Employer of Record (EOR) in Denmark
Employer of Record (EOR) in Denmark helps companies hire skilled professionals without opening a legal entity. Denmark has a workforce of about 3 million people, with strong expertise in technology, pharmaceuticals, renewable energy, engineering, and life sciences. Its labor market is highly educated, multilingual, and supported by strong digital infrastructure. However, Denmark’s strict employment regulations, collective bargaining agreements, and high tax rates make compliance complex. Businesses often rely on EOR providers to handle payroll, taxation, social security, and employment contracts. This allows organizations to hire efficiently, reduce administrative burdens, and focus on operations while ensuring compliance with Danish labor laws.
About Denmark
Denmark, a Nordic country in Northern Europe, is known for its high quality of life, stable economy, and strong social welfare system. With a population of nearly 6 million, Denmark is one of the world’s most digitally advanced nations, ranking highly in innovation and green technology.
The country is part of the European Union’s single market, which facilitates business and trade across Europe. Its economy is supported by sectors such as information technology, renewable energy, biotechnology, and pharmaceuticals. Major cities like Copenhagen and Aarhus are hubs for business, research, and global connectivity.
Denmark is also recognized for its work-life balance, inclusive labor market, and flexible working conditions under the “flexicurity” model, which combines labor flexibility with strong social security protections. These factors make Denmark a strategic choice for businesses planning expansion into Northern Europe.
Employment Terms and Regulations
Types of Contracts:
Permanent, fixed-term, temporary, and apprenticeship contracts.
Job Titles:
Common roles include software engineers, IT specialists, project managers, healthcare workers, and researchers.
Working Hours:
Standard is 37 hours per week, with flexibility under collective agreements.
Minimum Wage:
No statutory minimum wage; wages are set by collective bargaining agreements (usually €18–€20/hour).
Probation Period:
Up to 3 months, depending on the contract.
Taxation and Contributions
Income Tax:
Progressive, ranging from 8% to 55%, including municipal and state taxes.
Employer Contributions:
Around 12% of salary, covering labor market contributions, ATP pension, occupational insurance, and maternity leave funding.
Social Security:
Low compared to other EU countries but mandatory schemes exist.
Types of Leave
Annual Leave:
25 days per year.
Public Holidays:
9–11 days depending on the year.
Sick Leave:
Employers pay for the first 30 days; social security may cover longer absences.
Parental Leave:
Up to 52 weeks, partially paid through government schemes.
Employee Benefits
- Employer pension contributions (ATP and private schemes).
- Paid vacation and holiday allowance.
- Health insurance and occupational injury insurance.
- Work-life balance programs supported by collective agreements.
Termination Process
Notice periods vary based on seniority and collective agreements. Employees can be terminated with notice ranging from 1–6 months. Unfair dismissal protections apply, and collective agreements often regulate redundancy procedures.
Employer Taxes
Employer contributions total around 12% of gross salary, including social contributions, pensions, and insurance schemes. Denmark is known for relatively low employer contributions compared to other EU nations, though employee income tax is high.
EMPLOYER TAXES
12% (Estimated)
FAQ's
How STM Manages Employment in India
Establishing an entity in every hiring location can be cost-prohibitive. STM simplifies the process by employing and paying your Indian talent on your behalf. We handle the intricate HR procedures and employment contracts in compliance with local laws. You can conveniently approve invoices through our platform. By partnering with an Employer of Record (EOR), you can efficiently and compliantly hire top talent globally.
Payment Processes for Indian Employees
We streamline payroll management for your Indian workforce. Employee hours, leaves, holidays, bonuses, and commissions are meticulously calculated. STM invoices you around the 15th of each month in your preferred currency, including US Dollars (USD), Euros (EUR), British Pounds (GBP), Canadian Dollars (CAD), or Singapore Dollars (SGD). This ensures your Indian employees receive their salaries promptly in Indian Rupees (INR). Simplify further by consolidating your global team’s salaries into a single payment.
Full-time Employees vs. Global Contractors
Contractors engage with multiple companies and are self-employed, while full-time employees focus solely on their employer and receive additional benefits like health insurance, equity, and time off. While hiring international contractors can be cost-effective, it comes with misclassification risks. Partnering with an EOR for contractor onboarding and payments ensures compliant and timely compensation.
Reliable Employee Support
Our platform offers accessible support for employees and employers with inquiries about benefits, visas, and global employment in India. Utilize the chat function to connect with our expert team. Additionally, every STM client is assigned a dedicated account manager, serving as the primary contact for global HR assistance.
