Tuesday, December 12, 2023

Collective bargaining agreements in Denmark

Approximately 80% of the Danish workforce is organized in trade unions. Therefore, the agreements made between the trade unions and the employers’ organizations will likely have a large impact on your company’s employment policy as well as pay and working conditions.

In this article, we will provide you a general overview of the collective labour market in Denmark.

What you should know

• Large parts of the Danish labour market is regulated by collective agreements
• Most collective agreements regulate working conditions and dispute resolution
• A crucial part of a collective agreement is the employees’ right to appoint a shop steward
• There is no legal requirement for a company to follow or conclude a collective agreement in Denmark

Collective agreements

Unlike most European countries, the Danish labour market is built on collective agreements solely between the representative organizations of employers and the trade unions. In Denmark, the state does not interfere with the regulation of salary and working conditions, as long as the organizations and trade unions themselves are able to come to agreement on these issues.

Approximately 80% of the Danish workforce is organized in trade unions.

Approximately 80% of the Danish workforce is organized in trade unions. Therefore, the trade unions and the employers’ organizations have a large impact and influence on the salary and working conditions for most of the Danish work force. As most companies and industries are governed by detailed bargaining agreements, and as there are dispute resolving bodies in place, actual strikes are not a frequent occurrence and disputes are typically solved prior to escalating out of control.

A collective agreement is an agreement between two parties on the working conditions applicable to employees of a business or industry. The agreement typically contains rules on working hours, salary, payment for overtime, occupational pension, notice periods and other working conditions.

There may also be rules about work environment (Health & Safety) and rules for dispute resolution. The agreements include many stand-alone provisions and are supplemented by mandatory “background” legislation under general Danish employment law.

A crucial part of a collective agreement is the employees’ right to appoint a shop steward (in Danish ”Tillidsmand”). As a trusted representative, the shop steward is the employees’ link of communication with the management and serves as the union’s representative in the workplace.  A shop steward has a mandatory – and very strong – protection against dismissal.

There is no legal requirement for Danish or foreign companies to enter into a collective agreement in Denmark, but quite a number of non-organized private employers join these collective agreements.

If a company is a party to a collective agreement, the collective agreement is legally binding on both the company and the employees.

Violations of the collective agreements can be met with union actions and/or substantial fines. Non-compliance with other employment legislation can cause rather comprehensive compensations to the employees as well. In addition to the financial risks, a poor start for a foreign company in Denmark will have a negative impact on the relationship to the employees as well as to the trade unions and local authorities going forward. It is important for you and your company to be well prepared before entering the Danish Labour Market.

Would you like to know more about how to enter the Danish Labour Market as an employer while avoiding the costly mistakes? Contact today our specialist, attorney-at-law Nicholas Ørum Keller, Baker Tilly Legal.