Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.
For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.
For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.
As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.
While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.
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A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.
Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Denmark can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Denmark, you have to:
If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Denmark.
An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.
An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.
Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.
At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.
Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:
Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.
Paying employees in Denmark is not the same as paying workers in your own country. Employees have to be paid using Denmark’s employment and payroll standards.
This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.
Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.
After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:
One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.
Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.
Outside of EORs acting as the full admin employer, many also provide remote payroll.
For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.
We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.
Full-time employment is 37 hours weekly. A workweek should not exceed 48 hours, including overtime.
Denmark does not have a mandatory or general overtime regulation. Rules for overtime should be stated in the collective bargaining agreement. The typical overtime pay rate is 150% of the regular pay for the first three hours, and 200% for subsequent hours, holidays, or Sunday work.
The payroll cycle is monthly and wages must be paid by the end of the month.
There are no provisions in the law regarding 13th salaries.
Denmark has a “concurrent holiday” system, meaning that employees can use their holiday as they earn the days each month. Employees earn 2.08 days of paid holiday every month, for a total of 25 days per year. In general, employees accrue 12.5% of your salary in holiday allowance.
The holidays begin to accumulate on September 1, and run through August 31 of the following year. Employees who wish to take days before they earn them can do so with the agreement of the employer.
Employees who were unable to take their holiday leave due to Covid-19 can postpone it to the current year.
There are 10 public holidays.
Salaried employees receive payment during sickness from employers for the first 30 days. After this period, social benefits pay employees for up to 22 weeks.
Non-salaried employees are not guaranteed paid sick leave. Any sick benefits should be stated in the employment contract.
Expecting mothers are entitled to leave of 4 weeks before birth, and 14 weeks after. Salaried employees receive 50% of their wages for this time. Employees who are covered by agreement may be entitled to full pay.
New fathers are entitled to 2 weeks’ leave which must be taken during the first 14 weeks following birth.
Following the initial 14 weeks of maternity leave, each parent has the right to take up to 32 weeks of leave. This time can be extended by either 8 or 14 weeks, however, this will decrease the amount of parental allowance received monthly. One of the parents may choose to defer between 8 to 13 weeks of leave which can be kept for a continuous period before the child is one year old.
Work-related injury leaves: Employers are covered for work accidents from contributions made to social security (ATP). Also, most employers have additional private workers compensation insurance. Work accidents should be reported no later than nine days after the first day of absence. See sick leave for time off and compensation.
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In order to terminate an employee, sufficient reasoning must be provided. A written notice is not required but is recommended to avoid any disagreements
Under the labor law in Denmark, salaried employees are entitled to a notice period of 1-6 months, depending on the length of employment.
There is no general statutory regulation on severance pay, but salaried employees who have been in continuous employment for between 12 to 17 years are entitled to a severance payment of between 1 to 3 months’ salary. Some collective bargaining agreements also include rules on severance pay that depend on seniority.
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