Your Guide to Hiring Employees and
Contractors in Denmark
Danish krone (kr., DKK)
Ease of doing business
All employee payments will be made in equal monthly installments on or before the last working day of each calendar month, payable in arrears.
Minimum Wage Requirements:
- There are no provisions regarding the minimum salary stipulated in the law.
- The average effective hourly minimum salary across all private and public sectors is approximately 110 DKK.
Individual Income Tax
Income tax in Denmark is complex. The individual income tax ranges from 8% to 56.5%. Income tax is calculated according to progressive rates. Multiple additional factors may impact overall rates, such as the household status, the number of children, and the employee’s location. Local, Church and state taxes may also apply.
Up to DKK 50,761
Tax rate: 8%
Up to DKK 544,800
Tax rate: 42.83%
Over DKK 544,800
Tax rate: 56.5%
The employer cost range is around DKK 915 DKK per month, excluding the holiday allowance.
- Holiday Pay: Accrued at 12.5%
- Aes labour market insurance: 34.17 kr
- Financing contribution (FIB): 68.75 kr
- ATP (Labour Market Supplementary Pension): 189.35 kr
- Barsel.dk (Maternity contribution): 102.08 kr
- AUB (Education contribution): 233.58 kr
- AFU (Labor Market Fund for Secondary Persons): 1.42 kr
- Administration of holiday fund: 10.20 kr
- Administration of frozen holiday pay: 2.00 kr
- Compulsory occupational injury insurance: 273.60 kr
Monday to Friday
Overtime Pay & Maximum Hours:
All 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.
Terminations in Denmark can be complex. There is no at-will termination in Denmark for employers. Terminations can be done for just cause subject to certain conditions.
Compliant terminations include:
- Voluntarily by the employee
- By mutual agreement
Unilaterally by the employer based on:
- Probation period
- Objective grounds
- Disciplinary dismissal
- Performance due to unsuitability for the job
- By the expiration of the contract
The minimum notice period is 2 weeks and will be increased according to the length of the employment.
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.