 2022) that the employee uses to save up salary for use on holidays, childcare, sickness, etc., or for extra payment for pension. The employee chooses (depending on the agrrement) each year how many vacation days they want to take during the upcoming vacation period, how the value of the untaken vacation days should be used, and what the current payments to the free choice account are to be used for.
Hi, nice info and page!
As a future employer of temporary seasonal jobs in Copenhagen, will I have to calculate to give any sick leave benefits on short fixed term contracts, or is that 100% optional given that we wont have a collective agreement for this short period? And on contracts of 1-3 months, does paid time off (vacation) come into play?
Hi Johan, being a ‘seasonal worker’ in itself does not mean that time off and sick leave does not have to be given; there are many different employment terms that can impact this so it is important these requirements are always reviewed with the specifics of the company, industry and worker. For sick leave, there could be collective bargaining agreements that could have an impact. Generally white collar would receive full salary during sickness. For Blue collar there tends to be more variation in terms depending on any Union agreement/Employment contract/Staff handbook as well as length of employment. For vacation leave, workers on full-time schedules will earn 2.08 days every month; workers who are paid hourly earn 0.07 days per day.
Thank you for the reply!
Since these are seasonal kiosks open to retail household goods only about 1 month, and not being unionised, could we specify in our employment contracts that no sick leave and/or vacation days are earned?
So how are calculated overtime hours overal. I dont get it. Any hours after 37 should be treated as overtime? I’m in construction. Working 53 hours weekly. In contract not stated any fixed working hours.
Hi Sandor, overtime law in Denmark isn’t strict and overtime pay is not always required, that’s why it’s important for employees to have overtime agreements written within their contracts. There are however limits on working hours and daily rest requirements. An employee should not be working more than 48 hours on average per week measured over a period of four months. I recommend speaking with your HR team to understand your companies specific requirments.
When holiday payment should be payed when you have claimed that? I have waited over one month so far..
And yes i have spoke with employer several times.
Hi Markus, holiday pay is generally paid out on May 1st of each year.
How it goes on that situation when you dont work on that company anymore? I have changed my employer in September.
Hi Markus, how long did you work at your previous company for?
Not long. 4 months. There was so much issues with salaries etc.
Hi Markus, this is not something that we can really advise on. In general, an employee is eligible to get paid holiday pay after completing one month of employment. At the end of your employment, you should receive holiday pay unless it’s already been taken. However, most likely holiday pay will be paid to your account with Feriekonto. I would suggest that you speak with the employer and find out what has been arranged.
What is the maximum working hours per week for a university student from abroad? And the minimum hourly rate?
The maximum number of hours that international students can work per week is 20. The minimum wage isn’t set, but students typically earn between 75 and 90 DKK per hour.