Denmark: Labour and Employment Comparative Guide

Last Updated: 30 July 2019
Article by Michael Møller Nielsen
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1 Legal framework

1.1 Are there statutory sources of labour and employment law?

The main sources of employment law are legislation, collective bargaining agreements and individual contract and case law. Regulation of such law is influenced by the implementation of EU directives in national law.

1.2 Is there a contractual system that operates in parallel, or in addition to, the statutory sources?

No.

1.3 Are employment contracts commonly used at all levels? If so, what types of contracts are used and how are they created? Must they be in writing must they include specific information? Are implied clauses allowed?

Generally, Danish employment law distinguishes between three main groups of employees:

  • white-collar employees;
  • blue-collar workers; and
  • managing directors responsible for the day-to-day management of a company and people who are self-employed.

The terms and conditions of white-collar employees, as well as their protection in each employment relationship, are typically regulated by the Danish Salaried Employees Act and are also reflected in the individual terms of employment contracts.

The terms and conditions of certain groups of typically non-academic white-collar employees (primarily office and administrative staff, as well as sales assistants) are – depending on the industry and in addition to the aforementioned regulation – typically regulated by collective bargaining agreements.

On the other hand, blue-collar workers are to a large extent covered by collective bargaining agreements only. The Danish labour market is characterised by a long tradition of employer and trade union negotiations regarding collective bargaining agreements for blue-collar workers. The agreements between the labour market organisations ensure protection in employment.

An increasing number of statutory laws apply to all kinds of workers, due to the influence of the European Union. EU law can be implemented through law (mandatory) and, typically, through collective bargaining agreements. Workers who are not subject to the Salaried Employees Act or a collective bargaining agreement are not protected against unfair dismissal.

If so, what types of contracts are used and how are they created? Must they be in writing must they include specific information?

An individual employment agreement can be contracted in writing, orally or tacitly. It is not a legal requirement for an employment relationship to be established in a written contract in order for it to be valid. However, within one month of the commencement of employment, the employer must provide the employee with a written statement of all material terms of employment and at least:

  • the name and address of the employer and the employee;
  • the place of work;
  • the job title;
  • the employment commencement date;
  • in the case of fixed-term employment, the expected duration of employment;
  • holiday entitlements;
  • notice periods;
  • the agreed salary;
  • working hours; and
  • any applicable collective bargaining agreements.

If the terms of employment are materially amended, written information reflecting the amendments must be issued within one month of the change coming into effect.

Are implied clauses allowed?

There are few implied terms, as typically all material terms are to be agreed in writing. However, some terms of unwritten law apply to all employment relationships, the most important being the duty of loyalty.

The duty of loyalty means that the employee may not undertake any activities deemed to be in competition with the employer. In addition, the employee is prohibited from performing any acts which could potentially be detrimental to the employer.

2 Employment rights and representations

2.1 What, if any, are the rights to parental leave, at either a national or local level?

In Denmark, the right to payment from the employer during maternity leave is mainly regulated through collective bargaining and individual employment agreements and workplace policies. However, as a minimum, female employees covered by the Salaried Employees Act are entitled to 50% of their ordinary salary in the four weeks prior to and 14 weeks after delivery.

Parents who are not entitled to maternity leave with pay will usually be entitled to benefits from their local municipality.

If Danish employers pay a salary during maternity leave, they are entitled to reimbursement of the daily cash benefit from the local municipality that the employee would have received. In addition, it is possible for employers to receive a supplementary reimbursement from the Danish Maternity Leave Fund.

As an employee, a woman is entitled to return to the same or a similar position with working conditions no less favourable than those applicable prior to the leave. Furthermore, upon returning from leave, parents may request changed working hours or working patterns. The employer is obliged to consider (although not obliged to accept) such request and reply in writing.

2.2 How long does it last and what benefits are given during this time?

After the 14th week following childbirth or the reception of a child, either parent shall be entitled to parental leave for 32 weeks.

However, the father must begin the parental leave within the first 14 weeks after childbirth.

Additionally, and following a 24 January 2019 decision of the European Parliament and the European Council regarding new regulations on paternity and parental leave, Denmark is soon expected to introduce earmarked parental leave for fathers.

2.3 Are trade unions recognised and what rights do they have?

In Denmark, there are no general regulations on the recognition of trade unions. Outside of the area of collective bargaining agreements, trade union representatives are generally recognised as lay representatives and only through industrial action may the employer be forced to recognise collective bargaining.

Trade unions have no particular rights protected by legislation. They derive their rights from the labour market's main agreements and collective bargaining agreements.

2.4 How are data protection rules applied in the workforce and how does this affect employees' privacy rights?

The General Data Protection Regulation (GDPR) regulates the processing of personal data, including an employer's processing of employee personal data. Employees have the same rights as other data subjects according to the GDPR, including the right to access personal data processed by the employer, the right to deletion, the right to restriction of processing and the right to data portability.

Employees also have the same right as other data subjects to be informed about the employer's processing of personal data according to Articles 13 and 14 of the GDPR.

The Danish Data Protection Act supplements the GDPR and – in certain areas – provides for even greater protection of personal data, including in relation to the processing of social security numbers, which generally requires consent unless the processing is required by law.

It is a general principle in both the GDPR and the Danish Data Protection Act that the employer – as the controller of employees' personal data – must have a legal basis for processing employees' personal data, and that the employer must process such data in accordance with the general data processing principles according to Article 5 of the GDPR.

As a main rule, it is lawful for an employer to process employees' personal data where the processing is necessary for the employer to fulfil its obligations according to the employment contract and its duties according to applicable legislation.

According to the GDPR and the Danish Data Protection Act, an employer can therefore also process special categories of personal data (‘sensitive' personal data) without the employee's consent where processing is necessary for the purposes of carrying out the obligations and exercising specific rights of the controller or of the data subject in the field of, for example, employment law and social protection law, or according to an applicable collective bargaining agreement.

In some areas, the nature of the employment relationship has an impact on how the employer must adhere to the data protection rules. For example, the employer must take special care when obtaining consent from employees (where relevant). It must be made clear to the employees that their consent is voluntary, and that refusal to provide consent will have no negative impact on the employment relationship. Employees must be able to withdraw their consent under Article 7 of the GDPR.

The Danish Data Protection Agency published guidelines on the processing of personal data in employment relationships in November 2018 (in Danish only). These guidelines have streamlined the Data Protection Agency's practice in certain areas. For instance, the guidelines state that an employer must obtain consent from employees if it wishes to publish pictures of them – for example, on its website, on social media or in marketing materials. According to the guidelines, this requirement applies to both profile pictures and ‘situational pictures'. As a main rule, internal publication of employees' personal data, including pictures, on the employer's intranet does not require consent.

It is standard for employers to have access that allows them to monitor emails, telephone calls and use of computer systems where such monitoring is for operational reasons and to ensure correct use of the equipment.

If (limited) private use of email, telephones and other communication systems is permitted, the employer must not use its access to read or monitor employees' private emails, telephone calls and so on (except in case of suspicion of fraud or similar criminal activities).

After termination of an employee, it may be lawful for the employer to keep his or her email account active for a limited period, but this can never exceed 12 months. The employer can keep an email account active only to ensure that significant information is not lost and only to receive emails – not to send emails from the former employee's account. The former employee must be informed that the email account is being kept active and for how long.

It is recommended that the employer inform all employees about its use of control measures and processing of personal data relating to use of email, internet, telephone and other systems in its HR policy and/or privacy policy.

2.5 Are contingent worker arrangements specifically regulated?

Contingent worker (or ‘fixed-term employment') agreements are regulated by the Danish Fixed-Term Employment Act. The purpose of the act is to improve the quality of fixed-term employment by applying the principle of non-discrimination and to establish a framework to prevent abuse originating from the conclusion of several consecutive fixed-term employment agreements.

The principle of non-discrimination prohibits employers from treating fixed-term employees less favourably than their permanent counterparts, unless the differential treatment is based on objective grounds and not solely on the temporary status of the employment relationship.

In order to prevent abusive renewal of fixed-term employment agreements, an extension of the fixed-term agreement must be justified by objective circumstances (eg, extension due to maternity leave, vacation, illness, project delays or similar).

3 Employment benefits

3.1 Is there a national minimum wage that must be adhered to?

Denmark has no statutory minimum wage. Market-level wages are regulated in collective bargaining agreements, but these agreements have no general binding effect.

3.2 Is there an entitlement to payment for overtime?

Outside of collective bargaining agreements, there are no general regulations regarding payment for overtime or time off in lieu; such entitlements are thus for the employer to decide.

In practice, under collective bargaining agreements employees are often entitled to overtime payment or time off in lieu.

3.3 Is there an entitlement to annual leave? If so, what is the minimum that employees are entitled to receive?

According to the Danish Holiday Act, an employee is entitled to 25 days of holiday per holiday year, which is currently the period from 1 May to 30 April.

An employee accrues 2.08 days of paid vacation for each month of employment during the calendar year, to take during the subsequent holiday year.

During the first year of employment, the employee is still entitled to take 25 days of holiday per holiday year. However, the employer can deduct 4.8% of the employee's salary for each day of holiday in respect of which no right to paid holiday has been accrued.

Effective 1 September 2020, a new Holiday Act will come into force in Denmark. After the transition to the new Holiday Act, Danish employees will accrue 2.08 days of paid vacation for each month of employment, which the employee can take during the new holiday year which runs concurrently with the accrual of paid holiday – that is, in the period from 1 September to 31 August. The employee will therefore be able to accrue and take paid holiday from the commencement of employment.

3.4 Is there a requirement to provide sick leave? If so, what is the minimum that employees are entitled to receive?

Salaried employees who are covered by the Danish Salaried Employees Act are entitled to receive full pay while on sick leave, regardless of seniority and length of absence.

Hourly paid employees are entitled to pay from their employer while absent due to illness according to the rules in the applicable collective bargaining agreement. Usually, employees must have reached a certain level of seniority before they are entitled to pay from their employer while absent due to illness.

Employees who are not entitled to receive pay while absent due to illness may be entitled to sickness benefit for the first 30 days of sickness. To qualify for sickness benefit, the employee must have been employed for eight weeks and have worked 74 hours during that period.

If the employee does not fulfil these conditions or has been absent due to illness for more than 30 days, he or she may be entitled to sickness benefit from the employee's municipality.

3.5 Is there a statutory retirement age? If so, what is it?

The retirement age in Denmark is determined by law and is regulated every five years. The retirement age is increased gradually in line with Danish employees' life expectancy.

The retirement age in Denmark thus depends on the year in which the employee was born. The younger the employee, the older he or she must be to receive early retirement and state pension.

The retirement age varies from 65 to 68 and is expected to reach 72 in 2050.

4 Discrimination and harassment

4.1 What actions are classified as unlawfully discriminatory?

Direct and indirect discrimination is prohibited according to the Differential Treatment Act and the Equal Treatment Act.

Direct discrimination occurs when a person is, has been or would be treated less favourably than someone else in a comparable situation. Indirect discrimination occurs when a provision, criterion or practice, which may appear neutral, consequently puts people who share a protected characteristic at a disadvantage.

The Differential Treatment Act prohibits discrimination of employees due to disability, among other things. The employer is obliged to make reasonable and proportionate adjustments, and to adapt the workplace to accommodate the needs of the employee's disability. Victimisation of employees who have acted to enforce their rights is prohibited.

From the outset, the employer is responsible for workplace harassment.

4.2 Are there specified groups or classifications entitled to protection?

Under EU law, atypical workers are protected against discrimination where they are:

  • part-time workers;
  • fixed-term workers; or
  • employed through a temporary agency.

The pro rata temporis principle applies for all part-time workers. This means that part-time workers must enjoy the same employment conditions as comparable full-time employees on a pro rata basis. Fixed-term employees may not be treated less favourably than permanent staff. In general, a fixed-term contract may, from the outset, be extended only once; although where there are objective grounds to do so, it may be successively extended.

Temporary agency workers are entitled to protection with regard to working time, overtime, breaks, resting periods, night shifts, holiday, bank holidays and pay, at least at the same level as those employed directly by the employer making use of the temporary agency workers. The employer shall inform the temporary agency worker of positions available at the company. Exceptions apply where collective bargaining agreements are applicable.

4.3 What protections are employed against discrimination in the workforce?

Equal treatment regulation in Denmark is largely based on EU directives prohibiting discrimination.

The Differential Treatment Act prohibits employers from direct or indirect differential treatment of employees or job applicants on the grounds of age, disability, race, skin colour, religious beliefs, political orientation and national, social or ethnic origin.

According to the Equal Treatment Act, an employer is prohibited from discriminating on the grounds of gender in relation to working conditions, including termination of employment. The act provides for the possibility of annulment of dismissals conducted on the grounds of pregnancy, maternity leave or adoption, or payment of compensation for acts of discrimination in contravention of any protected criterion.

Any employee associated with someone with protected characteristics is also protected.

4.4 How is a discrimination claim processed?

Employees may bring their claims before the ordinary courts, the industrial tribunals or the Equal Treatment Tribunal. If the Equal Treatment Tribunal decides in favour of the employee and the employer is not satisfied with the decision, the Equal Treatment Tribunal is legally obliged to pay the employee's legal costs for bringing the appeal before the courts.

Claims must always be settled before or during legal proceedings. There are no exact formal requirements required to conclude, for example, a settlement agreement; but it is always recommended to agree the terms in writing and to ensure that the employee has received advice. If not drafted with diligence, a settlement agreement for full and final settlement may be set aside by the courts.

4.5 What remedies are available?

Compensation is the main remedy in Denmark. In some cases – particularly before the industrial tribunals – reinstatement is also possible, but this remedy is rarely used.

The level of compensation ranges from DKK 10,000 to DKK 25,000 (eg, for claims for unequal treatment in relation to wage negotiations) to a standard level of six to 12 months' pay in case of discrimination, depending on seniority.

As from 1 January 2019, the level of compensation in so-called ‘#Metoo' cases (sexual harassment) has been increased by one-third of the previous level of compensation, which was in the average of DKK 25,000.

4.6 What protections and remedies are available against harassment, bullying and retaliation/victimisation?

Please see question 4.5. Additionally, many Danish companies have implemented their own individual guidelines on how to prevent and handle harassment, bullying, victimisation and so on in the workplace.

5 Dismissals and terminations

5.1 Must a valid reason be given to lawfully terminate an employment contract?

If the employee is protected against unfair termination, a reason for termination must be given.

5.2 Is a minimum notice period required?

Unless no notice period applies – which is typically due to short seniority or a special regulation in an individual employment contract – employees are entitled to notice of termination.

The notice period follows from:

  • the Salaried Employees Act;
  • a collective bargaining agreement; or
  • the individual employment contract.

5.3 What rights do employees have when arguing unfair dismissal?

Employees who are subject to the Salaried Employees Act are protected against unfair dismissal after 12 consecutive months of employment. The seniority requirement under collective bargaining agreements is typically nine months, but may vary. An employee is treated as dismissed if the employer gives notice of termination or invokes misconduct by the employee as a reason for considering the employment relationship as terminated. No third-party consent is required.

5.4 What rights, if any, are there to statutory severance pay?

As a rule, employees who are protected by the Salaried Employees Act may claim compensation in an amount equal to the length of the notice period in the case of unfair dismissal. Typically, one-third to two-thirds of the maximum amount is awarded. Furthermore, before the industrial tribunals, reinstatement is also possible.

Employees may bring their claims before the ordinary courts or, if protected by collective bargaining agreements, the ad hoc industrial tribunals.

6 Employment tribunals

6.1 How are employment-related complaints dealt with?

Any disagreements between the parties, including regarding cause for termination, are often initially dealt with through out-of-court negotiations either between the parties directly or between the employer and the employees' union. However, out-of-court negotiations are not mandatory.

The ordinary courts have jurisdiction over all disputes. However, if the employment is covered by a collective bargaining agreement and the employee is a member of the trade union which is party to the relevant collective bargaining agreement, the Labour Court and the industrial tribunals have sole jurisdiction over the matter.

The city courts are composed of one judge, whereas the High Court consists of three judges. Typically, at least five judges hear cases in the Supreme Court. The industrial tribunals are typically chaired by a justice of the Supreme Court and two or three expert assessors from the trade unions and employers' organisations which are also part of the tribunal.

Arbitration is seldom provided for in employment contracts, and only in agreements with top executives.

6.2 What are the procedures and timeframes for employment-related tribunals actions?

Outside the applicable provisions of collective bargaining agreements, no specific procedure applies. Conciliation is mandatory only if the applicable rules in a collective bargaining agreement so provide. Most such agreements do include specific procedural conciliation requirements in order for a case to be brought before the Labour Court or the industrial tribunals.

In cases brought before the Labour Court or the industrial tribunals, all expenses are covered by the trade unions; whereas before the ordinary courts, a court fee – which is calculated based on the financial value of the claim raised – is payable by the claimant.

Currently, case processing before the ordinary courts is lengthy: it takes between 12 and 18 months from submission of the claim before the actual court hearing is conducted. Case processing before the industrial tribunals is somewhat more expedient, but can vary from three to 12 months, and in some cases even more.

7 Trends and predictions

7.1 How would you describe the current employment landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

The European Parliament and the member states of the European Union have agreed that in future, two months of the total parental leave will be earmarked for the father of the child. If the father does not exercise his right to paternity leave, it will not be possible to transfer the related financial support for the earmarked paternity leave to the mother.

This leave agreement thus reduces the maximum period for which the mother is entitled to receive financial support during her maternity leave.

The agreement is expected to enter into force in Denmark within three years.

8 Tips and traps

8.1 What are your top tips for navigating the employment regime and what potential sticking points would you highlight?

When working under Danish employment and labour law, it is initially important to identify whether the employee and employer are covered by a collective bargaining agreement.

Next, it should be examined whether the employee is protected by any statutory legislation, such as the Danish Salaried Employees Act.

If you are still uncertain as to the legal position of the employee and employer in the specific situation, it is advisable to seek professional advice from an employment law specialist.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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