Danish employment and labour law is based on three main foundations; (1) collective agreements between employers’ organisations and employees’ unions; (2) individual agreements between employers and employees; and (3) Danish legislation.
Furthermore, when considering the foundation of the terms of employment in Danish employment and labour law, a general distinction must be made between blue-collar workers, skilled as well as unskilled, salaried employees and senior management. The main principles of the employment of the different types of workers are summarized in the following.
The terms of employment of blue-collar workers are normally based upon collective agreements entered into between a union of workers and an organisation of employers. The scope of collective agreements varies depending on the industry they aim to govern, but they stipulate all rights and obligations of the employers and the workers regarding e.g. minimum wages, pension scheme contributions, working hours, termination notices, holidays, overtime payment, etc. Employers may choose to grant blue-collar workers better terms than what follows from the collective agreements, but not poorer.
Collective agreements are normally considered essential as both parties, among other things, are given access to the possibility of industrial dispute procedures in the event of disagreements between the employer and the workers. Furthermore, during the term of the collective agreement, workers are not allowed to go on strike.
Salaried employees are the only group of employees whose material employment terms are regulated by law. The Danish Act on Salaried Employees stipulates the minimum obligations of the employer towards salaried employees, such as notice of termination, severance payments, compensation for the employer’s non-objective termination of the employment contract, absence due to illness and requirements for the contents of competition and customer clauses etc.
The minimum termination notice of salaried employees is one to six months to the end of a month, depending on the seniority of the salaried employee. On the part of the employee, the notice of termination is one month.
Salaried employees are generally protected against unfair dismissal. In case of unfair dismissal, the employee may be subject to compensation in the amount of up to six months' salary, provided that the employee has more than one year of seniority.
The term “employee” does normally not include senior management. Consequently, senior management is most often neither covered by collective agreements nor the Act on Salaried Employees. As a consequence hereof, with regards to managing directors or general manager’s freedom of contract rules, the parties are free to agree on the terms and conditions of the employment.
There is no general regulation on the terms of notice to the senior management, and the senior management is not covered by the Danish Holiday Act, see below.
Freedom of contract also applies with regards to non-competition and non-solicitation clauses, although such clauses may be set aside wholly or partly as being unfair or unreasonable.
If an employee is neither a manager, a salaried employee nor covered by a collective agreement, the employment will primarily be regulated by the individual contract agreed between the parties.
Regulation affecting all Types of Employees
According to the Danish Holiday Act, all employees are entitled to five weeks of holiday during the “holiday year” from 1 May to 30 April. The right to paid holiday is accrued in the calendar year preceding the holiday year in question. If the employee has not accrued the right to payment during holiday, the employee will not be entitled to paid holiday, but to unpaid leave.
As a result of negotiations between workers’ unions and employers’ organisations, most Danish employees are in excess hereof entitled to a sixth week of holiday (spare time). Many Danish employees not covered by collective agreements are entitled to the sixth week of holiday according to individual agreements with their employers.
According to the Danish Act on Employment Contracts, the employer must inform the employee in writing of all significant terms of employment, including ten specific terms listed in the Danish Act on Employment Contracts.
All employees in Denmark are protected against unequal treatment and from termination of employment due to the employee’s pregnancy or maternity/parental leave or other discriminatory criteria such as gender, age, national origin, sexual orientation, etc. If these non-discriminatory rules are not complied with, the employee may be entitled to a large compensation.
Under Danish law, employees of certain companies are entitled to have an influence on the management of the company, provided that the company is a public and private limited liability company with an average number of employees of at least 35 in a period covering the preceding three years. Employees are entitled to elect up to half the number of members of the board members otherwise elected, however no less than two members (if the number is half, it is rounded up).
Although employees may be entitled to board representation, they are not obligated to execute this right. In other words, employee board representation is an employee right, not a duty.
Collective dismissals are regulated by the Danish Act on Collective Dismissals, provided that the number of dismissals within a period of 30 days exceeds a certain number in comparison to the total number of employees.
The act imposes a duty on the employer to enter into negotiations with the employees at as early a stage as possible. The purpose of the negotiations is to limit the number of dismissals and to minimise the detrimental consequences thereof. However, the employer is under no obligation to reach a solution which results in a reduction of the number of dismissals.
The above does not constitute legal counselling and Moalem Weitemeyer Bendtsen does not warrant the accuracy of the information. With the above text, Moalem Weitemeyer Bendtsen has not assumed responsibility of any kind as a consequence of a reader’s use of the above as a basis of decisions of considerations.