Figuring out both statutory and additional compensation and benefits 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, you’ll need to stay on top of every employment law to remain compliant. Globalization Partners is here to help. We will source the best benefits for your employees and make sure you meet every compliance law.
Denmark Compensation Laws
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.
Payslips 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 Denmark employees receive 25 working days of vacation each year as long as they worked a whole calendar year the year before. They also get 1% of their gross salary as a lump sum each May as a holiday allowance. Although Denmark has 10 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 benefit 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 an 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. One other thing to note is employees who commute should receive a statutory allowance for the expense of commuting.
Expanding into Denmark means either distributing compensation and benefits yourself or choosing to outsource. Working with a global PEO such as Globalization Partners for your Denmark compensation outsourcing brings a variety of advantages, including:
- The liability goes off your shoulders and onto ours
- We have expertise in Denmark compensation laws, so you won’t need to learn every intricacy
- We’ll source great benefits for your employees
- You can leave Denmark benefit management to us while you focus on running your new subsidiary
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 read over collective bargaining agreements to make sure you are meeting any 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’s your responsibility as an employer 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 employees’ 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 even adjust your plan to offer more benefits as your business grows and you have more resources available. 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 staff and offer lots of supplemental benefits to motivate them to stay.
2. Complete a needs assessment
Determining what your 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 your 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 health care 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.
Manage your employee benefits planning with Globalization Partners
If you’re ready to expand your business internationally, Globalization Partners is ready to help you manage benefits, hiring, and compliance seamlessly. Contact us today to learn more and request a quote.