Employer of Record in Greenland

Hiring employees in Greenland requires navigating a unique set of labor laws, payroll regulations, and social security requirements. For companies looking to expand their global talent pool, understanding these intricacies is crucial for compliance and a smooth onboarding process. Establishing a local legal entity can be a lengthy and resource-intensive endeavor, often presenting a significant barrier for businesses eager to tap into Greenland's talent without a full-scale physical presence.

Companies have several options for engaging talent in Greenland:

• Establishing a local legal entity: This grants full control but involves significant time, cost, and administrative burden for registration, bank accounts, and ongoing compliance.
• Utilizing an Employer of Record (EOR): A specialized service like Rivermate enables you to hire employees in Greenland compliantly without the need to establish your own local entity.
• Hiring independent contractors: While seemingly simpler, there are significant risks of misclassification under Greenlandic labor laws, which could lead to severe penalties and retrospective obligations.

How an EOR Works in Greenland

An Employer of Record simplifies global expansion by taking on the legal and administrative responsibilities of employment. In Greenland, the EOR acts as the legal employer, ensuring your team members are hired and paid in full compliance with local statutes while you retain full control over their day-to-day work and assignments.

• Payroll processing and administration: Handling all aspects of salary disbursement, ensuring timely and accurate payments in DKK.
• Tax withholding and remittance: Managing employer and employee income tax, social security contributions, and other mandatory deductions as per Greenlandic regulations.
• Benefits administration: Providing and managing compliant local benefits packages, including health insurance, pension schemes, and statutory leave entitlements.
• Compliance with local labor laws: Drafting legally sound employment contracts, managing terminations, and adhering to working hours, holiday, and parental leave policies specific to Greenland.
• HR support and guidance: Offering expert advice on Greenlandic employment standards, dispute resolution, and best practices.

Benefits of Using an EOR in Greenland

Engaging an EOR significantly streamlines your international hiring strategy, particularly in a distinct market like Greenland.

• Rapid market entry: Hire employees in Greenland quickly, often within days, without the typical delays associated with entity setup.
• Reduced legal and compliance risk: Transfer the burden of navigating complex Greenlandic labor laws to an expert, minimizing potential fines or legal issues.
• No need for local entity registration: Avoid the significant costs, time, and administrative overhead involved in establishing and maintaining a legal entity.
• Cost-efficiency: Leverage a solution that is often more economical than setting up and running a subsidiary, especially for a small number of employees.
• Focus on core business: Free up internal resources by outsourcing administrative HR tasks, allowing your company to concentrate on strategic growth and operations.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Greenland includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Greenland.

Greenland's tax system, managed by the Danish Tax Agency, grants the territory autonomy over tax rates and regulations. Employers must contribute to social security, which funds social programs, and are responsible for withholding income tax based on employee tax cards and official tables. Although Greenland lacks a general payroll tax, employers must also provide accident insurance, with costs varying by industry.

Key employer obligations include regular reporting of withheld taxes and social contributions—typically monthly or quarterly—and ensuring employee tax filings are completed annually by spring. Employees benefit from deductions such as personal allowances, mortgage interest, pension contributions, and certain travel expenses, which reduce taxable income.

Foreign workers and companies face specific rules: residency is generally established after six months, affecting tax liability; companies without a permanent establishment are taxed only on Greenland-sourced income; and double taxation treaties or expatriate schemes may offer relief or benefits. The following table summarizes critical data points:

Greenland's salary landscape is shaped by its high cost of living, small economy, and sector-specific demands. Compensation packages typically include base salary, allowances (such as cost of living, remote area, housing, and travel), and performance bonuses, reflecting the need to offset high import costs. Salaries vary significantly by industry and role, with healthcare professionals, public administrators, and skilled workers earning the highest wages.

Greenland lacks a statutory minimum wage; wages are set via collective bargaining, with employers advised to consult relevant agreements to ensure compliance. The typical payroll cycle is monthly, with payments made primarily through bank transfers. Employers must deduct taxes and social contributions according to local regulations.

Salary trends forecast increased demand for skilled workers in IT, healthcare, and tourism sectors, driven by economic diversification and high living costs. To attract and retain talent, companies should offer competitive packages, including allowances and bonuses, aligned with the high cost of living and remote work challenges.

Employees in Greenland are entitled to a minimum of 5 weeks (25 working days) of paid annual vacation leave, accrued throughout the year and typically used within a specified period. Employers must provide salary during this leave, with some agreements offering additional vacation pay. Public holidays are observed annually, including New Year's Day, National Day, Christmas, and variable dates like Easter; employees are generally entitled to paid time off, with extra compensation if working on these days.

Sick leave entitlements vary but generally include a set number of days per year with pay, often requiring a medical certificate for extended absences. Parental leave covers maternity, paternity, and adoption leave, with specific durations and pay levels governed by agreements or contracts. Other leave types such as bereavement, study, and sabbatical are available depending on employment terms.

Greenland's employee benefits are governed by legislation, collective agreements, and cultural expectations. Mandatory benefits include paid time off, sick leave, parental leave, public holidays, and occupational injury insurance, forming the baseline for employment packages. Employers are required to provide these benefits to ensure employee security and well-being.

In addition to statutory requirements, many employers offer optional benefits such as supplementary health insurance, pension plans, life and disability insurance, training, housing assistance, and travel allowances—especially important in Greenland's remote regions. Benefits vary by industry; for example, the fishing and mining sectors often provide housing and travel allowances, while the public sector offers stable pension and health benefits.

Employers must also consider costs related to insurance premiums, pension contributions, housing, and travel allowances, which can be significant, especially in remote areas. Compliance with Greenlandic labor laws and collective agreements is essential to avoid penalties, requiring careful administration and regular updates on legal requirements.

Employment agreements in Greenland are essential legal documents outlining job responsibilities, compensation, working hours, benefits, termination conditions, confidentiality, and intellectual property rights. They are governed by Greenlandic law, which emphasizes clarity and fairness to prevent disputes and foster positive employer-employee relationships.

Greenland recognizes two main contract types: fixed-term and indefinite. Key clauses include job description, salary, working hours, benefits, termination terms, confidentiality, and governing law. Probation periods typically last 3-6 months, allowing easier employment termination during this phase. Confidentiality and non-compete clauses are enforceable but must be reasonable in scope and duration.

Modifications to employment agreements require mutual, written consent. Termination must be justified with valid reasons, and notice periods depend on employment duration. Employers should ensure compliance with local laws when dismissing employees or making contract changes.

Greenland currently lacks specific remote work legislation; existing labor laws apply equally to remote and on-site employees. Employers should clearly define remote work terms in employment contracts, covering working hours, performance expectations, and health and safety responsibilities, including ergonomic support. While employees do not have a legal right to remote work, they can negotiate arrangements, which employers should consider fairly.

Flexible work options include flextime, compressed workweeks, job sharing, and part-time work. Effective implementation involves assessing job suitability, developing clear policies, training managers and staff, and ongoing evaluation. Data protection is crucial, requiring secure communication channels, encryption, and privacy policies, especially when handling personal data under GDPR. Employers should also establish equipment and expense reimbursement policies, clarifying whether they provide hardware and how expenses like internet or office supplies are covered.

Terminating employees in Greenland requires compliance with specific legal procedures, including proper notice periods, severance pay, and justified grounds for dismissal. Employers must provide adequate notice based on employee tenure, ranging from 1 month for less than 6 months of service to 6 months for over 6 years. Severance pay is generally only applicable in cases of redundancy without cause, calculated as 3 to 5 months' salary depending on years of service.

Termination can be "with cause" (misconduct, poor performance) or "without cause" (redundancy). Employers must maintain documentation, provide written notices, consult with unions if applicable, and settle final payments to ensure lawful dismissal. Employees are protected against wrongful dismissal and can seek legal recourse if they believe their termination was unjust, emphasizing the importance of adherence to procedural requirements and non-discrimination.

Greenland's economy is increasingly embracing independent contracting as businesses seek specialized skills and flexible work arrangements. For employers, understanding the legal and tax framework is crucial to ensure compliance and establish clear working relationships. Correct classification between employees and independent contractors is essential, as misclassification can lead to significant consequences. Factors such as control, integration, dependency, and financial risk are considered in classification, with greater autonomy and project-based work indicating contractor status.

Contracts for independent contractors in Greenland should be comprehensive, covering scope of work, deliverables, payment terms, and intellectual property rights. Contractors generally retain IP ownership unless specified otherwise. Tax obligations include registering with tax authorities, filing income tax returns, and potentially handling VAT and social contributions independently. Insurance, such as professional liability and general liability, is typically the contractor's responsibility.

Independent contractors are prevalent in sectors like consulting, IT, creative services, construction, fisheries, mining, tourism, and professional services. The demand for independent expertise is expected to grow as Greenland's economy integrates further with international markets. Employers must navigate these frameworks to effectively and compliantly engage independent professionals.

Foreign nationals seeking employment in Greenland require both a visa and a work permit, with the process managed primarily by the Danish Immigration Service. The main visa types include short-term Schengen visas for up to 90 days, national D visas for longer stays, and work permit visas tied to specific jobs and employers. Employers must sponsor applicants, demonstrating no qualified local candidates are available, and provide detailed documentation such as job offers, employment contracts, and proof of qualifications. The application process typically takes 2 to 4 months, with fees applicable.

Key data points for employers:

Foreign workers can qualify for permanent residency after approximately 5 years of continuous residence, demonstrating self-sufficiency, integration, and a clean criminal record. Dependents, including spouses and children under 18, may apply for family reunification, with rights to residence and study, though work rights may require separate permits. Employers and employees must adhere to legal obligations, including reporting employment changes, complying with labor laws, and renewing permits timely to maintain legal status.