How to hire employees in Denmark with an Employer of Record

Hiring employees in Denmark through an Employer of Record gives you access to one of Europe’s most skilled and productive workforces without setting up a local entity. Denmark consistently ranks among the top countries globally for ease of doing business, but its employment framework has specific requirements that international employers need to get right from day one. This guide covers what you need to know.

If you are comparing EOR providers for Denmark, our guide to the best Employer of Record providers in Denmark covers that in detail. For a broader look at Danish employment law, see our Denmark country guide.

Denmark’s labour market is built on a model known as “flexicurity”, a combination of flexible hiring and dismissal rules, generous social security protections, and active labour market policies. For employers, this means fewer regulatory barriers to hiring compared to many other European countries, paired with a highly educated workforce and strong English proficiency.

The country has a GDP per capita among the highest in the EU, a well-developed tech sector, and a deep talent pool in engineering, life sciences, fintech, and green energy. Copenhagen in particular has become a magnet for international companies looking to build European teams.

But Denmark’s employment system has its own logic. Collective agreements cover a large proportion of the workforce and often set terms that go beyond statutory minimums. Understanding the interplay between legislation, collective bargaining, and individual contracts is essential.

An Employer of Record is a company that legally employs people on your behalf in countries where you do not have your own entity. In Denmark, the EOR becomes the legal employer, handling employment contracts, payroll, tax withholding, pension contributions, and compliance with Danish labour law.

You retain full control of the work. You manage the employee’s day-to-day tasks, set priorities, conduct performance reviews, and make development decisions. The employee is part of your team in every practical sense. The EOR provides the legal and administrative infrastructure that makes the employment relationship compliant.

Here is what the process looks like in practice.

Step 1. You identify your candidate. You source, interview, and select the person you want to hire. The EOR does not recruit for you.

Step 2. You agree on terms. Before you finalise the offer, your EOR can advise on Danish market norms, mandatory benefits, expected salary ranges, and total employer costs. This helps you make an informed offer with no surprises.

Step 3. The EOR creates a compliant employment contract. Danish employment contracts must meet specific requirements under the Danish Employment Contract Act (Ansættelsesbevisloven). The EOR drafts the contract using locally compliant templates, including all mandatory terms. You review and approve before it goes to the employee.

Step 4. Onboarding and registration. The EOR handles registering the employee with the Danish tax authorities (SKAT), setting up payroll, enrolling the employee in the mandatory ATP pension scheme, and completing all required documentation. You handle the team introduction and work setup.

Step 5. Ongoing employment. Each month, the EOR processes payroll, withholds income tax (A-skat) and the 8% labour market contribution (AM-bidrag), makes employer pension and ATP contributions, and ensures ongoing compliance. You manage the work.

Step 6. Changes and offboarding. If circumstances change, the EOR ensures everything is handled according to Danish law. This includes notice periods, which vary depending on the employee’s length of service and whether the Salaried Employees Act (Funktionærloven) applies.

Danish employment law requires employers to provide written terms of employment to any employee whose average working time exceeds three hours per week over a four-week period. Since the 2023 update to the Employment Contract Act, these terms must be provided within seven calendar days of the start of employment (for key terms) and within one month for remaining terms.

The contract must include the identity of the parties, the place of work, a description of the role, the start date, expected duration (if fixed-term), salary and payment intervals, working hours, holiday entitlement, notice periods, and references to any applicable collective agreements.

For employees covered by the Salaried Employees Act (Funktionærloven), which applies to most white-collar workers, additional protections apply. These include minimum notice periods that increase with tenure, specific rules on sick pay, and restrictions on post-termination non-compete clauses.

An EOR manages all of this. The contract templates are already built for Danish compliance, and your EOR will ensure they reflect any applicable collective agreements.

Denmark has lower mandatory employer social contributions than most EU countries, but there are costs beyond gross salary that you need to account for.

AM-bidrag (labour market contribution). This is technically an employee contribution at 8% of gross salary, but it is the employer’s responsibility to withhold and remit it to SKAT.

ATP (Arbejdsmarkedets Tillægspension). The mandatory supplementary pension scheme. Contributions are shared between employer and employee, with the employer paying two-thirds and the employee one-third. The total contribution is relatively modest (around DKK 3,408 per year for a full-time employee in 2026).

Holiday allowance. Under the Danish Holiday Act, employees accrue 2.08 days of paid holiday per month, totalling 25 days per year. The employer must either pay holiday pay at 12.5% of salary or provide paid holiday at the employee’s normal salary rate. There are specific rules around accrual, payment, and the interaction with the holiday fund (FerieKonto). See our guide to the Danish Holiday Act for the full breakdown.

Occupational pension. While there is no universal statutory employer pension obligation beyond ATP, most collective agreements require employer pension contributions, typically in the range of 8% to 12% of salary. Even where no collective agreement applies, offering a pension is standard market practice and expected by Danish employees.

Other costs. Depending on the industry and any applicable collective agreement, there may be contributions to training funds, industrial injury insurance, or other schemes.

For a full picture of what it costs to employ someone in Denmark, use the Boundless cost calculator.

The flexicurity model. Denmark’s employment protections are less rigid than in countries like France or Germany, but they come with trade-offs. Dismissal is relatively straightforward provided the employer follows proper notice periods and does not breach anti-discrimination rules or collective agreement terms. However, the social safety net is strong, and employees expect fair treatment.

Collective agreements (overenskomster). Around 80% of the Danish workforce is covered by collective agreements negotiated between employer organisations and trade unions. These agreements often dictate minimum pay, pension contributions, working hours, overtime rules, and notice periods. Even if your employee is not a union member, the applicable collective agreement may still set the terms. Your EOR should know which agreements apply and ensure the employment contract reflects them.

The Salaried Employees Act (Funktionærloven). This applies to employees who spend more than 50% of their time on office, administrative, or commercial work. It provides enhanced protections including minimum notice periods (one month during the first six months, increasing to six months after nine years), sick pay obligations, and restrictions on competition clauses. Most white-collar employees hired through an EOR in Denmark will be covered.

Working time. The EU Working Time Directive applies. The standard working week is 37 hours under most collective agreements. Overtime rules vary by agreement.

Sick pay. Employers must pay sick pay for the first 30 calendar days of an employee’s illness. After that, the municipality takes over through the sickness benefit system (sygedagpenge). The Salaried Employees Act provides additional protections for covered employees, including full salary during sickness.

Parental leave. Denmark reformed its parental leave system in 2022 to implement the EU Work-Life Balance Directive. Each parent is entitled to 24 weeks of leave. Two weeks for each parent are earmarked and cannot be transferred to the other parent. The remaining weeks can be shared or transferred depending on the employment situation. Employers are reimbursed through the barsel.dk scheme.

For most international companies hiring one to twenty employees in Denmark, an EOR is the more cost-effective and faster option. The threshold at which an entity makes financial sense is higher than most people expect, particularly when you factor in the ongoing cost of local accounting, legal compliance, and HR administration.