Nine things to be aware of when employing staff

When you start up your own business and consider employing staff, it is a good idea to know what to pay special attention to. Below, we have listed nine focus areas.

1. Written information on the employment terms

In Denmark, an employee working at least one month and more than eight hours a week must be informed in writing of the most material conditions of the employment. The Danish Act on Employment Certificates lists nine specific types of information which as a minimum must be given to the employee. Normally, the information will be provided in the contract of employment.

As an employer, you must provide the information as soon as possible and no later than one month after the commencement of the employment. If you fail to (sufficiently) do so, the employee may be entitled to compensation of DKK 25,000.

2. Salaried employees

Salaried employees are a special group of employees who enjoy specific rights, for instance in relation to unfair dismissal, notices of termination and salary during sickness. The employment terms of salaried employees are governed by the Salaried Employees Act and any other general employment legislation.

Generally, salaried employees are performing work as shop assistants, office workers employed within buying and selling activities in office work etc. Furthermore, salaried employees include persons whose work takes the form of technical or clinical services (except handicraft work or factory work) and persons whose work is wholly or mainly to manage or supervise the work of other persons on behalf of the employee.

Because of the wide definition of salaried employees and the special rights that they enjoy, it is relevant for the employer to be aware of whether the employees are protected by the Salaried Employees Act.

3. Holiday

According to the Danish Holiday Act, the employer must give the employee minimum five weeks' holiday each year.

The employee is not entitled to paid holiday, unless the employee has qualified for paid holiday by working during a qualification year running from 1 January to 31 December. Earned holiday is to be taken in the subsequent holiday year running from 1 May to 30 April.

On 1 September 2020, a new holiday act will come into force. According to this new act, all employees will be entitled to the same number of weeks as today. However, the principles for earning and taking of holiday will change.

4. Data protection

Data protection is the new black and on 25 May 2018, the new general Data Protection Regulation will apply to all data processing. This also means that as an employer, you must comply with the rules when processing personal data concerning your employees.

You should therefore already now be preparing a number of important documents, for instance one explaining how you are handling personal data on behalf of your employees, and another explaining the legal basis of the data processing and the appropriate security measures in relation to this processing.

5. Ownership of intellectual property rights

If you have employees working in a development department, it may be relevant to agree in the contract of employment that any intellectual property rights, including copyrights, patentable inventions, etc. obtained by the employee in connection with the employment belong to the company free of charge.

6. Non-competition and non-solicitation clauses

Non-competition and non-solicitation clauses regulate the period after the effective date of termination and are governed by the Act on Employment Clauses.

If a non-competition clause has been agreed, the employee who has ended his or her employment, is not entitled to take on employment with another company or have any other interest in a company which carry out the same kind of business as the former employer.

According to a non-solicitation clause, the employee is prevented from contacting the customers of the former employer. Customers also mean agents, suppliers and other business connections.

If you are to operate in a highly competitive market, you should consider the possibility of agreeing on a non-competition clause or a non-solicitation clause with the relevant employees.

It is important to be aware that the Act on Employment Clauses stipulates certain rather strict requirements for non-competition or non-solicitation clauses to be effective, and the employee must receive compensation while the clause is in force.

7. Termination of the employment

An employer may dismiss an employee by respecting the notice in the contract of employment, the Salaried Employees Act or a collective agreement. If the employer decides to dismiss the employee, the reason for the dismissal must in most cases be fair. According to the Salaried Employees Act and collective agreements, the employee will often be entitled to compensation for unfair dismissal.

The employer may, however, terminate the employment without notice if the employee is guilty of behavior which is considered gross misconduct, for instance in case of theft or serious disloyalty. It is important that you implement immediate dismissal as soon as possible after obtaining knowledge of the circumstances justifying the dismissal. Failure to do so will result in the employee being entitled to a compensation.

8. Tax

As an employer, you are obligated to withhold and pay the employee's tax to the tax authorities calculated based on the employee's tax rate. Failure to do so is a criminal offence. The employee's pay slip must contain information about the amount of tax paid.

In connection with the payment of salary, you are further obligated to provide information on the deducted tax, social contributions and any expenses, e.g. contributions to costs, gifts, etc.

9. Anti-discrimination

As an employer, it is important that you are familiar with the Anti-Discrimination Act which concerns different kinds of discrimination.

The Anti-Discrimination Act provides protection in relation to pregnancy or other reasons connected with maternity, parental leave, sex, race, ethnicity, politics, religion, social orientation, age and handicap. The act does not only protect against direct discrimination, but also against indirect discrimination. The latter meaning the situation where a person is placed at a disadvantage by the application of a provision, criterion or procedure that appears to be neutral, but may in fact place the person of a certain sex, age, etc. at a particular disadvantage compared with other persons, unless the provision, criterion or procedure is justified by a legitimate purpose, and if the means for achieving this purpose are appropriate and necessary.

contacts

Jonas Enkegaard

Partner

Maria Schmiegelow

Attorney