Denmark Payroll and Benefits Benchmark guide

No minimum wage. However, for public and private sectors, collective barganing agreement states approximately DKK 110 per hour.

Your employer calculates your holiday allowance. In general, you accrue 12.5% of your salary in holiday allowance. This complies with 2.08 days of holiday for every month that you are employed.

From September 1, 2020, a new holiday law will come into force, and until then a transitional arrangement that will affect your holiday in 2020 will be in effect. The holiday you earn during the transition year from September 1, 2019 to August 31, 2020 cannot be paid for, but will become a savings with the new fund, Employees' Vacation Resources.

Due to the new Danish holiday act in 2020, the government is implementing a transitional period (September 2019 –August 2020). This period employees will earn holiday in the normal manner but will not be able to utilize their entitlement. Instead, the holiday pay will be frozen, stored in a government fund, and paid out to employees when they retire or leave the Danish labor market. Frozen holiday pay must be transferred to the Employees’ Fund for Outstanding Holiday Funds by 31 December 2020. Employers may choose to transfer administration to the Holiday Fund itself or self-administer the money within the fund.

First 30 days of the employee’s sick leave is paid by the employer. After the first 30 days, the state pays the sick leave if the employee has been continously employed by the employer for the last 8 weeks and has worked for at least 74 hours. During leave, employees receive 90% of their salary with a maximum of DKK 4,300 per week or DKK 116.22 per hour

Expecting mothers are entitled to leave of 4 weeks before birth, and 14 weeks after. Salaried employees receive 50% of their wages for this time. Employees who are covered by agreement may be entitled to full pay.

New fathers are entitled to leave of 2 weeks before the birth of their child and 14 weeks after.

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 8 or 14 weeks, however this will decrease the amount of parental allowance received monthly. One of the parents may choose to defer between 8 to 13 weeks of leave which can be kept for a continuous period before the child is one years old.

Work related injury leave: Employers are covered for work accidents from contributions made to social security (ATP). Also, most employers have additional private workers compensation insurance. Work accidents should be reported no later than nine days after the first day of absence. See sick leave for time off and compensation.

Full time employment is 37 hours weekly. A work week should not exceed 48 hours, including overtime.

Denmark does not have a mandatory or general overtime regulation. Rules for overtime should be stated in the collective bargaining agreement. The typical overtime pay is 50% pay for the first three hours, and 100% pay for subsequent hours, holiday or Sunday work.

25% standard rate.

The Danish pension system is comprised of three pillars; The national public pension, labor market pension and company-based pension (voluntary), and the individual pension (voluntary).

All employers and employees in Denmark with must make contributions to the supplementary old-age pension (ATP). The contribution rates depend on how the employee is paid.

Private pension plans are very common, the average employer contribution can reach 15% of the pensionable salary. The pensionable earnings are calculated on the monthly base salary of January × 12,24.

Contributions are made to the following:ATP –An employer and employee contribution made towards lifelong pension.AUB–Contributions from employers that goes to funding apprenticeships andvocationaltraining. AES –Contributions made towardsoccupational injury and disease. AFU The Danish Labor Market Fund for Posted Workers is a fund ensuring that employees posted to Denmark receive wages owing to them. Maternity Leave Fund-All Danish employers are obligated to contribute to a maternity leave fund. There are public as well as private maternity leave funds. The annual contribution is approximately EUR 128 per full time employee.

Total cost for both social security and occupational insurance are about DKK 10,000-12,000 per employee.

Salary is paid in 12.24 instalments. Special holiday allowance accounts for the additional 0.24 as it is paid at a rate of 2%.

On September 1, 2020 a new Holiday Act is due to enter into force, which significantly will change the Danish holiday system. (Danish Holiday Act No 60 of 30 January 2018)

Salaries are usually paid on monthly basis. Paydays vary from the last day of the month to the 15th of the following month.

Employees are given from 1 month to 6 months notice depending on the length of their employment in the company.

Under the labor law in Denmark, salaried employees are entitled to a notice period of 1-6 months, depending on the length of employment. 

There is no general statutory regulation on severance pay, but salaried employees who have been in continuous employment for between 12 to 17 years are entitled to a severance payment of between 1 to 3 months salary. Some CBAs also include rules on severance pay that depend on seniority.