Collective agreements

A collective agreement is an agreement between two parties on the working conditions for employees that will apply in a business or industry. In Denmark, there is no legal requirement for Danish or foreign companies to follow or enter into a collective agreement.

The parties to a collective agreement are a trade union or employee organisation representing employees, and an individual employer, business or employers' organisation representing employers.

The options for entering a collective agreement

As a foreign enterprise you should be prepared for Danish trade unions contacting you to enter into a collective agreement covering your workers posted to Denmark. You can choose to negotiate a collective agreement with a traded union yourself. But you can also choose to join an employers' organisation to negotiate with the trade union on your behalf.

For a collective agreement to be valid in Danish labour law, it is essential that the agreement has been entered into by two parties that are independent of each other.

Trade union use of industrial action

A fundamental principle in Denmark is that trade unions have the right to negotiate a collective agreement with employers and employers' organisations. Trade unions can make use of various industrial actions against an employer to reach an agreement. As a foreign employer with employees posted in Denmark you may also encounter this.

The regulations covering industrial action are not fixed in law but are based on long-standing practice of the Danish Labour Court. In Denmark, there exists an extensive right to take industrial action and sympathy action. A sympathy action is undertaken in support of an ongoing industrial action. An action is only legal if the work that the trade union is attempting to enter agreement on, normally belongs to that union's area of interest. But it is not a requirement that members of the union are employed in the business.

Industrial actions a union can take:

  • Strikes, in which the union instructs its members to cease working at the enterprise affected by a dispute.
  • Recognitional picketing, in which the union instructs its members to refrain from taking a job at the enterprise affected by a dispute.
  • Sympathy action, in which the union or other unions in the same umbrella organisation support the main industrial action by instructing members to strike or refrain from performing work for the enterprise affected by a dispute.

It is a precondition of instigate a strike, boycott or sympathy action that the union has previously referred the foreign enterprise to the provisions of the collective agreement covering the sector. These must be national collective agreements that have been agreed by the most representative employee and employers' organisations in Denmark.

Disputes on the legality of a strike or boycott can be brought before the Labour Court, which will quickly reach a decision.

Danish unions can take action to reach agreement

There are many examples in Denmark where unions have taken industrial action to achieve collective agreement. This applies to both Danish and foreign employers. In relation to foreign employers, the right to take action has been especially relevant in the building and construction sector.

Example 1: A trade union instructs its members not to supply goods, not to dispose of waste or to perform work for the main contractor or employer that the union is trying to reach agreement with.

Example 2: Electricians working on a construction project refuse to carry out work for the main contractor because a foreign company performing other construction tasks has not entered into a collective agreement.

About the fund

On virk.dk, the fund publishes a list of foreign employers that have given rise to claims for payment from the fund over the preceding 36 months. This is done so that Danish assignors can familiarise themselves with the list before signing a contract with a foreign employer. If a Danish assignor chooses to sign an agreement with a foreign employer on the list, the assignor will, in the same manner as the employer, be charged an increased fee if the employer again gives rise to payment claims from the fund.

The fund is financed by contributions from all Danish employers that are obliged to pay the Labour Market Supplementary Pension (in Danish ATP) for employees.

All foreign employers providing services that employ temporary workers in Denmark also contribute to the fund. The collection of contributions from these enterprises is based on notification to the Register of Foreign Service Providers (RUT-registeret).