Danish pay floors: how pay is set without a minimum wage

No. No national minimum wage is set by statute in Denmark. No act of parliament sets a lowest hourly or monthly rate for employees in general. Floors do exist. You find them in collective agreements (overenskomster) negotiated between trade unions and employer organisations, not into law.

This is a deliberate feature of what is often called the Danish labour market model. SIRI, the agency that handles work permits, describes it on its page on the Danish labour market model: the government does not regulate pay and conditions on the labour market; unions and employer organisations settle them between themselves through agreements. The state keeps to framework laws on holiday, working time, written terms and health and safety, and leaves pay to negotiation.

For a foreign employer used to looking up a single national figure, the absence can feel like a gap. In practice it means two separate questions replace the one you expected: is my hire covered by a collective agreement, and if not, what does the market pay for the role? Both are answered below, and later sections cover the few legal thresholds that still bite.

A collective agreement sets the minimum pay for the jobs within its scope, along with many other terms. Agreements are concluded between unions and employer organisations for a trade or sector, and they are renewed every 2 or 3 years, so their pay rates move in steps rather than on a fixed annual date.

The key rule for an employer is about scope, not membership. An employer bound by a collective agreement must apply it to every employee whose work falls within its scope, whether that employee belongs to the union or not. Once the agreement applies, its pay rates are the floor for those roles, and paying below them is a breach of the agreement.

Agreements typically reach well beyond the hourly or monthly rate. Depending on the sector they may cover:

• minimum pay and how it is adjusted over the agreement period
• an occupational pension, which Danish law does not otherwise require beyond ATP
• a holiday supplement different from the statutory 1% for salaried staff, which Ferieloven allows agreements to set
• how overtime is arranged and paid
• variations to the rules on non-compete and customer clauses, which the Employment Clauses Act permits agreements to make

Disputes under a collective agreement are settled through industrial arbitration or by the Labour Court (Arbejdsretten), a reminder that the agreement, not a statute, is the source of the obligation.

Whether a collective agreement applies depends first on the employer, not on the employee’s job title. If the employer is not bound by any agreement, none applies to its staff, however widespread agreements may be in that line of work.

If the employer is bound, the next question is whether the role falls within the agreement’s scope. Agreements describe the work they cover, and a software developer, a warehouse worker and a sales manager may each sit under different agreements or under none. Under an employer of record arrangement, these questions are about us as the employer, so ask us directly which agreement, if any, would cover the job you have in mind.

Three practical checks help before an offer goes out:

• ask whether the employer is bound by any agreement and, if so, which one
• ask whether the job’s tasks fall within that agreement’s description of covered work
• if covered, get the current minimum rate, the pension rule and the holiday supplement in writing

Where no agreement applies, the floor is whatever you and the candidate agree. That is freedom, but it comes with a market test of its own, covered next. Our list of questions for choosing an EOR in Denmark includes this one for good reason.

When no agreement applies, the useful reference is market pay, and Danmarks Statistik publishes it. Its structural earnings statistics for 2025, published in September 2026, give standardised monthly earnings that already include pension, holiday pay and benefits:

• all employees, whole country, all sectors: DKK 52,846 a month (2024: DKK 50,652)
• private sector, whole country: DKK 54,894
• private sector, Capital Region (Region Hovedstaden): DKK 60,521
• software developers, private sector, whole country: DKK 70,020
• ICT professionals as a group: DKK 69,436

Compare like with like. Because these figures include pension, a base salary should not be set against them directly. In the Capital Region, pension including ATP accounts for about DKK 7,270 of the DKK 60,521, so the cash-pay equivalent is closer to DKK 53,000. The data also moves quickly: the all-employee figure rose from DKK 50,652 in 2024 to DKK 52,846 in 2025, roughly 4.3% in a year, so use the latest release when you benchmark. It is also why our standard worked example starts from a base of DKK 55,000 a month, or DKK 660,000 a year, for a salaried role in Copenhagen.

A competitive offer then comes down to a choice about the package: a higher base with no occupational pension, or a lower base plus a pension contribution. Make clear in the offer which one you mean. Our article on the employer cost of staff in Denmark shows how each choice changes the total.

Although there is no minimum wage, several Danish rules attach consequences to a salary level. None of them is a floor for ordinary employees, but each one can affect a hire.

Work permits. A non-EU hire under the Pay Limit Scheme (beløbsordningen) needs a salary of at least DKK 552,000 a year in 2026, DKK 46,000 a month. The Supplementary Pay Limit Scheme sets DKK 446,000, with prior advertising on Jobnet and EURES. In both cases SIRI also requires pay and terms to match Danish standards for the field, and employment under a collective agreement is normally accepted as meeting that standard. Guaranteed salary, pension contributions and holiday allowance count towards the threshold; a company car or phone does not. The Pay Limit amount is regulated every 1 January: DKK 465,000 in 2023, DKK 487,000 in 2024, DKK 514,000 in 2025 and DKK 552,000 now. A permit holder extending in the same job may keep the threshold that applied when they first applied.

Researcher tax scheme. A hire who wants the 27% researcher and key-employee scheme (forskerskatteordningen) needs a salary of at least DKK 65,400 a month in 2026, rising to DKK 67,300 in 2027, unless approved as a researcher. It is an eligibility test for a tax regime, not a pay floor.

Statutory additions. Whatever the salary, the law adds certain items on top: the 1% holiday supplement for salaried staff, or the 12.5% holiday allowance for others; ATP of DKK 198 a month from the employer; full pay during sickness for salaried employees; and pay during notice. These are the parts of a Danish package that no negotiation can remove.

Foreign employers tend to draw the wrong conclusion from the missing minimum wage in one of four ways, and each can cost money or a candidate.

“No minimum means any salary will do.” For a direct offer without an agreement, the law indeed sets no floor. But if the hire needs a work permit, SIRI tests pay against Danish standards for the field as well as the Pay Limit threshold, and if the employer is bound by an agreement, its rates apply whatever the contract says.

“Agreement rates are fixed for years.” Agreements are renewed every 2 or 3 years, and the pay rates within them can be adjusted in steps during the period. Check the rate that applies on the start date, not the one quoted in last year’s offer.

“The statistics show base salaries.” The Danmarks Statistik figures are standardised earnings including pension, holiday pay and benefits. Setting a base salary equal to them overshoots the market by roughly the value of the pension.

“Without a minimum wage, the extras are optional too.” They are not. The 1% holiday supplement or 12.5% holiday allowance, ATP, full pay during sickness for salaried staff and the 25 days of paid holiday all come from statute, regardless of how the salary itself was set.

With no national minimum to check against, a sound offer in Denmark rests on four decisions you can document. Set the salary against an applicable collective agreement, or against market data if none applies. Decide whether an occupational pension is part of the package and say so plainly. Confirm that the pay clears any permit threshold that matters for the candidate. And put pay, pay dates, normal hours and the overtime arrangement into the written terms, which the Written Terms of Employment Act requires within 7 days of the start.

Variable pay needs the same clarity. Danish law has no 13th-month salary, so a bonus or commission exists only if the contract creates it. Where part of a salaried employee’s pay comes as profit share, Funktionærloven § 17 a gives a pro-rata share on leaving mid-year, which is worth reflecting in the scheme’s wording from the start.

Overtime deserves a specific line. The Working Time Act limits average weekly hours to 48 over 4 months, including overtime, but the rate for extra hours comes from the contract or a collective agreement. Leaving it out of the written terms is a gap the employee can later claim compensation for.

If you employ through us, we check the agreement position for the role and set the written terms accordingly; the commercial choices, from salary to pension, stay with you. Read how the employer of record split works in Denmark for the full division, contact us with a job description for a cost estimate, or return to the Employer of Record Denmark homepage.