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UPDATED JUL 6, 2026💡 Everything you need to know to hire and manage employees in Denmark through Toku. Toku handles payroll processing, tax withholding, social contributions, and statutory compliance. This guide covers what you need to plan costs and manage your team.
At a Glance
| Item | Detail |
|---|---|
| Currency | Danish Krone (DKK) |
| Payroll cycle | Monthly. Toku runs one payroll per month in Denmark. |
| Estimated employer costs on top of salary | Approx. 1-3% (flat contributions of roughly DKK 8,000-15,000 per employee per year) |
| Onboarding lead time | 3-5 business days |
| Standard working week | 37 hours (per most collective agreements) |
| Probation period | 3 months |
| Annual leave | 25 days (5 weeks) |
| 13th month salary | Not required |
| Minimum notice on termination | 1 month (14 days during probation), rising with tenure to 6 months |
Onboarding a New Hire
Plan for 3-5 business days between submitting a new hire and their start date, one of the fastest lead times of any country. Toku completes the tax authority registration one business day before the start date; your new hire just needs to sign the employment agreement.
Submit your new hire through the Toku platform and we take it from there: local employment agreement, statutory registrations, and payroll setup. See Onboard Contributors as a Client Admin in Toku for the step-by-step process, and the Country Readiness Live Tracker for lead times across all countries.
Employer Costs
Denmark is one of the lowest-cost EU countries for employer contributions: they are mostly flat annual amounts rather than percentages of salary.
| Cost | Rate | Notes |
|---|---|---|
| ATP (supplementary pension) | DKK 2,376 per year | Employer's two-thirds share per full-time employee |
| AUB (training fund) | Approx. DKK 2,821 per year | Funds apprenticeships and vocational training |
| AES (occupational injury insurance) | DKK 215-5,157 per year | Varies by industry risk; low for office roles |
| Barselsfond (maternity fund) | Approx. DKK 2,200 per year | Reimburses employers for parental leave pay |
Total contributions typically land between DKK 8,000 and DKK 15,000 per full-time employee per year. As a rule of thumb, total cost of employment is roughly 101-103% of gross salary. There is no mandatory 13th month salary. If you offer an occupational pension (very common in Denmark, see Benefits below), budget for that separately.
Employees pay an 8% labour market contribution (AM-bidrag) plus progressive income tax (municipal plus national brackets, with a combined marginal rate of up to about 55.9%). These are withheld from gross salary, not paid on top. Toku calculates and remits all of the above.
Compensation & Payroll
Toku runs one payroll per month in Denmark, and employees receive a payslip each cycle showing gross salary, tax, ATP, pension contributions, and net pay. Salaries are paid in DKK to the employee's NemKonto.
Denmark has no statutory minimum wage; pay floors come from collective agreements and typically range from about DKK 130 to DKK 145 per hour depending on industry and experience. There is no 13th month salary. Salaried employees receive their full salary while on holiday; where holiday pay applies instead, it is funded at 12.5% of gross salary.
Employment Contracts & Probation
- Toku issues a compliant local employment agreement for every hire, with written terms provided within the statutory deadlines from the start date.
- Indefinite-term employment is the default. Fixed-term contracts generally may not exceed three renewals or three years without objective justification.
- Most professional hires are salaried employees (funktionaerer) under the Salaried Employees Act, which provides structured notice, severance, and sick pay protections.
- Probation is 3 months under Toku's employment agreement, which is also the statutory maximum for salaried employees. During probation, either party may terminate with 14 days' notice.
Working Hours
Denmark has no statutory maximum working week; the standard under most collective agreements is 37 hours, Monday to Friday. Average weekly time including overtime may not exceed 48 hours over a four-month period, and employees are entitled to 11 consecutive hours of daily rest and 24 hours of weekly rest.
Overtime rates are set by agreement rather than statute; typical collective agreement rates are 150% for the first three weekday overtime hours and 200% after that. For managerial and senior roles it is common to agree that overtime is included in the salary.
Leave Entitlements
| Leave | Entitlement | Who pays |
|---|---|---|
| Annual leave | 25 days (5 weeks), accruing at 2.08 days per month | Employer |
| Sick leave (first 30 days) | Full salary for salaried employees | Employer |
| Sick leave (day 31 onward) | Sickness benefits up to DKK 5,085 per week (2026) | Municipality (employer can claim reimbursement) |
| Maternity leave | 4 weeks before the due date plus 10 weeks after birth at full salary for salaried employees | Employer / municipality |
| Paternity leave | 2 weeks within the first 14 weeks after birth | Employer / municipality |
| Parental leave | 24 weeks per parent after birth (48 combined); 11 weeks per parent are non-transferable | Municipality (benefits rate) |
| Child's first sick day | 1 day per illness episode at full pay (per most collective agreements) | Employer |
The Danish leave year runs September 1 to August 31, and leave is accrued and used concurrently. Parental leave benefits are paid by the municipality, and the maternity fund (included in employer costs above) reimburses part of any salary paid during leave.
Public Holidays (2026)
Denmark observes 11 public holidays in 2026. Holidays falling on a weekend are not moved. Constitution Day (June 5) is officially a half-day, though most employers grant the full day; May 1 and December 24 are not statutory holidays but are widely given as days off under collective agreements and company practice.
| Date | Holiday |
|---|---|
| January 1 | New Year's Day |
| April 2 | Maundy Thursday |
| April 3 | Good Friday |
| April 5 | Easter Sunday |
| April 6 | Easter Monday |
| May 14 | Ascension Day |
| May 24 | Whit Sunday |
| May 25 | Whit Monday |
| June 5 | Constitution Day (half-day) |
| December 25 | Christmas Day |
| December 26 | Second Christmas Day |
Benefits: Required vs. Common Extras
Statutory (included in employer costs above): the ATP supplementary pension, occupational injury insurance, and maternity fund coverage. Healthcare in Denmark is universal and tax-funded, so no employer health contribution is needed, and the state pension is funded through general taxation. Unemployment insurance is voluntary and arranged by employees through A-kasser.
Toku offers fully sponsored international health coverage through Remote Health. See Remote Health, Your Global Insurance Plan for coverage details and enrollment.
The most significant common extra in Denmark is an occupational pension plan, typically 8-15% of salary with the employer paying about two-thirds; supplementary health insurance, group life insurance, and commuter benefits are also widespread. Toku can advise on the cost impact of any of these.
Ending Employment
Denmark's flexicurity model makes termination comparatively straightforward: no specific grounds are required for salaried employees, but a dismissal must not be unreasonable, and employees with a year or more of service can claim compensation (typically 1-6 months' salary) if it is. Involve Toku early so the process and documentation are handled correctly. For the process, see How to Terminate an Employee or Contractor.
Employer notice for salaried employees (given to the end of a calendar month):
| Service | Notice |
|---|---|
| During probation (first 3 months) | 14 days |
| Up to 6 months | 1 month |
| 6 months to 3 years | 3 months |
| 3-6 years | 4 months |
| 6-9 years | 5 months |
| 9 years or more | 6 months |
Statutory severance is modest and only applies to long-tenured salaried employees dismissed by the employer: one month's salary after 12 years of service and three months after 17 years. Toku will confirm the full exit cost for you before anything is signed.
Hiring Someone from Overseas?
EU and EEA citizens can work in Denmark without a permit. Non-EU nationals typically come through the Pay Limit Scheme (for salaries above DKK 552,000 per year in 2026), the Positive List for shortage occupations, or the EU Blue Card, with processing of roughly 1-3 months (as fast as 10-20 business days under the Fast-Track Scheme for certified employers). Talk to Toku before extending an offer to a candidate who needs sponsorship.
Last verified July 2026. This guide is for general information and doesn't constitute legal or tax advice. Your Toku account manager can confirm specifics for your situation.