Employer of record explained for Denmark: who does what

Think of it as two employers with different jobs. On paper, your chosen hire is our employee. In practice, your company is where they spend their working day. The contract, the payslip and the reports to the tax authorities carry our name. The calendar, the targets and the line manager are yours.

The split exists because Danish employment law attaches its duties to whoever signs as employer. The Salaried Employees Act (Funktionærloven) gives a salaried employee pay during sickness, fixed notice periods and protection against a dismissal that is not reasonably justified. The Holiday Act (Ferieloven) adds 25 days of paid holiday a year. None of that disappears because the person works for a foreign business. It lands on the contract-holder, and with an EOR that is us.

For a foreign company, the result is that a person in Copenhagen, Aarhus or Odense can start on a Danish contract before you have formed a Danish company, opened a business bank account or set yourself up as an employer with Skattestyrelsen (the Danish Tax Agency). The model suits a first hire or a small first team. Once headcount climbs, owning a company can become the better answer, and we have set out the EOR versus ApS choice in a separate guide.

Every task the law gives to a Danish employer moves to us. Listed roughly in the order a new starter meets them, that means:

• a Danish contract, together with the statement of terms that Ansættelsesbevisloven (the Written Terms of Employment Act) demands: core terms no later than day 7, the remainder inside the first month
• monthly payroll in DKK, withholding income tax (A-skat) at the rate shown on the employee’s electronic tax card (skattekort) and the 8% labour market contribution (arbejdsmarkedsbidrag, AM-bidrag)
• filing through eIndkomst every month so that pay, A-skat, AM-bidrag and ATP reach the income register (indkomstregisteret), and settling the withheld sums by that deadline
• the statutory supplementary pension, ATP, which for a full-timer paid monthly costs DKK 297: two-thirds from us, one-third deducted from salary
• the fixed employer levies collected quarterly through Samlet Betaling, such as AUB, Barsel.dk and the financing contribution, plus the AES occupational-disease contribution
• work-injury insurance with a private insurer, which every Danish employer must hold
• holiday administration under Ferieloven, including the 1% holiday supplement (ferietillæg) paid to salaried staff
• an objective, reliable system recording each employee’s daily working time, a duty since 1 July 2024, with the records kept for 5 years

Sickness also runs through us on the pay side. Salaried staff are paid in full through illness, and for the opening 30 calendar days that cost is the employer’s alone. After that, municipal sickness benefit (sygedagpenge) takes over, and an employer still paying salary can reclaim it. Nobody reminds you to make the claim, so it is the kind of task that quietly goes missing in a home-grown setup.

One file stays with the employee rather than with either of us: their own tax record. Skattestyrelsen builds the tax card from the employee’s forskudsopgørelse (preliminary income assessment), and only the employee can change it, for example after moving to another municipality. Once the year is over, the annual tax assessment notice (årsopgørelse) reconciles what was withheld. We apply whatever rate the card shows; if it looks wrong, the fix is an update by the employee, not an override on our side.

Decisions about the work itself remain yours. You pick the candidate, agree the salary with them, set objectives, review performance and decide what equipment the job needs. Promotion, a change of project or the end of the employment all start as your call.

Several of those decisions carry Danish rules, so we carry them out jointly. Holiday shows how this works. Ferieloven puts the timing of holiday in the employer’s hands, once the employee has been heard: the summer block (hovedferie) of three weeks in a row, placed somewhere from May to September, needs a quarter’s warning, and single days need a month’s. Your manager knows when a release or a busy quarter falls; we make sure the notice goes out on time and that the days are booked against the right holiday year.

Pay design is another shared area. No Danish statute creates a 13th month, which leaves anything beyond base pay to the contract. If a bonus or commission plan is part of the offer, describe it to us at the drafting stage so it appears in the written terms. One rule is easy to overlook: when a salaried employee paid partly through profit share or a similar scheme leaves mid-year, Funktionærloven § 17 a gives them a proportionate part of it.

Day-to-day costs of the work are agreed with you up front. Under Funktionærloven § 9, necessary work travel by a salaried employee is the employer’s expense, with reasonable advances. We settle how those expenses are paid to the employee and passed on to you, so a trip to your headquarters never sits in a gap between two companies.

Parental leave works the same way. Funktionærloven § 7(2) gives a salaried mother no less than 50% of her salary from the day her maternity leave begins to week 14 after the birth; the state’s parental benefit flows back to the employer, and Barsel.dk tops up the reimbursement. You arrange cover; we run the pay and the claims.

Four topics cause most of the friction when they are left vague, and all four are easier to handle at the offer stage than later.

Ending the employment. Under Funktionærloven § 2, an employer’s notice is 1 month, expiring at a month end, while the person has under 6 months’ service, then 3 months, lengthening by a month for each three years served until it reaches 6. Notice must be served in writing, and the employee needs to hold it no later than the closing day of the month ahead of the notice period; the employee may also request a written reason. A dismissal needs a reasonable justification (rimeligt begrundet) rooted in the employee’s conduct or the company’s situation. In practice you supply the facts and the business reason; we issue the notice and settle final pay and holiday.

Restrictive covenants. The Employment Clauses Act (Ansættelsesklausulloven) permits a non-compete only for someone in an especially trusted role who has served half a year; it must be written, can last a year at most, and costs the employer compensation, a minimum of 40% of monthly pay where the clause runs up to half a year and 60% beyond that. If you want such a clause, say so before the contract goes out.

Intellectual property. When an employee writes software as part of the job, copyright in that program passes to the employer under the Copyright Act (Ophavsretsloven) § 59. Because the employer on paper is not you, the contract and our agreement with you should carry those rights on to your business. Inventions follow a separate statute, the Employee Inventions Act (Opfinderloven), which lets the employer claim an invention within 4 months against reasonable compensation.

Probation. A salaried hire can be put on probation for at most 3 months; a dismissal inside that window needs only 14 days’ notice. Decide whether you want that period before the start date, because it has to appear in the written terms.

Most of the Danish cost is the salary itself, because Denmark adds very little on top. There is no employer social security contribution charged as a percentage of pay. The levies are fixed amounts per person, and income tax plus the 8% AM-bidrag are taken from the employee’s side of the payslip.

A worked example makes the scale clear. Take a salaried hire on DKK 55,000 a month, DKK 660,000 over twelve months, living in Copenhagen, single and outside the national church. Add the statutory 1% supplement and the 2026 gross reaches DKK 666,600. AES, AUB, ATP, the holiday-fund administration fee, the financing contribution and Barsel.dk together come to DKK 8,202 (roughly 1.2% of gross pay), which puts the employer’s total at approximately DKK 674,802. The employee keeps about DKK 430,150 for the year, or DKK 35,519 in a standard month.

None of those figures includes the EOR charge itself. For that, budget from €599 per employee per month. We invoice that charge in euro. Two items are outside the figures above because they vary by employer and by person: the private work-injury premium and any occupational pension. Apart from ATP, no employer pension is required by Danish law; any other scheme is set by a collective agreement or written into the contract, so settle early whether your offer has one. The pricing page sets out the fee, and our article on the full employer cost in Denmark takes the example line by line.

An EOR fits best when the Danish headcount is small or still uncertain. A first sales hire in Copenhagen, one engineer joining a distributed team, or a few people hired to test whether a Danish office makes sense are all typical cases. You get a person on a proper Danish contract without first building the company, the bank relationship and the payroll registrations around them.

The case weakens as the team grows. If you plan to hire many people, or to bring in a steady stream of non-EU specialists, your own company starts to pay for itself. SIRI’s Fast-Track Scheme, for instance, requires certification, and only a business with ten or more permanent full-timers in Denmark can be certified.

An EOR is also no substitute for a contractor agreement where the person really is an employee. Skattestyrelsen looks at the whole relationship: who gives instructions, whether there is one main client, whether the hours are set by the client and whether pay arrives monthly. Our guide to the freelancer or employee question in Denmark lists the factors.

If the model looks right, the next question is timing. Our article on the steps from signed offer to first Danish payslip follows a new hire through the first month, and the Employer of Record Denmark homepage is the place to begin.