Navigating Employee Termination and Notice Periods in Denmark

Denmark's employment termination framework, while relatively straightforward compared to many jurisdictions, maintains specific legal protections for employees. Employers must possess valid grounds for dismissal, though written justification is typically only required if explicitly requested by the employee. Valid grounds for termination generally fall into three categories:

Employee-related issues, such as misconduct, persistent underperformance, or a lack of cooperation.
Economic reasons necessitated by the company's financial situation.
Organizational changes within the company structure.

In practice, employers often issue one or more formal warnings to underperforming employees before proceeding with dismissal. A standard termination process involves adhering to the statutory notice period, providing a legitimate reason, and, where applicable, offering severance compensation.

Understanding Notice Periods in Danish Employment Law

The notice period for terminating an employment contract must be clearly stipulated within the agreement itself. For roles covered by a collective bargaining agreement, its terms typically dictate the notice requirements for both parties. Under the Danish Salaried Employees Act, an employee must generally provide one month's notice when resigning. For employers, the statutory notice periods are as follows:

Employment lasting 0-6 months: 1 month's notice.
Employment lasting 6 months to 3 years: 3 months' notice.
Employment lasting 3-6 years: 4 months' notice.
Employment lasting 6-9 years: 5 months' notice.
Employment lasting over 9 years: 6 months' notice.
During a probationary period (max. 3 months): 14 days' notice.
For temporary assignments under 1 month: No notice period required.

Severance Pay Regulations

Beyond salary during the notice period, the Salaried Employees Act mandates severance pay for long-serving employees. An individual with over 12 years of continuous service is entitled to one month's salary as compensation, while service exceeding 17 years warrants three months' salary. It is crucial to note that specific collective agreements may stipulate more generous severance terms.

Protections Against Wrongful Dismissal

Danish law strictly prohibits termination based on discriminatory or protected grounds. It is illegal to dismiss an employee for reasons including:

Temporary absence due to illness, accident, or occupational disease.
Utilizing maternity, paternity, or parental leave.
Membership in a political organization or trade union.
Discrimination based on gender, race, religion, nationality, or political beliefs.
Pregnancy or being on maternity/paternity leave.
Summary dismissal without a valid, substantiated reason as defined by law.

Employees who believe their dismissal was unjust or unlawful should immediately contact their trade union representative or the relevant union body. Legal challenges must typically be filed with the Labor Court within four weeks of the termination date.

The Step-by-Step Termination Process

Terminating an employee in Denmark involves a structured process to ensure legal compliance:

Formal Notification: If the employee is unionized, the employer must provide written notice to the relevant trade union before issuing the termination. The employee must then be formally notified. If requested, this notification must be in writing and include the reason for termination and information on the employee's right to appeal.
Consultation and Dialogue: The union may submit a formal written objection after receiving notice. The employee also has the right to request a detailed, written explanation for the dismissal.

Accessing Unemployment Benefits in Denmark

Denmark's unemployment insurance system, governed by both EU regulations and national law, provides a safety net for eligible individuals.

Eligibility Criteria for Benefits

To qualify for unemployment benefits, an individual must be registered as a job seeker with the local employment center (Jobnet.dk) and meet the following conditions:

Membership in an unemployment insurance fund (a-kasse) for at least one year (periods from other EU/EEA countries may be included).
Registration as a job seeker from the first day of unemployment.
Minimum income threshold met within the last three years: DKK 263,232 for full-time insured (2024) or DKK 175,488 for part-time insured.
Submission of an approved CV within two weeks of registering as unemployed.

Benefit Entitlements and Duration

Eligible individuals can receive benefits for up to two years within a three-year period, calculated in hours (3,848 hours total). The system is designed to incentivize work, as every hour worked extends the benefit period by two hours. The benefit amount is up to 90% of the previous salary, based on the highest-earning 12 months within the last 24.

Maximum benefit for full-time insured: DKK 20,359 per month (2024).
Maximum benefit for part-time insured: DKK 13,573 per month (2024).

Higher compensation, up to 118.86% of the standard maximum, is available under specific conditions, such as long-term membership in an unemployment fund (4+ years) and meeting higher income or work-hour thresholds.

Ensuring Compliant Employee Separations with SailGlobal

Navigating the nuances of Danish employment law, from notice periods to potential legal disputes, requires expert knowledge. SailGlobal provides comprehensive support for international businesses, offering legal advice and end-to-end management of termination processes to ensure full compliance and mitigate risks. Our expertise helps you manage these complex procedures smoothly and efficiently.

Denmark Termination Laws: Notice Periods, Severance & Dismissal Guide