Including both statutory and fringe benefits in a compensation package is an integral part of expanding your business into Denmark. Every country differs in its minimum wage requirements and government-sponsored benefits. As a new employer in Denmark, companies need to stay on top of every employment law to remain compliant.
Denmark employment law is relatively simple in terms of compensation laws. There aren’t many statutory compensation and benefits laws. Instead, trade unions or collective bargaining agreements outline these rules for specific employees. For example, the country does not have a minimum wage, but collective bargaining agreements will often include minimum wage regulations.
Pay slips are required, but you can decide the frequency of your employees’ salary payments. Many businesses pay their employees at the same time each month, but you could choose daily, weekly, or biweekly based on the employee’s job description. Denmark compensation laws do not dictate a specific payment mode, but most employers use electronic payments instead of cash or check.
Guaranteed benefits in Denmark
All employees in Denmark receive 25 working days of vacation each year. Although Denmark has 11 public holidays, no law dictates whether an employee must have those days off. Collective bargaining agreements or an employment contract will outline which days the employee is expected to work.
Part of Denmark benefits management involves understanding the country’s extensive tax laws, which also cover employees’ health insurance. The country’s social security program includes health insurance, child allowance, maternity benefits, disability benefits, and more. Both employees and employers contribute to this fund.
Denmark benefits management
It’s a good idea to include any supplemental benefits in the employment contract. This contract can attract a bigger talent pool and ensure those benefits are adequately outlined. Incentive bonuses are one additional benefit that is not required but is becoming increasingly common in Denmark. Flexible work hours are also growing in popularity and can be included in an employment contract.
Expanding into Denmark means either distributing compensation and benefits or working with an employer of record like G-P, which can have many benefits, including:
- We have expertise in Denmark compensation laws, so you won’t need to learn every intricacy.
- We’ll help you ensure you’re offering competitive local benefits.
- You can leave Denmark benefits management to us while you focus on running your business.
Restrictions for benefits and compensation
While Denmark does not have too many statutory restrictions for benefits and compensation, it’s essential to work with trade unions or carefully review collective bargaining agreements to make sure you are meeting stipulations such as minimum wage requirements and working hours.
Denmark competitive benefits planning
When you’re preparing a benefits plan for your international employees, you need to find the right balance between local expectations, legal requirements, and your budget. While this process takes careful consideration, it’s worth it — the benefits you offer will keep your company compliant and show your employees that you value their work.
Denmark employee benefits plans
In any country it is the employer’s responsibility to offer the legally required benefits. Supplemental benefits can help you stay competitive in the market when it comes to recruiting and retaining top talent. In Denmark, some of the more common supplemental offerings include:
- Awards for years of service
- Severance payments meeting contractual conditions
- Premiums for voluntary pensions
Requirements for employee benefits in Denmark
Denmark’s labor laws require that you provide several benefits for your employees, including:
- Maternity and paternity leave
- Health insurance
- Annual leave with pay
- Sick leave with pay
- Holiday leave with pay
How to design your employee benefits program
Every company’s benefits program looks different, and you might want to adjust your plan to offer more benefits as your business grows. That said, the following steps can be helpful as you begin planning.
1. Evaluate your company’s objectives.
A critical first step in the process is to determine your goals and priorities. Identify how you want to implement your benefits program and what results you want to bring your employees and your company.
Do you want to start off with a large team? To spread your budget as far as possible, you may need to stick to the legally required benefits and a few key extras. If employee retention is a priority for your company, you might want to recruit a small core team and offer lots of supplemental benefits to motivate them to stay.
2. Complete a needs assessment.
Determining what employees need most from your benefits plan is integral to your design process. You can gather data by interviewing employees in the region, sending questionnaires out to stakeholders, and completing a comparative benefits analysis. Ensure you understand market conditions and the demands employees face so you can best support them as members of your team.
3. Implement an employee compensation and benefits plan.
With the key data you’ve gathered from research and analysis, you can move to the final stage of your process — integrating the data into your benefits program. Complete a gap analysis and identify which benefits you need to prioritize. As you build and implement your benefits program, remember to consider employee contributions, administration costs, and any outsourcing requirements you may have as part of your budget.
Average cost of benefits per employee
Every company’s budget for benefits will look a bit different, so the average cost might not be a useful metric in your planning. You’ll want to ensure you’re building a benefits program that fits your budget and your employees’ unique needs optimally.
How to calculate employee benefits
Like your overall costs, your calculations for employee benefits will vary based on what you choose to provide. You are responsible for providing sick leave, annual leave, and holiday leave with full pay. You can find specific percentages for these contributions in Denmark’s labor laws. If you provide supplemental benefits, you’ll need to research current rates in your industry to determine the most competitive offerings for your employees.
How are employee benefits taxed in Denmark?
Supplemental benefits are generally taxable. You’ll want to research any specific requirements for the benefits you choose to offer.
Employee health benefits plans
Denmark offers state-sponsored healthcare for residents. However, private insurance options are also available. Many employers choose to provide additional coverage to help employees and their families get specialized care when they need it, though doing so is not a requirement.
Partner with G-P to build your everywhere workforce.
As your partner in global expansion, G-P will handle payroll and compliance, so you can focus on growing your team and scaling your business. Our market-leading Global Growth Platform™ is powered by the first fully customizable suite of global employment products and backed by the industry’s largest team of in-country HR and legal experts to streamline payroll management and help you offer competitive, compliant local benefits.
Learn more about our platform and request a proposal today.