Your guide to employment contracts - Everything you need to know

Employment contracts

An employment contract is an agreement between employer and employee that describes the terms and conditions that apply to the employment. In this way, the employment contract helps to define the guidelines for the company and the employee.

In this article, we will make you more aware of what an employment contract entails and what an employment contract must include.

Let's start by looking at what characterises an employment contract.

What is an employment contract?

An employment contract is a written or oral agreement entered into between an employer and an employee. The employment contract contains a number of elements, such as the start date of the contract and any end date if it is fixed term contract. Here you can read more about temporary employment. In addition, an employment contract also outlines terms and guidelines between the company and the employee.

At a minimum, the contract must inform the employee of the following matters:

• Company and employee name and address
• The location of the workplace - i.e. the location where the employee must perform their work
• Indication of the employee's title, position or job category. Alternatively, the employer can provide a description of the work
• The starting time of the employment relationship. If it is a fixed term employment, it is also required that the contract specifically highlights when the employee must leave their position
• Rights in relation to holiday
• Termination notices. It is not sufficient to refer to, for example, the Civil Service Act or the collective agreement, unless it is stated in the contract that the notice of termination follows from this
• Salary and allowances and other salary components, e.g. pension contribution and possible board and lodging. In addition, the payment dates must be clarified, is the salary paid weekly, every 14 days or monthly
• Daily and weekly working hours
• The collective agreements or agreements that help to regulate the working relationship

You can use the points above when you draw up an employment contract. In addition, there are several employment contract templates on the web. However, it may be a good idea to have the contract reviewed by a lawyer with expertise in employment contracts.

Can you be employed without an employment contract?

It is typically not legal to be employed without an employment contract. Thus, it is the company's responsibility to draw up an employment contract when a new employee starts at the workplace. You can see which types of employees below require employment contracts:

• Employees who have been employed by the company for more than 1 month

• Wage earners who work more than 8 hours a week on average

What does an employment contract look like if the employee is paid by the hour?

An employment contract for an hourly wage employee may look different compared to a contract where the employee receives a fixed salary. The content of the contract is determined based on the following factors:

• Clerk on an hourly wage
• Hourly wage without collective agreement
• Hourly wage with collective agreement

A contract for the three above types of employees must contain:

• Employer and employee information
• Workplace
• Position designation
• Pay
• Working hours
• Starting date
• Holiday Entitlement
• Notice of termination
• Confidentiality
• Special agreements

It should be noted, however, that although the overall points in the employment contract are the same for the three types of employees, the content of a number of the points will vary, for example in the case of hourly wages without a collective agreement. Here, the salary level can be determined by the municipality if it is an employee who is in a flexible job.

In addition, the salary must be in accordance with the minimum wage rules specified in the applicable collective agreement, if the employee is paid by the hour with a collective agreement. Furthermore, termination notices can also be different, for example there are special rules for flexi-jobbers.

What is an employee contract?

An employment contract for a salaried employee is called a salaried contract. The Salaried Employees Act defines the rules and terms of the employment agreement entered into between the employer and the employee.

The Salaried Employees Act also gives the employee rights, e.g. in connection with termination, illness, paternity and holiday. Here, for example it is mentioned that the employee has the right to full pay during illness.

In addition, the employee has regulated salary rights during paternity leave and special rules regarding notice of termination also apply. If you would like to read more about the Danish Salaried Employees Act, you can click here.

What is a collective agreement?

A collective agreement is a collective agreement between the employers' organisation and the employee association. The collective agreement determines minimum requirements that must apply when a member is employed in your company. 

What are non compete and customer clauses?

A non competition or customer clause is an agreement between the company and the employee. The purpose of the two contracts is to protect the business interests of the workplace when the employee resigns from his position. Thus, the employee cannot establish their own business that sells competing products or services, or enter into business contact with customers from their previous workplace.

When the employee is employed, it is important to provide good onboarding and get the employee integrated into a good working environment. Just look here