PEO Denmark

Professional Employer Organization (PEO)

Employer of Record (EOR) | Remote Work

peo denmark

World Bank Ease of Doing Business Ranking

Ease of Doing Business in Denmark
  • DB Rank – 4
  • DB Score – 85.3

Rankings on Doing Business topics – Denmark

Rankings on Doing Business topics Denmark

Topic Scores

topic scores denmark

Global PEO in Denmark

Denmark, as a Professional Employer Organization (PEO) country, offers a highly conducive environment for businesses seeking to expand and establish their presence in Europe. With its stable economy, transparent regulatory framework, and skilled workforce, Denmark presents an attractive option for companies looking to outsource their HR and employment responsibilities. By partnering with a PEO in Denmark, foreign businesses can benefit from streamlined onboarding processes, compliance with local employment laws, and access to a vast talent pool. Additionally, Denmark’s reputation for innovation, green initiatives, and high quality of life further enhances its appeal as an ideal destination for global companies looking to optimize their operations while maintaining a competitive edge.

What Is a PEO?

A PEO, or Professional Employer Organization, is a company that provides a range of HR and payroll services to small and medium-sized businesses. These services can include employee benefits, payroll, compliance with labor laws, and recruiting and training.

PEOs work by entering into a co-employment agreement with the businesses they serve. In this arrangement, the PEO becomes the employer of record for the business’s employees, taking on responsibilities such as payroll, tax withholding, and employee benefits. The business, however, retains control over its day-to-day operations and the supervision of its employees.

PEOs can help businesses streamline their HR and payroll processes, reduce costs, and free up time and resources to focus on their core business activities. They can also provide access to a range of benefits and resources that small businesses may not be able to afford or manage on their own.

PEOs are also understood as employer of record / EOR at times.

Denmark – Country Overview

Denmark has one of the strongest market economies in Europe which is open to trading with foreign companies. The Danish economy relies heavily on foreign trade and the country boasts some world-leading advanced industries with a major focus on maritime shipping, pharmaceuticals, and renewable energy. The country’s economy is expected to grow from 330.00 USD Billion in 2019 to 348.00 USD Billion in 2020. The GDP growth projections for 2019 and 2020 are 2.4% and 2.1% respectively. Based on GDP, it is the 39th largest economy in the world.


Congolese Franc

Principal Language



Republic, Semi-presidential system

Capital City


Major Cities

Kinshasa, Lubumbashi, Kisangani, Kananga

Employment Contracts in Denmark

A written employment contract is mandatory under the Danish law, which needs to be finalized 1 month before the employment commencement date. The Act addressing the Employer’s obligation to inform workers about their employment conditions mandates that employers draft employment certificates containing crucial employment terms, with the following details:

  • The name and address of the employer and the employee
  • The address of the workplace or details of the central place of work
  • Description of the work or indication of the rank, title, job profile or position
  • The employment commencement date
  • The period of employment if it is fixed-term
  • The rights of employees regarding paid vacation
  • Required notice and other regulations of termination for both employer and employee
  • The salary and any supplements and benefits not included in the salary, such as pension contributions
  • The time of salary payment
  • The daily or weekly working hours
  • Any collective bargaining or other agreements that regulate the employment, and
  • Information regarding any other material terms of employment, such as bonuses, overtime, time off in place of payment for overtime and salary payable in lieu of maternity or paternity leave.

Based on recent case law, an employer’s noncompliance with the act may result in paying compensation to an employee up to 10,000 krone. The Danish Salaried Employees Act regulates the employment of salaried employees.

Working Hours in Denmark


The Danish Act on working hours stipulates that average working hours during a week and in a period of 4 months, cannot be more than 48 including overtime. The Danish Act on Working Environment specifies that employees are entitled to a weekly day off, which if possible should be Sunday.

Also, working hours need to be organized in a way that employees get a period of at least 11 hours of consecutive rest within every 24 hour period. Special rules apply to night shifts and work that employees under the age of 18 perform.

Employee Leave in Denmark


Denmark observes the following public holidays:

  • January 1: New Year’s Day
  • Maundy Thursday: Thursday before Easter; date varies
  • Good Friday: Friday before Easter; date varies
  • Easter: Date varies
  • Easter Monday: Monday after Easter; date varies
  • Common Prayer Day: The fourth Friday after Easter; date varies
  • Ascension: Date varies
  • Pentecost: Date varies
  • Whit Monday: Day after Pentecost, seventh Monday after Easter; date varies
  • Dec. 25 – Christmas Day
  • Dec. 26 – Boxing Day

Salaried employees get full pay on holidays. Collective agreements may specify additional holidays and the terms of payment in lieu of holidays for non-salaried employees.

Maternity Leave

According to the Danish Act on Maternity Leave and Allowance, a female employee is entitled to leave due to pregnancy and childbirth from 4 weeks before expected childbirth, maternity leave for 14 weeks after childbirth, and 32 weeks of additional parental leave subsequent to the 14th week of childbirth. It is mandatory for all private sector Danish employers to make contributions to the maternity pay equalization scheme. The annual contribution per full-time employee amounts to 750 krone currently. In return for contributing to the scheme, employers receive reimbursement for employees whose salary they need to pay on account of maternity, paternity and parental leave.

Female salaried employees are entitled to 50% of their salary during pregnancy and maternity. However, based on individual employment agreements or collective bargaining agreements, employees may receive full salary during some of their maternity leave.

An employer that pays salary on account of maternity leave may get its reimbursement from the public authority Udbetaling Danmark. Employees who do not get any payment from their employers may receive it in the form of maternity/paternity pay from Udbetaling Danmark.

Paternity Leave

Men receive paid leave of 5 days for the birth or adoption of a child. In case the mother dies during childbirth, or during her maternity leave, the father is entitled to her unused leave. The same leave policies apply to adoptive parents. A worker may get up to 12 weeks’ leave if he is the guardian or custodian of a baby younger than 6 months. The 12-week leave period can increase up to 18 weeks with a part-time work agreement.

Adoption Leave

Adoptive parents can take paid leave for 14 weeks post-adoption. The adoptive parents can share the leave of 14 weeks between them, but only one of them can take leave at a given time. Additionally, one of the adoptive parents is entitled to paid leave of 2 consecutive weeks within the first 14 weeks after adoption of the child, allowing the adoptive parents to be on leave together during this period.

Sick Leave

According to the Salaried Employees Act, the salaried employees receive full salary, including bonuses, during sick leave. An employer pays salary during the first 30 days of sick leave, after which the municipality reimburses the employer. As a general rule, the employer’s right to reimbursement does not impact the employee’s right to complete pay during sick leave.

The amount an employee gets depends on the employee’s hourly pay and weekly working hours. An employee not covered by the Salaried Employees Act may be entitled to payment during sick leave according to the relevant collective bargaining agreement or under the individual employment agreement. If the employee is not entitled to pay during sick leave, the employee may receive sickness benefits according to the relevant Danish Act.


Many components of payroll are governed by local labor laws in Denmark. A lot of the benefits and protections extended to employees in the country make up portions of payroll processing—leaves, work hours and overtime, taxation, and contributions to social insurance, to name a few. To implement payroll processing in Denmark efficiently, you need to understand which parts of income are taxable, how to handle social insurance contributions, and what data inputs to collect and validate, among other equally crucial considerations. Additionally, noncompliance to statutory components of payroll also hurts your relationship with any remote employees when their pay is delayed or becomes inaccurate.

Employee Benefits in Denmark

Danish citizens who can submit proof of having a permanent residence in Denmark get old age pensions payable by the state according to the provisions of the Danish Act on Social Pensions. Currently, the old-age pension is payable from the age of 65-67, varying based on the date of birth.

While it is not mandatory by the law for employers to provide pension schemes for their employees, many collective bargaining agreements include pensions covering blue-collar and white-collar employees. Mostly, these pensions accumulate through defined contribution plans.

In case there is no collective bargaining agreement, a private pension scheme, financed by contributions made by the employer and the employee, need to be established. Under this requirement, called Arbejdsmarkedets Tillaegspension (ATP), the employer makes two-thirds of the contribution, and the employee contributes the balance one-third. Usually, the employer’s contribution is 8%, with the employee’s contribution being 4%.

The Danish Act on Labor Market Supplementary Pensions mandates that all employers and employees need to contribute to a supplementary pension, which is in addition to the old age pension. Monthly employer and employee contributions depend on hours worked per month and whether the employee receives payment on an hourly, weekly or monthly basis.

Under the Danish law, employers are under an obligation to contribute a fixed amount per year per employee to the Labor Market Industrial Disease Insurance plan. The amount changes according to the number of industrial diseases in the relevant line of business. Employers are not under any obligation to provide health insurance to employees, although many companies offer this benefit.

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