a. New or Expected Developments
From a European perspective, the Danish labour market is considered attractive due to both a strong Danish economy and the specialised Danish labour market model, which benefits both employers and employees through flexible working conditions, employment terms and conditions based on individual or collective agreements and a high level of social security. In recent years, a number of independent contractors and businesses have been established in Denmark as a result; in particular specialists can benefit from establishing themselves as independent contractors, instead of working as employees. In recent years, a significant number of graduates from universities and business schools have shifted their career focus from being employed by well-known Danish and international businesses, to instead becoming owners of their own businesses, typically based in a start-up environment.
Another development is the appearance of so-called “atypical employees”, a group of highly specialised individuals, e.g. journalists or IT specialists, who cater to a number of different employers or contractors as independent contractors, freelancers, consultants and employees depending on the work to be carried out or the character of the cooperation. Accordingly, an “atypical employee” might be both an employee and an independent contractor depending on how the specific relationship is structured. An “atypical employee” will benefit from a very flexible working method combined with the high level of social security mentioned earlier.
In recent years, unskilled work has moved away from Denmark to other countries due to the higher salary levels. In order to stay competitive, including avoiding high salary levels especially supported by collective bargaining agreements, certain employers involved in manufacture or who are dependent on an unskilled work-force (e.g. transportation by lorries and trucks), have redefined their employees as ‘independent contractors’ with the effect that the unskilled workers will not be protected by collective bargaining agreements, will not receive any pay during periods of sickness, will not receive holiday pay or be able to join a labour market pension scheme and will receive low rates of pay which are not in line with the labour market. Such bogus-employees have been brought to the attention of both Danish trade unions and the tax authorities.
b. Recent Amendments to the Law
In September 2014, the Danish High Court (High Court Western Division, 17 September 2014) ruled in a case regarding the employment of a Lebanese freelance interpreter, who assisted refugees with social work and interpretational work. The freelance interpreter was engaged by a company for a total of 24 months to perform interpretational work on a freelance basis. The interpreter carried out work on a regular basis; an employment contract was not entered into and the interpreter received his remuneration both as “salary” and as payments based on invoices issued by the interpreter to the company. As the interpreter was not guaranteed a specific number of hours of work, he was entitled to reject work offered to him, he was free to organise the work in a way he preferred and as he had never challenged the fact that the company did not pay him holiday pay, the High Court ruled that the interpreter, despite the fact that he had on a number of occasions received a salary with the deduction of withholding tax, was not to be considered an employee of the company. Accordingly, the interpreter was not entitled to receive a salary during a notice period or a holiday allowance.
This ruling demonstrates that all aspects of the engagement must be considered carefully and individually before it is decided whether the relationship should be defined as an employment relationship or as an agreement with an independent contractor.