Employment Contracts: the New Requirements

As an SME owner, you are required to issue a written statement of employment particulars to every employee, and since 2023 the requirements for what it must contain have been significantly tightened. If you are not up to speed with the new rules, you risk complaints, compensation claims, and unnecessary disputes with your staff.

What is an employment contract?

An employment contract is a written document setting out the essential terms and conditions of employment. It can take the form of a traditional signed contract, but it does not have to be called that. What matters is that the document contains the information required by law and that the employee receives it within the applicable deadlines.

The Act on the Employer's Obligation to Inform Employees of the Conditions Applicable to the Employment Relationship implements the EU Directive on Transparent and Predictable Working Conditions into Danish law. The Directive came into force in 2022, and Denmark updated the legislation with effect from 1 July 2023.

Who is covered by the rules?

The rules apply to all employees regardless of the form of employment and regardless of whether the position is fixed-term or open-ended. This means that as an employer you must issue a written statement of employment particulars to:

• Full-time and part-time employees
• Agency workers and temporary staff
• Employees on probation
• Employees with variable working hours (including on-call workers)

Previously there was an exemption for positions averaging fewer than eight hours per week. That exemption has now been removed. Even employees who work very few hours are entitled to a written statement.

What must the employment contract contain?

The updated legislation expands the list of mandatory particulars. Your employment contract must include at a minimum:

Basic information:

• Name and address of the employer and the employee
• Location of the workplace
• Job title and description of work
• Start date and expected duration (for fixed-term positions)

Pay and working hours:

• Remuneration and its components (basic salary, supplements, pension, etc.)
• Payment date and method
• Agreed normal working hours per day or week
• Any arrangements for overtime and payment for it

New requirements from 2023:

• Information on rules for shift scheduling and variable working hours, including notice periods and guaranteed paid hours
• Information on the right to training where the employer provides it
• Name of the social security arrangement (pension scheme, parental leave scheme, ATP, etc.)
• Termination procedures and notice periods for both parties
• Probationary terms, if a probationary period has been agreed

In addition, the contract must state whether a collective agreement governs the employment relationship and, if so, which one.

When must the employment contract be issued?

The deadlines have changed significantly. Previously a general deadline of one month applied. There are now differentiated deadlines:

• Within seven calendar days of the start of employment: The most fundamental particulars (identification details, workplace, job title, pay and working hours).
• Within one month of the start of employment: The remaining particulars (such as holiday entitlement, notice periods, pension and training rights).

Best practice is to have a complete employment contract ready from day one. It is simpler to meet both deadlines at once than to manage two separate rounds of documentation.

What happens if you do not comply?

Deficient employment contracts can have serious consequences. An employee who has not received a correct written statement can file a complaint with the Labour Court or bring a claim. The court may award the employee compensation of up to 20 weeks' pay, depending on the nature and extent of the breach.

The compensation is not limited to cases where the employee has suffered a concrete financial loss. The absence of proper documentation is itself sufficient to trigger a claim. This makes it especially important to have your templates and processes in order.

Practical steps for SME owners

You do not need a lawyer to get started. Here is what you should do in concrete terms:

1. Review your existing templates. Compare your current contracts against the updated list of mandatory particulars.
2. Update the templates. Add the missing items, in particular the new requirements on shift scheduling, training and social security.
3. Establish a consistent onboarding process. Make sure new employees sign and receive a copy of their employment contract no later than their first day of work.
4. Document delivery. Keep a record of when the contract was issued or sent, for example via email with a read receipt or a digital signature platform.
5. Remember to document changes. If material terms change (pay, job title, working hours), the employee must receive written notice as soon as possible and no later than the day the change takes effect.

Frequently asked questions

Do the rules also apply to family members working in the business? Yes, if the family member is employed on standard employee terms and receives a salary, the same rules apply. Where a contributing spouse works without a formal employment agreement, the situation is different, but seeking specific guidance is recommended in any case of doubt.

Is a digital employment contract acceptable? Yes. The law requires that the contract be in writing, but digital documents are accepted provided the employee has the ability to save and reproduce them. A contract sent by email or signed via a digital signature platform satisfies the requirement.

What if the employee does not return the signed contract? Your obligation is to issue the employment contract, not to secure a signature. Document that you have sent it and retain proof of delivery. Asking the employee to return a signed copy is good practice, but the absence of a signature does not prevent the employee from filing a complaint if the contract is deficient.

Let Legiant keep track of it for you

Employment contract rules change, and keeping up can be difficult when you are running a busy SME. Legiant automatically monitors changes in employment law and notifies you when your contracts and processes need updating -- so you are always compliant without spending valuable time staying current. Try Legiant for free and get started with a smooth onboarding process for your next employees.