Navigating employment termination in Denmark requires a thorough understanding of Danish labor laws and practices. Terminating an employee involves specific procedures, notice periods, and potential severance obligations that employers must adhere to. Failing to comply with these regulations can lead to legal challenges and financial penalties. This guide provides an overview of the key aspects of termination and severance in Denmark as of 2025, helping employers ensure a smooth and legally compliant process.
Understanding the nuances of Danish employment law is crucial for businesses operating in Denmark. This includes knowing the rules around notice periods, severance pay, and the permissible grounds for termination. By following the correct procedures and respecting employee rights, employers can minimize the risk of disputes and maintain a positive reputation.
Notice Period Requirements
The required notice period in Denmark depends on the employee's tenure and whether the termination is initiated by the employer or the employee. Collective bargaining agreements (CBAs) may stipulate different or more extended notice periods. Here's a general overview:
| Employee Tenure | Employer's Notice Period | Employee's Notice Period |
|---|---|---|
| 0-6 months | 1 month | 1 month |
| 6 months - 3 years | 3 months | 1 month |
| 3-6 years | 4 months | 1 month |
| 6-9 years | 5 months | 1 month |
| More than 9 years | 6 months | 1 month |
It's important to note that these are minimum requirements. Employers can always provide a longer notice period. During the notice period, the employee is typically entitled to continue working and receiving their regular salary and benefits.
Severance Pay Calculations and Entitlements
Severance pay in Denmark is not a statutory requirement in all cases. However, it may be applicable under certain circumstances, such as when an employee is terminated after a specific period of employment or when it's stipulated in an employment contract or collective agreement.
- Functionary Act: Under the Functionary Act, employees covered by this act who have been employed for at least 12 years are entitled to severance pay.
- Calculation: The severance pay is calculated as follows:
- 1 month's salary after 12 years of employment
- 2 months' salary after 15 years of employment
- 3 months' salary after 18 years of employment
The salary used for calculation typically includes base salary and any regular allowances. Severance pay may also be required under collective bargaining agreements, which can provide for more generous terms than the statutory minimum.
Grounds for Termination
In Denmark, termination can be either with or without cause. However, even in cases of termination without cause, the termination must not be unreasonable or discriminatory.
- Termination with Cause (Just Cause): This involves terminating an employee due to serious misconduct, breach of contract, or other significant violations of company policy. Examples include theft, fraud, gross negligence, or repeated insubordination.
- Termination without Cause: This occurs when the employer terminates the employment relationship for reasons unrelated to the employee's performance or conduct. This could be due to restructuring, redundancy, or economic downturn.
Even in cases of termination without cause, the employer must still adhere to the notice period requirements and ensure that the termination is not discriminatory or otherwise unlawful.
Procedural Requirements for Lawful Termination
To ensure a lawful termination in Denmark, employers must follow specific procedural requirements:
- Provide Written Notice: The termination notice must be in writing and clearly state the effective date of termination.
- Adhere to Notice Period: The employer must comply with the applicable notice period based on the employee's tenure.
- Offer a Reason for Termination (if requested): While not always legally required, providing a clear and honest reason for the termination can help avoid disputes.
- Conduct a Meeting: It is good practice to hold a meeting with the employee to discuss the termination and answer any questions they may have.
- Ensure Non-Discrimination: The termination must not be based on discriminatory grounds such as race, religion, gender, age, sexual orientation, or disability.
- Comply with Collective Agreements: If a collective agreement applies, the employer must follow any additional procedures outlined in the agreement.
- Provide Final Paycheck: The employee must receive their final paycheck, including any accrued vacation pay and other entitlements, on or before their last day of employment.
Employee Protections Against Wrongful Dismissal
Danish law provides several protections for employees against wrongful dismissal. Employees who believe they have been unfairly terminated can pursue legal action.
- Unreasonableness: Terminations that are deemed unreasonable or unfair can be challenged in court. Factors considered include the employee's length of service, the circumstances of the termination, and the employer's conduct.
- Discrimination: Terminations based on discriminatory grounds are illegal. Employees can file a claim with the Danish Board of Equal Treatment or pursue legal action in court.
- Violation of Collective Agreements: If the employer violates the terms of a collective agreement, the employee can seek redress through their union or in court.
- Reinstatement or Compensation: If a termination is found to be wrongful, the court may order the employer to reinstate the employee or pay compensation. Compensation amounts vary depending on the circumstances of the case.
Employers should carefully document the reasons for termination and follow all procedural requirements to minimize the risk of a wrongful dismissal claim. Seeking legal advice before terminating an employee can help ensure compliance with Danish law and avoid costly disputes.
