US vs Denmark termination: at-will meets Danish notice rules

Across most US states the starting rule is at-will. An employer may let a worker go on the spot, and the worker may quit the same way, with no notice owed and no reason needed so long as the motive is not unlawful. Limits come from exceptions, such as anti-discrimination law, contracts that say otherwise, and public-policy rules, and the burden is usually on the employee to prove that one applies.

Danish law for salaried staff runs the other way. The Salaried Employees Act (Funktionærloven) gives every salaried employee a statutory notice period that grows with service, requires the employer to give notice in writing, and allows compensation if the dismissal is not reasonably justified. These rights cannot be contracted away to the employee’s detriment (§ 21). The consolidated Act can be read on Retsinformation.

For a US manager, that changes the order of thinking. In Denmark, you decide whether there is a sound reason, then fix the date notice runs from, then work out what the exit will cost. Leaving any of the three until the day of the conversation is where most problems begin.

Disputes are handled differently too. The Labour Court (Arbejdsretten) and industrial arbitration deal with cases arising under collective agreements; other employment claims go to the ordinary courts. For salaried staff, the ceilings on compensation are written into Funktionærloven itself, which makes the cost of a Danish exit easier to predict, even if the process takes longer.

The employer’s notice depends on how long the person has been employed. Section 2 sets it as follows:

• 1 month, to the end of a month, during the first 6 months of employment.
• 3 months once the employee has passed 6 months.
• One extra month for every third year of employment, up to a maximum of 6 months.

Notice has to be given in writing, and the period only starts on the first of a month, so the day you hand over the letter matters. A letter handed over on 2 March to a person with 3 months’ notice ends the employment on 30 June, not 2 June. If the employee asks, the employer must state the reason for dismissal in writing.

The employee’s own notice is 1 month to the end of a month. Any longer notice from the employee must be agreed in writing and matched, month for month, by a longer employer notice. During notice, the employee keeps full pay and is entitled to reasonable time off to look for work without loss of pay (§ 16).

At-will thinking clashes most with pay in lieu. Danish practice often releases the employee from work during notice, but the salary still runs to the end of the period; the obligation is to pay the notice, not to keep the person at a desk.

The closest thing to at-will in Danish salaried employment is probation (prøvetid). For up to 3 months, if probation is agreed in writing, the employer can dismiss with 14 days’ notice (§ 2(5)). After 3 months, the ordinary 1-month notice applies. Probation has to appear in the written terms handed over in the first 7 days of the job.

A second short-notice route applies to long sickness. If the written contract includes it, a salaried employee who has been paid through 120 sick days in any run of 12 consecutive months may be given a shortened notice of a single month, running to a month end (§ 5(2)). The notice must be given immediately after the 120th sick day, while the employee is still ill; wait a week and the shortened notice is lost.

Neither route removes the other protections. A dismissal during probation for a discriminatory reason is still unlawful, and the 120-day rule does nothing for an employer whose contract does not mention it. Our guide to Danish employment contracts shows where these clauses belong.

Keep two limits apart. The Written Terms of Employment Act caps probation at 6 months in general, but for salaried staff the 14-day notice applies only within the first 3 months. Agreeing a 6-month probation does not stretch the short notice; from month four the ordinary 1-month notice applies anyway.

Denmark has no statutory list of lawful grounds. Instead, § 2 b of Funktionærloven asks whether the dismissal is rimeligt begrundet, reasonably justified, by the company’s circumstances or by how the employee has behaved or performed, such as poor performance after warnings, misconduct, or a genuine reduction in work.

If a court or tribunal finds the dismissal was not justified and the employee had at least 1 year’s service, compensation follows:

• As a general cap, half of what the notice period pays.
• Up to 3 months’ pay if the employee is 30 or older.
• Up to 4 months’ pay after 10 years of employment.
• Up to 6 months’ pay after 15 years of employment.

This compensation comes on top of notice pay. Keep a short, dated record of performance discussions and warnings; the case for justification is built during the employment, not at the end of it.

A sensible sequence for a performance case runs over weeks, not days: set out the concern in writing, agree what must improve and by when, review it, and give a written warning before notice if nothing changes. For a redundancy, record why the role is going and how you chose between people doing similar work. Neither process is set out in the Act, but both are what a reviewer will look for when deciding whether the dismissal was reasonably justified.

Statutory severance (fratrædelsesgodtgørelse) applies only to long service. Under § 2 a, a salaried employee dismissed after 12 years of continuous employment receives 1 month’s pay, and after 17 years 3 months’ pay. There is none before 12 years. The first DKK 8,000 of severance is tax-free in 2026.

Summary dismissal (bortvisning) without notice is reserved for gross breach. Where a bortvisning turns out to be unjustified, damages match the pay for the notice period, and severance and § 2 b compensation can be added. The rule also binds the employee: someone who quits on the spot owes the employer at least half a month’s pay in damages under § 4, special circumstances aside.

Some groups have stronger protection than at-will employees ever see:

• Pregnancy and parental leave: dismissal for these reasons is prohibited, and if the dismissal happens during pregnancy or leave, the employer must prove the reason was unrelated.
• Care leave and urgent family absence: dismissal for using these rights is prohibited.
• Employees asserting their rights to written terms: the burden of proof is on the employer.
• A salaried woman dismissed before or during maternity leave, up to 14 weeks after birth, is entitled to full pay during notice.

Larger cuts trigger the collective redundancy rules: for example, 10 or more dismissals within 30 days at an employer with 21 to 99 employees requires consultation and notice to the regional employment council, with dismissals taking effect no earlier than 30 days after that notice.

The thresholds rise with size: at least 10% of staff at employers with 100 to 299 employees, and at least 30 people at 300 or more. Where at least half of a workplace of 100 or more is affected, the waiting period is 8 weeks. Skipping consultation or notice costs 30 days’ pay per affected employee in compensation. Few EOR hires reach these numbers, but a US parent restructuring its Danish team should check them before announcing anything.

Consider a 34-year-old on a salaried contract earning DKK 55,000 a month, with 4 years’ service, dismissed in 2026 for a business reason. Notice is 4 months (3 months plus one for the third year), so about DKK 220,000 in salary, with ATP and the other levies continuing. If the employee is released from work, that pay is still due.

Untaken holiday is settled on leaving as a 12.5% holiday allowance under the Holiday Act. There is no statutory severance at 4 years. If the dismissal were later found not to be reasonably justified, compensation of up to 3 months’ pay, DKK 165,000, could be added because the employee is over 30. A US company used to a two-week courtesy payment should budget for the notice months at minimum.

These are the statutory floors. A collective agreement or the contract can give more, and a negotiated settlement often trades a release from work and a clear reference for an agreed end date. Read the contract and any agreement before the meeting, not after.

When we employ the person on your behalf, the decision about the job stays with you, and we carry out the employer’s side of the exit under Danish rules. That means checking the reason against § 2 b, confirming the notice length and the earliest lawful date, issuing written notice, giving written reasons on request, and running final pay, including notice salary, holiday settlement and any severance.

Talk to us before the conversation with the employee; timing alone can cost a month of salary if notice slips past the last day of a month. A fuller account of the rules is in notice periods in Denmark, what the EOR does and what stays with you is set out in employer of record explained for Denmark, and US firms starting out should read US companies hiring in Denmark. For a specific case, Employer of Record Denmark can walk through the dates and costs with you.

When you contact us, have the essentials ready: the start date and any change in role, the current salary and benefits, the absence record if sickness is involved, and notes of earlier conversations about performance. With those, the notice date, the cost and the risk of a challenge can be worked out in one pass rather than three.

Q01Can a Danish employer use at-will dismissal?+

A.Not for salaried employees. Funktionærloven sets minimum notice periods, requires written notice and allows compensation where a dismissal is not reasonably justified. The closest equivalent is probation: during its first 3 months, the employer gives 14 days’ notice.

Q02What notice does Funktionærloven require from the employer?+

A.For salaried staff the statutory scale begins at 1 month for the first half-year of service and moves to 3 months after that, adding a month at each third year of employment until it reaches 6. Notice must be in writing, and it has to reach the employee while the month before the notice period is still running.

Q03When does a Danish employee earn statutory severance?+

A.Only after long service. Salaried employees get 1 month’s pay after 12 years and 3 months’ pay after 17 years. Unfair-dismissal compensation is a separate amount.

Q04What does an unjustified dismissal cost after a year of service?+

A.After at least 1 year’s service, compensation of up to half the notice pay, or up to 3 months’ pay for employees aged 30 or over, rising to 4 months after 10 years and 6 months after 15 years.

Q05Can an employee be dismissed while on parental leave?+

A.Not because of the leave. If a dismissal happens during pregnancy or leave, the employer must prove the reason was unrelated, or the dismissal can be set aside or compensated.