If you are considering hiring or posting employees to Denmark, you must be familiar with Danish labour market regulations and you must comply with such. Holst, Advokat has prepared a general guide to employment law and labour law in Denmark.
THE DANISH LABOUR MARKET MODEL
The Danish labour market model is known for its interplay between a flexible labour market, a generous social welfare system and active employment policies, for which reason the model is also called the ‘Flexicurity model’ as a contraction of the English words flexibility and security.
The model is a result of a long tradition of collective agreements concluded between employer associations and labour unions, in which the government rarely interferes. Wage rates, allowances and other terms of employment are thus in general not governed by statutory law (see section 4 for an introduction hereof), upon which a broad range of freedom of contract applies.
Hence, an employer and an employee may freely contract the terms of employment, provided that the contracted conditions are not unreasonable, nor do they differ from the principles of good faith in enforcing them. The majority of companies in Denmark have, however, chosen to enter into collective agreements, for which reason certain conditions and parameters covering employers’ and employees’ rights and obligations apply.
Take away: In general, freedom of contract applies.
There is no legal requirement for either Danish or foreign employers to follow or enter into a collective agreement. As mentioned in the previous section there is, however, a long tradition of collective agreements in Denmark, and the coverage by collective agreements in the private sector is estimated to be between 71-77 %, while the coverage is 100 % in the public sector.
Consequently, you should as a foreign employer be prepared for Danish trade unions contacting you urging you to enter into a collective agreement covering your employees working in Denmark. This applies especially if your terms of employment are poorer than what is common in the industry.
In that respect it is important to know, that the unions have some industrial actions available – strikes, recognitional picketing and sympathy actions – which can be used to support their demand for a collective agreement. Over the years there have been several cases of unions taking such actions towards both Danish and foreign employers.
If you are met with a demand for a collective agreement, you can choose to either:
- decline the demand and risk industrial action
- negotiate a collective agreement with the trade union yourself (a so-called adhesion agreement); or
- join an employers’ organisation and their already agreed collective agreements with trade unions.
When choosing which option to follow, it is important to be aware of the irreversible nature of collective agreements negotiated by the employers’ organisation and many adhesion agreements.
You can withdraw from an employers’ organisation and give notice to terminate the collective agreement, which came with it, but this will on the other hand not release you from the obligations of the collective agreement. If you do not want to enter another employers’ organisation and their collective agreement, and you cannot reach an agreement with the trade union, the only option of becoming released from the obligations under the collective agreement is to initiate a lock-out.
As for adhesion agreements, you have the option of negotiating a general termination clause under the agreement, upon which you will become released from the obligations of the collective agreement, if it is terminated. In that way it will not be applicable until it is substituted by another collective agreement.
Take away: Take into account the relevant collective agreement pertaining to your field of work when deciding on the terms of employment, and carefully consider the pros and cons of following or entering into a collective agreement.
Even though a broad range of freedom of contract applies in the Danish labour market, some elements of employment have nevertheless been subject to law-making. This is especially the case when directives from the European Union are implemented in Danish legislation.
Based on purpose, Danish legislation can be divided into three categories:
Ensure certain minimum rights to defined groups of employees, e.g.:
- The Consolidation Act on Employers’ and Salaried Employees’ Legal Relationship
- The Act on Certain Working Conditions in Agriculture
- The Act on Vocational Education and Training
- The Seamen’s Act
Ensure certain minimum rights to all employees, e.g.:
- The Consolidated Act on the Employer’s Obligation to Inform Employees of the Conditions Applicable to the Employment Relationship
- The Consolidation Act on the Entitlement to Leave and Benefits in the Event of Childbirth
- The Holiday Act
- The Sickness Benefits Act
- The Act on Collective Redundancies
- The Health Information Act
- The Act on Protection against Dismissal due to Organisational Matters
- The Working Environment Act
- The Consolidate Act on Employees’ Inventions
Protect employees from discrimination in difference situations, e.g.:
- The Consolidation Act on Prohibition of Discrimination on the Labour Market
- The Consolidation Act on Equal Pay to Men and Women.
Despite the range of legislation and regulations, some of the most important and universal in the area of employment law and labour law are the following:
The Consolidated Act on the Employer’s Obligation to Inform Employees of the Conditions Applicable to the Employment Relationship
The Act stipulates that if an employee works more than 8 hours a week, and it is the intention that the employment relationship shall last for more than one month, the employer must inform the employee of all essential terms of employment in writing.
The Working environment Act
The Act stipulates that the employer must assure that it is both safe and healthy to go to work, and that working environment issues are solved in accordance with the social and technical development in society and in a collaboration between the social partners and the Danish Working Environment Authority. The means for a safe and healthy working environment are to a great extent the responsibility of the employer, but some measures are statutory – e.g. an employer must carry out a workplace assessment (in Danish a so-called “APV”).
The Holiday Act
The Act stipulates that an employee is entitled to accrue 2.08 days of paid holiday for every month of employment. If the employee is engaged on a monthly basis or for a longer period of time and is entitled to full pay during public holidays and sick days, such employee shall receive his/her regular salary when taking holiday. If this is not the case, the employee will instead receive a holiday allowance, corresponding to 12.5 % of his/her annual salary. In addition, the Act contains rules about taking holiday, reporting instructions and payment of contributions to Danish organisations administrating holiday allowances (FerieKonto, Lønmodtagernes Feriemidler), pay during holiday, statute-barring and setting off.
The Consolidation Act on Employers’ and Salaried Employees’ Legal Relationship
The Act stipulates a wide range of rights and obligations for both the employer and the salaried employees, which mainly include shop assistants and office workers employed in buying and selling activities, office work or equivalent warehouse operations. For example, the Act includes regulations on termination, maternity and pregnancy leave, commission and illness.
Take away: Despite the freedom of contract, some employment law is statutory and must be complied with.
DO YOU REQUIRE OUR ASSISTANCE?
If you are considering hiring or posting workers to Denmark or if you are in doubt whether you apply with current legislation, please do not hesitate to contact us.
Henrik Christian Strand, associate partner
M, +45 3010 2186
Pernille Kristensen, attorney
M, +45 3010 2224
The content above does not constitute legal advice, nor does it constitute any attorney-client relationship.
If you require legal advice, please contact us directly.