A Global Guide for In-House Counsel: Doing business in a rapidly changing world

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Employment – Transient Workers

Are you seeing a shift in employee/ workforce expectations in your jurisdiction, when it comes to flexibility, length of contract, remote working, hours of work, etc? How can clients both reflect this and protect their business interests in employment contracts?

The labour market has always been competitive, but competition has changed in the past year. Expectations have shifted, in particular to the working conditions offered by companies.

Employees are currently the strongest players in the Danish labour market, where unemployment right now is only 2.5%. Workplaces are being compared in terms of flexibility and working conditions, and many would start looking for a new job if their current workplace does not offer flexibility.

The fact that employees are gradually gaining power also means that employers must think differently. It is no longer possible to control the employees’ actions in the same way as when they go to work and work from an open-plan office. The flexible labour market requires the development of “distance management” skills. All employees working remotely should update their calendars with information about where they can be reached (office and/or digital communication channels) and during which hours. Companies may want to introduce virtual coffee breaks or set aside the last five minutes of virtual meetings for an informal chat. Managers should actively consider the number of attendees in digital meetings and consider the benefits of fewer attendees in such meetings, enabling a video image of each person in a reasonable size which should create greater commitment from attendees. An option could be for the company to have inhouse social media, or to set daily check-ins between managers and employees. There is a need to create a new digital culture: companies must decide whether to become “virtual first”, meaning that all tasks, meetings etc. should be organised so that employees rank equally and have the same access and opportunities, regardless of their distance.

Regardless of the length of contract, physical presence or number of working hours, employees need professional management, social attention and recognition. In addition to the fact that the requirements for management are increasing, there are also several legal requirements that clients must pay special attention to when, for example, remote working is made available to employees in Denmark.

Foreign employers must be particularly aware that if the work is to be carried out in Denmark, the provisions of the Danish Health and Safety at Work Act will apply. If employees work from home more than two days a week, the employer must ensure that the home office complies with the rules for arrangement. Danish companies whose employees live abroad and work from home, e.g., in Sweden or Germany, must comply with the health and safety regulations applicable in the country in question. Companies/clients that manage to adapt to this change will be able to retain their employees, recruit new employees and, not least, rise above the competition.

“Some of the work may be made remotely, as we offer remote working.” This sentence has often been seen in job advertisements in 2022 in Denmark.

The big benefit of flexibility and the flexible workplace is that employees are “set free” to work anywhere and anytime. The feeling of freedom is also seen as a sign of confidence granted by the employer; to work without “supervision”. The ability to work from home gives employees more time and energy for family and leisure and can contribute to increased productivity, and job satisfaction and motivation generally increase. Working from home will in most cases provide more peace of mind – away from open-plan offices and small distractions all the time. Employers will have more productive employees. Employers will be able to retain employees who, for geographical reasons, would otherwise have had to resign, or to recruit employees who otherwise would not have applied for the job. It is important that remote working is voluntary, as it is the employee’s own needs that are crucial in the current labour market.

The challenges of the flexible labour market and workplaces are how to maintain teamwork and human relations in the companies. Working from home weakens the daily human contact between employees, and between managers and employees. Employees can lose access to informal knowledge sharing and knowledge about what is happening in the company. Managers find it difficult to support the work and acknowledge the work effort. It therefore requires a targeted effort from the companies, including management. The feeling of belonging to a company may become weaker, which is why job satisfaction in remote working must be put on the agenda of employers. New routines must be introduced – and here technology can be used as a tool. Ongoing professional seminars and social events, where everyone can participate virtually, contributes to a good sense of belonging, development, and knowledge sharing. It could be the small things that are important, such as a picture on an email profile (of an employee you may never have seen in real life). When employees engage in remote working, they still need to feel included and updated in everything going on in the company. Only creativity can limit employers’ actions in the digital world.

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It is complex to advise foreign clients on Danish employment law and tax law issues. The questions that arise in connection with the recruitment of temporary workers are rarely the same, as it largely depends on the specific circumstances, which is why we have gathered our most important advice here.

Work permits: A residence and work permit must be obtained for non-European workers before beginning work in Denmark. Special exceptions apply to researchers, special, individually qualified employees, agricultural employees, and mobile workplaces.

Employees versus self-employed: According to Danish legislation governing employment and Danish collective agreements, only employees have rights. Whether it is an employee or a self-employed is therefore important for deciding whether a person has rights according to employment law and thus the right to collective negotiation on pay and working conditions, and whether the contracting party has obligations as an employer; or whether the contracting parties are independent undertakings operating freely on the market. Some employment contracts have ambiguous names, for instance ‘freelancer contract’ or ‘consultancy contract’ or the contract is designated as self-employed thereby avoiding the rules of labour law, even though the content of the contract might be something quite else.

Remote working and tax: When an employee receives pay from a Danish employer it is crucial for tax liability where the employee physically performs the work. If the employee works from Denmark, the employee will be liable to pay tax subject to the employee’s pay here in Denmark. If the work is carried out in the employee’s home country or a third country, the employee will not be liable to pay tax in Denmark, but probably in the home country. In relation to companies, the general rule is that the company is liable to pay tax on any profits in Denmark when the company is run with a permanent establishment here in Denmark, regardless of whether the company is Danish or foreign.

“Workplaces are being compared in terms of flexibility and working conditions, and many would start looking for a new job if their current workplace does not offer flexibility”

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