New Danish Employment Contracts Act enters into force on 1 July 2023

On 11 May 2023, the Danish Parliament passed the long-awaited bill on employment contracts and certain working conditions – the Employment Contracts Act. The Act implements the EU Directive on transparent and predictable working conditions, which had an implementation deadline of 1 August 2022, but has been postponed several times by the Ministry of Employment. The new rules extend the employer’s duty to inform employees about their terms and conditions of employment and introduce a number of new minimum requirements regarding working conditions.

The new Employment Contracts Act enters into force on 1 July 2023 and replaces the previous Employment Contracts Act.

All employers must now update their standard employment contracts to reflect the requirements for new employment relationships that will come into effect from 1 July 2023.

The purpose of the recently passed Employment Contracts Act is to create greater transparency and predictability in employment relationships. The new Act entails both an extended scope, an increased duty of disclosure for employers and a number of completely new substantive rights for employees.

Extended scope

In the future, the Employment Contracts Act will apply to employees with a predetermined or actual working time of an average of three hours per week (determined based on a four-week reference period), whereas today the limit is an average weekly working time of 8 hours. These employees will be entitled to a an employment contract that meets the requirements and rules of the Act.

As a new addition, the Act will – regardless of the actual working hours – also apply to so-called “zero-hour contracts”, i.e. to employees for whom no working hours are guaranteed in advance, but who are obliged to be on call.

In this context, the only practical solution is to treat all employees as covered by the Act and provide them with an employment contract that fulfils the requirements of the Employment Contracts Act.

Increased duty of disclosure

The new Act extends the employer’s current duty of disclosure to include a range of additional information about the terms of the employment relationship – some of this information has already been covered by the previous duty of disclosure but has merely been specified in the new Act. The new rules imply that employees must now be informed about the following:

• If the employee does not have a fixed or primary place of work and the employee is free to determine his/her place of work.
• If the employee is a temporary worker, the identity of the user company must be provided.
• If a probationary period has been agreed, the terms and duration of the probationary period must be stated.
• The employee’s rights regarding other paid absences, not only – as before – information about holidays, but also about, for example, salary in connection with illness, the child’s first day of illness, maternity/paternity leave, etc.
• Any overtime arrangements and payment for overtime and/or shift change arrangements.
• If the employee has unpredictable working hours, information must be provided on the variable nature of the schedule, the number of guaranteed paid working hours and payment for work beyond the guaranteed hours. In addition, information must be provided on the time periods during which the employee can be required to work, the minimum notice to be given prior to a work assignment and the deadline for cancelling a work assignment.
• If the employer offers training, these rights, including the number of training days, must be disclosed.
• The identity of the social security institutions for which the employer is responsible and which receive social security contributions related to the employment relationship, as well as any social security protection.

The new Act also introduces new deadlines for when the employee must receive the information in question. While some of the information must still be provided within 1 month of the start of the employment relationship, some information (new and old) must now be provided within 7 days of the start of the employment relationship. In practice, however, the information is typically provided together with the employment contract.

New substantive rights

The new Act also introduces a number of substantive rights that specifically aim to ensure that employees with unpredictable working hours achieve a greater degree of predictability in their work.

• Probationary period: A probationary period cannot be agreed to exceed six months, and in fixed-term employment relationships, the probationary period cannot exceed one fourth of the employment period. However, for salaried employees, the rules on probationary periods in the Danish Salaried Employees Act will continue to apply. The provision will therefore have very little practical significance.
• Other employment: Employers are not allowed to prohibit an employee from taking up other employment unless the other employment is incompatible with the existing employment relationship. Employers are also not allowed to subject employees to adverse treatment for taking up other employment.
• Unpredictable working hours: An employee with a wholly or predominantly unpredictable work pattern may only be required to work if the work takes place within predetermined periods. In addition, the employee’s work must be notified with the notice that the employee has been informed of in accordance with the duty of disclosure. If these conditions are not met, the employee can legitimately reject the work assignment.
• On-call employees: A presumption rule is established for on-call employees that these employees are employed for a fixed minimum number of paid hours equal to the work performed in the last 4 weeks, unless the employer proves otherwise. The possibility of rebutting the presumption will depend, among other things, on whether the employer can present an employment contract that clearly states that no agreement on a fixed minimum number of hours has been made and at the same time can document that the work has been performed accordingly.
• Change in form of employment: If an employee has been employed for more than 6 months and has completed his/her probationary period, he/she can request a form of employment with more predictable and secure working conditions if this is available in the company. An employee who has made such a request is entitled to a written and reasoned response no later than 1 month after the company has received the request.
• Mandatory training: If an employer offers statutory training, this must be done at no cost to the employee. This implies that training time should count as working time and that it should, as far as possible, be organised within normal working hours.

Entry into force and transition

The Act enters into force on 1 July 2023; however, the duty of disclosure only applies to employees who join on or after this date. As an employer, you need to make sure that all employees employed on or after 1 July 2023 have employment contracts that comply with the new requirements of the Act. In other words, it is important that all employers update their standard employment contracts to reflect the requirements that will enter into force on 1 July 2023 for all new employment relationships.

However, no new contracts or addenda need to be issued to employees already employed or joining before 1 July 2023, unless requested by the employee.

The substantive rights will apply to all employees from the entry into force of the Act on 1 July 2023.

Updating employment contracts

If you have any questions about the new Act or in relation to updating your employment contracts, please feel free to contact us.

We can help you update your standard employment contracts.