Contracting across borders: Posting of workers in Denmark

Introduction

Labor shortages are nothing new. While there are variations across different industry segments, the overall shortage remains high, and Danish companies foresee labor shortages continuing until at least 2030. In particular, the Danish construction sector has been facing persistent labor shortages for the past few years.

Combined with the increase of large-scale projects in Denmark requiring substantial workforces, the number of foreign workers within the Danish construction sector has increased. It has recently been estimated that approximately every sixth worker is foreign. Simultaneously, the media has increased its focus on foreign workers in relation to social dumping and poor working environment.

But what should foreign contractors be particularly aware of when bringing foreign workers across borders into Denmark?

Hiring Workers from the European Union

Free Movement of Labor

When posting foreign workers in Denmark, it is important to distinguish between workers from the European Union and third-country nationals.

Due to the European Union’s rules on free movement, citizens from other EU countries can work in Denmark with few restrictions.

Posting of foreign workers is primarily regulated by the Danish Posting of Workers Act. As set out in the act, only limited Danish mandatory labor law will apply. In particular, the contractor posting workers in Denmark must ensure that mandatory legislation such as The Working Environment Act, The Equal Treatment Act, The Act on Prohibition against Discrimination on the Labor Marked are complied with and due notification to the Danish Register of Foreign Service Providers has been made.

Additional requirements may be imposed if the workers are posted for a period longer than 12 or 18 months, as they are no longer considered to be posted for a short-term provision of services.

The Danish Act on Temporary Workers’ Rights

Companies seeking labor for short-term projects may opt to use foreign temporary work agencies. When using temporary workers, temporary work agencies should be aware, that the Danish Act on Temporary Workers’ Rights applies in addition to the act on posting of workers.

According to section 2 of the Danish Act on Temporary Workers’ Rights, the Danish company will be considered the “user company”. As a result, the foreign workers are entitled to the same employment conditions as would have applied according to legislation or collective agreements if they had been employed directly by the user company to carry out the same work in Denmark.

Additional Requirements for Third-country Nationals

Unlike citizens from the European Union, third-country nationals may also be required to obtain a work permit before beginning their employment in Denmark, which imposes additional requirements. These permits are issued by the Danish Agency for International Recruitment and Integration (SIRI).

Depending on the work in question, various schemes with associated conditions can grant work permits. Generally, to meet the requirements, the employment terms must be considered standard and usual. In any case, the employment terms, such as wages, holiday conditions, a notice of termination, etc., must not be inferior to the general Danish employment terms for the specific position.

Final Considerations

Understanding the different applicable legislation and different requirements for foreign workers based on whether these are located outside the European Union is key to deciding the most attractive way to bring in additional workers.

Regardless of the applicable minimum requirements under Danish law, the parties to a construction contract may also wish to set a higher standard, requiring the contractor to offer employment terms similar to those set out in the relevant collective bargaining agreement through clauses on the use of foreign labor.

The clauses may set out control mechanisms to ensure that the site management is able to supervise and inspect whether the contractor and its subcontractors are compliant. Failure to comply may result in suspension and/or termination of the contract.

Consequently, we strongly advise that the parties consider imposing similar back-to-back terms with subcontractors when contracting across borders to bring in foreign workers.

If you want to know more about how we can help you with your projects in Denmark, feel free to reach out to Joachim Riis Jensen or Lærke Maria Mark Jensen.