Navigating employment termination in Denmark requires a thorough understanding of local labor laws, which prioritize employee protection and fair process. Unlike some jurisdictions, Danish law does not operate on an 'at-will' basis; employers must have valid grounds for dismissal and adhere to strict procedural requirements.
Compliance with Danish termination rules is essential to avoid costly disputes, potential compensation claims for unfair dismissal, and damage to your company's reputation. Key legislation, such as the Salaried Employees Act (Funktionærloven) and various collective agreements, dictates minimum standards for notice periods, severance pay, and the overall termination process.
Notice Period Requirements
The required notice period for terminating an employment contract in Denmark depends primarily on the employee's category (e.g., salaried employee, hourly worker) and their length of service with the company. The Salaried Employees Act provides minimum notice periods for employees covered by this act. For other employee types, notice periods are often governed by collective agreements or individual employment contracts, which may offer different terms, but generally cannot provide less favorable terms than the Salaried Employees Act for comparable roles if no collective agreement applies.
For employees covered by the Salaried Employees Act, the minimum notice periods are as follows:
| Employee Seniority (Completed Years) | Minimum Notice Period (Employer to Employee) |
|---|---|
| Up to 6 months | 1 month |
| More than 6 months, up to 3 years | 3 months |
| More than 3 years, up to 6 years | 4 months |
| More than 6 years, up to 9 years | 5 months |
| More than 9 years | 6 months |
Employees covered by the Salaried Employees Act are generally required to give one month's notice to the employer, effective at the end of a calendar month. Probationary periods, typically up to 3 months for salaried employees, allow for shorter notice (14 days by either party).
Severance Pay
Under the Salaried Employees Act, employees are entitled to statutory severance pay only after completing a significant period of service. This severance is separate from payment during the notice period.
The entitlement is triggered at specific seniority milestones:
- After 12 years of continuous employment: Entitlement to 1 month's salary in severance.
- After 17 years of continuous employment: Entitlement to 3 months' salary in severance.
It is important to note that this statutory severance under the Salaried Employees Act is only applicable upon termination by the employer, provided the employee is not entitled to a company pension at the time of termination. Collective agreements may include different or additional severance provisions.
Grounds for Termination
In Denmark, termination of employment must be based on objective grounds. These grounds can broadly be categorized as either related to the employee's conduct or performance, or related to the company's operational needs.
- Termination with Cause (Summary Dismissal): This is reserved for instances of the employee's gross misconduct or fundamental breach of contract. Examples include theft, serious insubordination, or violence in the workplace. Summary dismissal requires immediate termination without a notice period and is a high threshold to meet legally.
- Termination without Cause (Ordinary Dismissal): This requires valid and objective reasons. These reasons typically fall into two categories:
- Employee-related reasons: Poor performance (following warnings and attempts at improvement), significant changes in job duties the employee cannot perform, or long-term illness (subject to specific rules and limitations).
- Company-related reasons: Redundancy due to restructuring, downsizing, closure of a department, or changes in business needs.
Regardless of the category, the employer must be able to demonstrate that the grounds for termination are reasonable and fair under the circumstances.
Procedural Requirements for Lawful Termination
Adhering to the correct procedure is as crucial as having valid grounds for termination. Failure to follow procedural requirements can render an otherwise justified dismissal unfair.
Key procedural steps typically include:
- Valid Grounds: Ensure clear, objective, and documented reasons exist for the termination.
- Warnings (for performance/conduct issues): For performance or less severe conduct issues, providing written warnings outlining the problem, expected improvement, and consequences of failure is usually required before termination.
- Hearing/Consultation: While not always a strict legal requirement for individual dismissals under the Salaried Employees Act, offering the employee an opportunity to comment on the reasons for potential dismissal is best practice and may be required under collective agreements or in specific situations (e.g., redundancy).
- Written Notice: The termination must be communicated in writing.
- Content of Notice: The written notice must clearly state that the employment is terminated, the effective date of termination (considering the notice period), and ideally, the grounds for termination, especially if requested by the employee or required by a collective agreement.
- Delivery: Ensure the notice is delivered effectively, preferably in a way that provides proof of receipt.
For collective redundancies (dismissing a significant number of employees within a 30-day period), specific consultation procedures with employee representatives and notification requirements to the authorities apply.
Employee Protections Against Wrongful Dismissal
Danish law provides significant protection against unfair dismissal (usaglig opsigelse). An employee who believes they have been unfairly dismissed can challenge the termination.
Grounds for challenging a dismissal as unfair include:
- Lack of valid, objective grounds for termination.
- Failure to follow correct procedure (e.g., insufficient notice, lack of warnings where required).
- Termination based on discriminatory reasons (e.g., age, gender, race, religion, disability, sexual orientation, pregnancy, union membership).
- Termination of employees in protected categories without very strong justification (e.g., pregnant employees, employees on parental leave, employee representatives).
If a dismissal is found to be unfair by a court or arbitration body, the employer may be ordered to pay compensation to the employee. The amount of compensation varies depending on factors such as the employee's seniority, age, and the circumstances of the dismissal, but can range from a few months' salary up to 12 months' salary (or more in cases of discrimination or for protected individuals).
Common pitfalls for employers include failing to adequately document performance issues, not providing clear warnings, having insufficient or subjective grounds for dismissal, miscalculating notice periods, or failing to comply with procedural requirements, particularly in redundancy situations or when terminating protected employees. Careful planning and adherence to legal requirements are paramount.
