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An Employer of Record (EOR) in Denmark is a third-party business entity that legally employs another company’s workers, handling administrative and compliance requirements while the client directs daily work and performance. The EOR provides locally compliant contracts, processes monthly payroll in Danish Kroner (DKK), withholding taxes, handles benefits and ensures 100% Danish labor law compliance.
This structure allows foreign businesses to hire Danish employees with no local entity, quickly and at a fraction of the cost and time. In contrast to a Professional Employer Organization (PEO), which requires the client to have a local Danish entity, the PEO model is a co-employment solution that is not legally recognized in Denmark. An EOR is the only compliant option for companies without a local presence.
Compliance is key in Denmark’s “Danish Model”. It’s a framework of statutory acts like the Salaried Employees Act (funktionærloven) and Collective Bargaining Agreements (CBAs), which extend Denmark’s labor laws and cover roughly 80% of the workforce. EORs deal with the relevant CBA that the business falls under, which is critical to avoid disputes with powerful unions and resulting penalties.
Common EOR services in Denmark cover compliant contract drafting, payroll setup through e-Boks, salary deductions for AM-bidrag and A-tax, ATP pension contributions, Feriepenge (12.5% vacation pay) and more, ensuring smooth and fully compliant employment operations.
Remote People provides an all-in-one EOR in Denmark, including both full-time employees and contractors. The service also includes integrated recruitment agency support to help find and source top Danish talent with the help of local expertise. Remote People also manages the complexities of the Danish market, including CBA compliance.
| Pros | Cons |
|---|---|
| Remote People offers one of the cheapest EOR solutions in the market, starting at $199 per employee per month. This makes it a perfect option for small businesses and for business owners who value cost-effective solutions. | On the other hand, Remote People doesn’t have as many integrations as the more expensive providers do. Business owners relying on connecting their EOR to a specific HRIS, accounting, or project management tool may find their options limited. |
Deel is a high-growth, all-in-one global HR platform that has scaled its EOR services to 150+ countries, including Denmark. Best known for its frictionless technology, speed, and world-class platform that can scale both EOR employees and international contractors in one place.
| Pros | Cons |
|---|---|
| Deel provides quick onboarding, allowing companies to hire and set up employees in a matter of minutes. It features a unified system for EOR and contractors, simplifying HR processes for both. Additionally, it offers coverage in over 150 countries. | It is more expensive than some of its competitors. It has been known to experience delays in customer support. It may not be as specialized in regional compliance and services in Denmark as Nordic-focused providers. |
Check out our Deel review to learn more about its services.
Safeguard Global has a long track record as an EOR provider. They have a long-standing experience in the global HR and payroll industry, with over 2,000 organizations under management. Safeguard Global’s service model is unique in its commitment to in-country, human expertise and on-the-ground support to manage multi-country compliance across 170+ countries.
Our Safeguard Global review includes more details about the company’s services.
| Pros | Cons |
|---|---|
| The company has robust compliance in Denmark, supported by its own local entities that have been around for a long time. It offers professional, human-led services, which can be particularly beneficial for managing complex CBAs. It has significant experience managing global employment for large organizations, having more than 2,000 clients. The employer of record has been in operation for over a decade. | Pricing is not available upfront and can only be discussed after a consultation. Its human-centric approach may not be preferred by those who lean towards a self-service platform. Onboarding can take up to two weeks, longer than many tech-focused competitors. |
Papaya Global presents itself as an enterprise-grade global workforce management platform with a single “Workforce OS” integrating EOR, multi-country payroll, and global payments. The key areas of strength for the platform are its payment technology, which uses AI for data validation and efficient payroll processing for large, complex organizations.
See our Papaya Global review for more in-depth details.
| Pros | Cons |
|---|---|
| This provider is a great fit for large businesses in need of a one-stop shop for complex, multi-country workforces. Its powerful payments technology and AI-powered validation reduce payroll mistakes, and clear, tiered pricing simplifies cost comparison. | Its EOR offering is costly ($750 per employee per month) and may be too much for small businesses. Service consistency can also vary due to the use of partner entities in certain countries. |
G-P is one of the earliest and most well-known players in the EOR space. G-P has built an end-to-end EOR platform available in over 180 countries. G-P was built on the principles of compliance and control, employing 95% of its workforce worldwide through owned legal entities. G-P’s platform is supported by a sizable team of in-house HR and legal professionals.
Head to our Global Partners (G-P) review to learn more.
| Pros | Cons |
|---|---|
| They have deep internal legal and HR knowledge to handle Denmark’s complex labor laws, including termination and CBA management. The platform is user-friendly with features like contract creation and benefits analysis that improve efficiency. | There may be additional costs for setup fees or currency conversion. They use a hybrid model with some processes handled by an aggregator payroll, which may limit control. Some customers have experienced delayed responses from customer service. |
Oyster is a global employment platform for distributed and remote-first companies. The startup helps businesses simplify the remote hiring lifecycle on an easy-to-use platform with hiring, payroll, compliance automation, and benefits.
| Pros | Cons |
|---|---|
| Oyster has an easy-to-use platform that’s designed to help distributed teams. This solution automatically calculates and provides compliance for Danish regulations, such as holiday pay, and extends to the employee experience as a whole, including benefits and employee growth. | Oyster charges extra for benefits and has a smaller coverage compared to some other large-scale competitors. It’s also not clear whether Oyster uses its own entities in Denmark. |
Partnering with an Employer of Record (EOR) in Denmark is a strategic business decision. The primary advantage is, of course, immediate market access. With an EOR, a company can hire talent and start working almost immediately, without the months (or years) and significant expense of setting up a local entity. This can speed up expansion plans, moving your team from zero to operations in days instead of months.
The most important advantage in the Danish market is actually total compliance and risk mitigation. The EOR has local experts on staff who know how to properly manage employees in Denmark’s complex labor market, which is mostly made up of CBAs, or Collective Bargaining Agreements. The EOR will apply the correct CBA and avoid misclassification and the heavy fines that can be imposed by trade unions if done incorrectly.
An EOR gives employers 100% predictability in payroll and financial costs. The EOR will manage the complex accrual and remittance of the 12.5% Feriepenge (holiday pay), which is a fixed cost per employee. A big liability for a new employer is getting the Feriepenge calculations wrong or missing the strict deadlines. Additionally, an EOR will manage all employer-side social contributions, which are, for the most part, fixed-sum in Denmark.
If employers plan to hire talent outside of the EU, using a certified EOR provides a distinct advantage. The certified EORs can, in many cases, access the Danish Fast-Track Scheme. This is an initiative for certified companies that will process their work permits extremely fast, allowing an EOR to onboard world-class talent from outside the EU in a fraction of the time. The EOR will manage all the immigration and visa paperwork.
Employment in Denmark is not regulated by a single labor code. It is regulated by separate acts like the Danish Salaried Employees Act (funktionærloven) for white-collar employees, the Holiday Act (Ferieloven), the Act on Sickness Benefits, etc.
Most terms, like minimum pay and working hours, are determined by Collective Bargaining Agreements (CBAs). The CBAs are agreements between trade unions and employer associations. They cover approximately 80% of the total Danish workforce.
An employee who is expected to work for more than eight hours per week for at least one month is required to have a written contract of employment. The contract should be given within one month of starting the job.
The contract should include:
The contract must be written in Danish or in another language that the employee can understand.
There is no statutory workweek in Denmark. The workweek is usually set to 37-37.5 hours per week in CBAs. The maximum average number of hours per week, including overtime, is set by law to be no more than 48 hours in any four-month period.
Overtime rules are found in CBAs. The standard rates are usually 150% of the regular salary for the first three overtime hours in a day, 200% of the regular salary after three hours or time off instead of overtime payments.
Denmark does not have a national, statutory minimum wage. The absence of a national minimum wage is one of the five principles of the Danish Model. The social partners, rather than the government, are responsible for wage regulation.
Minimum wages are set only in sectoral CBAs negotiated between trade unions and employer associations.
The biggest statutory benefit in Denmark is holiday (paid vacation), which is legislated in the Danish Holiday Act (Ferieloven). All employees are entitled to five weeks (25 days) holiday per year.
Denmark operates on a “concurrent holiday” system. Under this system, the employee accrues 2.08 days of paid holiday per month of employment, which can be taken as early as the next month.
The employer pays a holiday allowance (Feriepenge) equal to 12.5% of the salary. With salaried employees, this is typically done by paying their regular salary while on leave, plus a 1% supplement. With hourly workers, the 12.5% is paid into a state-administered FerieKonto (Holiday Fund).
Other mandatory benefits include partially paid parental leave (up to 52 weeks combined for both parents) and comprehensive sick leave benefits.
The unique feature of the Danish payroll system is its high personal income tax on the employee side and its incredibly low and fixed social contributions on the employer side.
The EOR must withhold two items from the employee’s gross salary:
The employee’s progressive tax rate is determined by their skattekort.
The employer contributions are not a percentage of the salary, as in other European countries. Rather, they are a series of small, mostly fixed-sum contributions. Since an employer’s social security overhead does not increase with high salaries, Denmark is a very cost-effective place to hire skilled and high-earning professionals.
Termination for cause of salaried employees is governed by the Salaried Employees Act (funktionærloven). The employer may terminate the employment contract only on an objective ground.
Notice periods for the employer to terminate an employee are dependent on the employee’s continuous period of service. The employee is only obliged to give one month’s notice if they wish to resign.
Notice periods, according to the Salaried Employees Act, are as follows:
Statutory severance pay is only due for very long tenured salaried employees. A dismissed employee is entitled to severance pay if they have worked for the same employer without interruption for at least 12 years. The employee then receives one month’s salary after 12 years of service, two months’ salary after 15 years of service, and three months’ salary after 18 years of service.
Citizens of Nordic countries, EU countries, or EEA countries can work in Denmark without a permit. All other non-EU/EEA/Swiss citizens require a valid work and residence permit prior to taking up their employment legally in Denmark. An EOR can sponsor an employee and help manage their application for a work and residence permit.
The Pay Limit Scheme is the most common work permit for highly skilled talent. In 2025, this threshold is set at a minimum of DKK 514,000 per year. The salary is paid to a bank account in Denmark. There is also a Supplementary Pay Limit Scheme with a 2025 threshold of DKK 415,000.
The Fast-Track Scheme is a major benefit of using a certified EOR. This scheme is open only to companies certified by the Danish Agency for International Recruitment and Integration (SIRI). The employee can begin their employment before the residence permit is granted, significantly reducing the processing time.
A SIRI-certified EOR can onboard non-EU talent in as little as 0-30 days. This is a big win compared to a 1-3 month timeframe for the standard Pay Limit Scheme.
Selecting the ideal Employer of Record in Denmark is a strategic decision. The EOR deals with the complexities of Collective Bargaining Agreements, fixed-cost social contributions, and applicable legal acts such as the funktionærloven. It allows for a quick expansion into the Danish market.
The differences between providers range from platform technology to local entity ownership and immigration scheme certification, all of which can significantly impact costs, speed, and compliance.
RemotePad’s global hiring and EOR experts have spent decades in HR, payroll, and compliance and can offer objective, data-backed analysis to help companies compare providers and identify the best fit for their needs. If you are a business owner looking to partner with an EOR provider, request an EOR proposal today and let us help you make an informed decision.
No, legally, companies do not have to follow a CBA. But in reality, they can’t avoid it. Close to 80% of the Danish workforce is under a CBA, and the CBAs generally set the minimum wage, work hours, and overtime rates for nearly every industry in Denmark.
Refusal to adhere to the relevant CBA for the industry results in huge labor conflicts. Any compliant EOR will ensure your employment contracts are at the same standard or better than the appropriate sectoral CBA, so it’s essential for compliant employment in Denmark.
The time depends on the immigration program. For the typical Pay Limit Scheme, the normal processing time is 1 to 3 months. The employee can’t start work until the permit is approved.
However, if the EOR provider is SIRI-certified, they can apply through the Fast-Track Scheme. This program enables the employee to start working in Denmark almost right after the application and biometrics are finished, usually within 0-30 days. This can be a massive time difference.
Employee’s gross annual salary + 12.5% Feriepenge (holiday pay) + fixed social contributions such as ATP, AUB, AES, and the Maternity Fund. The employer’s fixed social contributions are quite low (DKK 13,000 to 18,000 per year, depending on industry).
So, the total cost = Gross Salary + 12.5% Holiday Pay + approximately DKK 15,000 Fixed Costs + EOR Fee, making Denmark very cost-effective to hire in, compared to other countries.
