Information for this page was compiled during December 2023 and January 2024. As Member States are currently transposing the EU minimum wage directive, national legislation can be subject to change. Eurofound intends to update these profiles in early 2025. Users are invited to contact Eurofound if they are aware of changes.
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In Denmark, wages and working conditions are mainly regulated by sectoral collective agreements entered by employer associations and trade unions. These collective agreements are typically updated at intervals of two or three years. Companies covered by collective agreements are bound to comply with the terms with the agreement under the labour law, including the set wage levels. A CA applies to all of its employees, irrespective of whether they have joined a signatory TU or not. There are no regulations regarding who can enter an agreement and what it should entail. Companies do not have to sign a collective agreement; however, trade unions are entitled to demand work to be covered by a collective agreement and to use strikes or picketing to make an employer comply. This applies both to Danish companies and to non-Danish companies operating in Denmark. Disputes about collective agreements are resolved by industrial arbitral tribunals and the Danish Labour Court. According to the Main Agreement between the social partners at confederation level, it is the non-breaching party to the agreement that may institute proceedings in the event of a breach and demand back payment of amounts owing and the payment of a fine for the breach. Disputes about whether a valid collective agreement exists are decided by the Labour Court unless the case has already been solved through the obligatory alternative conflict resolution measures between the social partners. The basic rules for the relationship between Danish labour market partners are outlined in the Main Agreement from 1973 (last updated in 1993) between the Danish Trade Union Confederation (FH) (LO at the time) and The Confederation of Danish Employers (DA).
In Denmark, there are no extension mechanisms. The companies, which do not want to be a member of an employer organisation, can sign single-employer agreements with trade unions. These supplementary agreements (adoption agreements) are often standard single-employer agreements that the unions have ready for the occasion. In case of breach, the regulations are the same as mentioned above.
Denmark has a fairly high coverage of workers by collective agreements. The exact coverage rate may be calculated in different ways and thus vary slightly. The numbers provided by the Confederation of Danish Employers (DA) based on 2018 data from Statistics Denmark, The Danish Employers' Association for the Financial Sector, as well as Eurostat’s Structure of Earnings Survey, represent a widely used source. According to their calculations, Danish Employers found, and published in an article, that 82% of employees in Denmark are covered by collective agreements (100% percent in the public sector and 73% in the private sector).
The Confederation of Danish Trade Unions (FH) published a report on collective bargaining coverage in 2022, in which the coverage rate was stated to be 84% overall, 78% in the private sector and 97% in the public sector. Not much data is to be found on collective bargaining coverage for low-paid workers per se, and it is often discussed in correlation with organisational coverage (i.e. employees that are members of a trade union). According to the report almost half a million workers – around 15% of the workforce – are employed on workplaces that have a low or medium collective bargaining coverage. Industries with low coverage are more likely to have short-term employment, part-time employment, foreign workforce, as well as a low level of trade union memberships. The report highlights four industries with low organisational density and where over half of the workforce is in the lowest wage quartile: hotel and restaurant, cleaning, agriculture, and retail. However, despite the low organisational density, only the first has a low collective bargaining coverage, while the other three have medium to high collective bargaining coverage. While the retail sector has a high collective bargaining coverage and a lower foreign workforce, it has – together with cleaning – the largest share of workers, 72%, in the lowest wage quartile. Thus, low organisational density (in terms of trade union membership numbers) affects the bargaining power and eventually the working conditions and wage levels, irrespective of the collective bargaining coverage.
Regarding the lack of collective bargaining coverage and set minimum wages, the main groups of workers often mentioned are posted workers (mainly in construction) and digital platform workers (mainly cleaners and couriers). These are relatively new types of workers in the Danish context, and there have been various attempts during the last decade to ensure a better incorporation of these workers into the Danish system. However, the largest group not covered by collective agreements are highly skilled employees with a university degree. According to the Danish Association of Masters and PhDs (DM), a trade union for workers with a university degree, only one third of their members in the private sector are employed according to a collective agreement, and the majority is employed exclusively on individual contracts.
Most of the private Danish labour market falls within the scope of the two main labour market confederations, the Confederation of Danish Employers (DA) and the Danish Trade Union Confederation (FH). However, it is their member organisations that do the actual negotiation of the sectorial collective agreements, while FH and DA (in particular) ensure coordination between negotiations of the different sectorial agreements.
In the private sector there are two pace-setting agreements with two different collective agreement payment schemes:
These two agreements set the mark for the development in wage levels for most workers in the private sector, including low-paid workers. The public sector follows the mark set by wage setting in the private sector.
In Denmark, collective agreements in the private sector are renewed on an industry-by-industry basis, but they are negotiated during the same period (collective bargaining round) and are approved through a joint vote by trade union members in all industries.
The Industrial Agreement between DI and CO-industri is always the first agreement to be concluded in the collective bargaining rounds. It is the largest and lays the framework for the rest of the agreements. Further, it sets the wage levels for all those using the ‘minimum payment system’, which is around 60% of the private sector. In the ‘minimum payment system’, actual wage levels have to be negotiated at the company level and most workers will be paid much more than the agreement’s minimum rate. The other pace-setting agreement is the Transport and Logistics Agreement between DI and 3F, which covers around 20 percent of the private workforce. This agreement sets the wage levels in the ‘standard payment system’, in which the wage level set by the sectorial agreement is often the wage paid to workers. However, there is a strong coordination in the negotiation of both types of collective agreements implying that the relative increase in wages will be approximately the same across sectors and occupational groups covered by these agreements. Therefore, the relative outcomes of bargaining rounds will not differ much between different groups of workers and the system ensures that low paid workers are not left behind in their wage development.
The duration of the collective agreement is agreed upon during the collective bargaining round and will last for two to four years depending on the economic situation. In the last two decades, three-year agreements have been the norm. The bargaining rounds take place in the first quarter of a year. In the private sector, local negotiations in companies can follow the conclusion of their relevant sector or company agreements.
Bargaining rounds for the public sector always follow one year after the private sector negotiations. Wage increase disparities are automatically adjusted according to formalised procedures, so that the public sector neither falls far behind nor overtakes the wage levels in the private sector.
Across all sectors, Danish collective agreements contain wage provisions lower than the adult minimum rates for young workers (<18 years) and apprentices. For both groups the wage levels differ between sectors and industries, and in the private sector, a higher rate can be achieved with local negotiation.
In Denmark, one can start working at age 13, however, this is not very common, and most agreements only contain rates for youth workers in ages 15, 16 and 17. Most agreements contain youth rate supplements for time worked in early mornings and/or evenings and/or Sundays and public holidays. It is only legal to give age-based wages if the worker is covered by a collective agreement. Due to the Discrimination Act, wage negotiations in companies without a collective agreement cannot differentiate wages based on age. Rather, it is only legal to give a young person a lower wage than someone older due to less experience and competence; the salary for a young person under the age of 18 must be agreed in the same way as for an employee who has turned 18.
The wage levels of apprentices (ages 16-24) are similarly determined by the collective agreements, and they might differ slightly between industries. However, even if the company is not covered by an agreement, students and apprentices are always guaranteed the minimum wage and salary benefits stated in the main collective agreement in the certain industry by law. The levels are minimum rates that increase annually as students and apprentices gain more experience in the field. In 2022 the monthly minimum rate for the first year of an apprentice could be expected to be between DKK 9,500 and DKK 12,500 before tax (approx. €1,273 –€1,675). For some apprenticeships, the wages are higher if the apprentice has turned 21 before starting. Minimum rates for adult apprentices (25+) are higher with minimum rates equal to unskilled workers. All apprentice wage levels are minimum rates, and in the private sector, a higher level might be negotiated.
The wage system in the private sector
In Denmark there are three main wage systems in the private labour market, which provide different opportunities for employees to enter into local wage agreements with management. Around 60% of the private workforce are on the minimum payment/minimum wage system, around 20% are on the standard wage system, and the remaining are either on collective agreements without rates or on individual contracts.
The wage system in the public sector
In the public sector, everyone is covered by the local wage system, which is a seniority-based pay system with decentralized non-seniority-based supplements. The purpose of local pay is to provide the opportunity to pay employees in relation to their competence development, functions and personal qualifications, as well as to adapt the pay to local conditions. The local wage consists of five parts, of which only the first has to be centrally determined:
Deductions and allowances
In Denmark, certain amounts can be deducted from a worker's income prior to the calculation of taxes. These include trade union fees; interest expenses; transport to/from work in excess of a total 24 km; double housing or board and lodging for temporary workers; work travel expenses if not paid by the employee.
In permanent jobs a worker must pay tax on free board and lodging provided by the employer. There are fixed standard rates for free board and lodging at the place of employment for helpers in agriculture etc., domestic help, kitchen and serving staff, private nurses and hospital staff. There are also special rates for personnel in the military. The rates are decided by the Tax Council and the newest order entered into force on 1 January 2023. If a cash benefit has been paid instead of free boarding and lodging, it must be treated as wages.
An employer may choose to pay a tax-free travel allowance for food, accommodation, and petty acquisitions in connection with work-related travel. The employee must be away for at least 24 hours. Travel allowances are tax-free and are paid according to standard rates. This is also called subsistence allowance (in Danish called ‘diæter’).
In Denmark there are no regular reports on minimum wage setting.