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Undoubtedly, payroll is a critical process for any organization. Pay cycle in Denmark refers to the period for which an organization pays its employees, and this can vary depending on the pay frequency that the organization chooses to adopt.

In Denmark, it is common for employees to be paid on a monthly basis.

Not mandatory in Denmark, however employees get bonuses in year end.

The government of Denmark introduced temporary changes to its international recruitment strategy for foreign nationals under the Fast-Track scheme and the Pay-Limit scheme. Effective 1 December 2022, the new gross minimum salary requirements will be reduced from DKK 448,000 to DKK 375,000 for both schemes. These temporary measures will remain valid for a period of three years.

All work more than the standard working hours a week is to be paid as overtime and is regulated by the employment contract or collective agreement. If the employee is hired for a fixed number of working hours, he or she can usually take time off in lieu of overtime pay for each hour of overtime worked. All collective bargaining agreements have rules on overtime payment. The most typical model is 50% for the first three hours and 100% for all subsequent hours and Sundays and public holidays.

The following information must be kept for each employee for a minimum of five years:

• name,
• date of birth
• tax registration number,
• address,
• records of wages paid (including overtime, bonuses and tax-free reimbursements) and the calculation and withholding/payment of taxes.

If an employee is terminated, records of employee notification, correspondence with the competent authorities regarding dismissal, outplacement, and calculations of termination payments.

Job ads that state information about the company and the duties of the candidate. Specify if any company seeks applicants to submit their materials in English.

Once the candidate is identified, the job offering and employment contract are submitted to the candidate.

The employment contract must contain the name and address for both employer and employee, workplace location, job title or description, start date, the expected duration for permanent positions, policies regarding holidays and holiday pay, terms of notice for employee and employer, salary, any other wages, and frequency of paychecks, typical working hours, Information on any collective agreements that apply.

• Paperwork and documents are collected, which are required for various processes in a company such as registration, benefits to be given, and HR purposes.
• Every company has a different policy with their onboarding purpose; usually, it’s a brief about the company and answering questions from the freshly hired employee.

The following information is required during onboarding:

• Name of Candidates
• Address
• Date of Birth
• Tax Registration Number
• Work Permit
• Copy of Identification

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.

Denmark observes the following public holidays:

• Jan 1: New Year
• Apr 6: Maundy Thursday
• Apr 7: Good Friday
• Apr 9: Easter Sunday
• Apr 10: Easter Monday
• May 5: Prayer Day
• May 18: Ascension Day
• May 28: Whit Sunday
• May 29: Whit Monday
• Dec 25: Christmas Day
• Dec 26: Second day of Christmas

In addition to these, holidays like Good Friday and Easter

Abolition of common prayer day public holiday 2024:

With effect from January 1, 2024, Denmark proposed to reduce Great Prayer Day as a public holiday, replacing it with an ordinary extra working day on the fourth Friday after Easter. Employees with longer working hours due to the holiday abolition will receive payment for the extra working day. A pay bonus equals the value of a normal workday, calculated as 0.45% of the annual salary, and is paid to wage earners with a fixed monthly salary.

The first 30 days of sickness are usually paid by the employer. For employees who are not entitled to full salary during sickness, this only applies if the employee has been continuously employed by the employer for the last eight weeks and has worked for at least 74 hours.

After the employer period, the municipality will reimburse or cover the sickness benefit if the relevant conditions are met, including that the employee has been in employment and has worked for at least 240 hours within the latest six calendar months, and that during at least five of those months has been employed for a minimum of 40 hours each month.

The sickness benefit is calculated based on the employee’s hourly pay and weekly working hours. The highest rate of sickness benefits is currently DKK4,460 per week or DKK120.54 per hour.

The father is entitled to take two weeks of paternity leave during the mother’s 14-week period of maternity leave. There is no legal obligation for the employer to pay salary during paternity leave. However, it is common practice in Denmark under collective agreements and under some individual agreements that employees receive full salary from the employer for a certain period during leave.

A pregnant employee is entitled to 18 weeks of maternity leave, four weeks preceding the due date, and 14 weeks after the birth, where the first two weeks are mandatory.

Employees who meet statutory eligibility requirements are covered by the Danish Salaried Employees Act and are entitled to 50.00% of their regular salary from the employer for four weeks before the expected date of birth until 14 weeks after the actual date of delivery.

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 year old.

During the parental leave (14 weeks after receiving the child), adoptive parents are entitled to leave to the same extent and regulation as biological parents.

Bereavement leave:

There's no statutory bereavement leave. Any pay or leave is at the employer's discretion.

Carer’s leave:

Employees have the right to time off to care for a close relative who is dying, is seriously ill, or disabled. The government is responsible for the carer's leave pay during such leave. If employers have already paid the employee's salary for the month, they can be reimbursed by the government, equivalent to the allowance.

Force majeure leave:

Employees are entitled to unpaid leave as a result of a relative's illness or accident.

• Employers can terminate a fixed-term contract for the following reasons – business, personal, or worker misconduct. It requires notice and a written explanation for the termination. If the reason is misconduct, a warning needs to be given, and the employee gets a chance to explain their actions.

• The date of Resignation/Termination must be reported in the month the employee resigns.

• When an employee terminates employment, then one must give either one month or one calendar month's notice. An exception is made if the work carried out is of a short nature and does not extend over one month or if the working relationship is a trial and does not extend beyond three months.

Grounds for termination

• Employment terminated in the event of sickness. Your employment contract describes what the rules are at your workplace. For example, if you are employed under the funktionærloven/ salaried employees Act the following applies: if you are ill for more than 120 days in a twelve-month period, and sometimes even earlier, you risk your employment being terminated.

• On grounds of misconduct.

In accordance with the labor law in Denmark, the notice period is dependent on the length of employment. In general, the notice period is between one and six months.

The Act of Employment

• 12 years seniority = 1 month allowance
• 17 years seniority = 3 months allowance

The allowance must include:

• Salary
• Benefits
• Fixed supplements
• The company pension share

No vacation allowance or pension of the allowance is calculated, and the allowance has a tax benefit of 8.000 DKK

A salaried employee who has worked for the same company for over 12 years or in the case of an employee’s dismissal for economic reasons, the employee is entitled to the following severance pay scheme

• 1 month’s salary, if the employee has more than 12 years of seniority at the time of expiration of the notice period.
• 2 months’ salary, if the employee has more than 15 years of seniority at the time of expiration of the notice period, and
• 3 months’ salary, if the employee has more than 18 years of seniority at the time of expiration of the notice period.

Danish law provides many options for employers of foreign nationals. Denmark is a member of the European Union (EU) and the Schengen Area. Nationals of Finland, Iceland, Norway, and Sweden are free to reside, study and work in Denmark.

However, suppose the employee is an EU/EEA or Swiss citizen and intends to live in Denmark for more than three months. The employee must apply for a registration certificate at the International Citizen Service or the State Administration (in Danish: “Statsforvaltningen”) upon arrival in Denmark.

Employers must meet the new threshold for new work permits under the Pay Limit scheme as of 1 Jan. 2022. Extensions of existing work permits may continue to use salaries from the initial application.

If the employee is a citizen of a country outside the EU/EEA or Switzerland, the employee must apply for a residence and work permit before entering Denmark. Suppose the employee already resides legally in Denmark. In that case, the employee can submit their application for a residence and work permit at newtodenmark.dk, at a Danish police station, or at the Citizen Centre of the Danish Agency for International Recruitment and Integration.

• With effect from 1 Apr. 2023, the number of full-time employees needed to qualify for Fast Track certification has been reduced from 20 to 10.
• Foreign nationals who have successfully completed a Danish professional bachelor’s graduate or doctoral program in Denmark are automatically granted a three-year period during which they may work or look for employment.

• Police background check: Private criminal records can only be obtained by the concerned individual from the national police. The applicant must obtain and submit their criminal record to the employer.

• Medical Check/medical history: Depends on the requirement of the job. Medical history can only be required if it is in any way relevant to the job description. Drug screening falls under medical check. Employees cannot be ordered to submit a drug test if it is not relevant to their future job. A female applicant is not required to disclose pregnancy as this might lead to a discrimination lawsuit.

• Credit History: Depends On the requirement of the job. In Danish practice, credit checks and full disclosure of their financial situation is only required for people who will have access to and handle the company's fund.

• Social Media checks- Yes
• Immigration status- Yes, employers are required to verify if a foreign national has the right to work in the country. Failure to do so and hiring an illegal immigrant is punishable by heavy fines.