DO YOU NEED ACCOUNTING?
NEED A QUOTE:
All rights reserved © 2024
With the increasing globalization of markets and the intensification of international cooperation, more and more companies are looking for ways to develop and expand in foreign markets. Denmark, with its stable economy and well-developed labor market, is becoming an attractive destination for many Polish companies both in terms of implementing projects and providing a variety of services. There is also a growing trend among Polish entrepreneurs to delegate employees to work in Denmark.
Delegating employees from Poland to Denmark is an excellent opportunity to develop your business on the international market, but it requires knowledge of complex regulations. We offer full support in complying with EU directives and Danish law, so you can focus on running your business without worrying about paperwork. We will make sure that the delegation of your employees goes without complications and that all employer obligations are met.
The Posting of Workers Abroad Act, which implements an EU directive, plays a key role in harmonizing labor rules across the European Union. Thanks to this directive, employers are required to comply with the minimum employment standards of the host country, which includes wages, working hours, and health and safety conditions, among other things. These regulations are designed not only to protect the rights of posted workers, but also to prevent inequality and unfair competition between companies operating in different EU countries. As a result, they ensure consistency and transparency in terms and conditions of employment across the European Community.
In accordance with Directive 96/71, the Danish Posting of Workers Act of March 25, 2011, does not set exact minimum wage rates that service companies originating in Poland are required to pay their employees sent to Denmark. Also, this law does not require companies from other EU member states to enter into collective bargaining agreements with Danish trade unions. Instead, Polish companies only have to comply with the general regulations on working conditions and minimum security standards that are set out in Danish labor law. This approach allows greater flexibility for companies that post workers, while maintaining basic standards of worker protection.
The European Union Enforcement Directive was introduced by the law regulating the posting of workers abroad. The purpose of this directive is to improve the enforcement of the law's rights, prevent circumvention, and prevent abuse. Within the framework of this directive, special emphasis is placed on standardizing inspection methods and increasing cooperation between member states in monitoring compliance. These measures are aimed at ensuring that labor standards are respected throughout the European Union.
Before deciding to post an employee, it is worth making sure that the destination country has specific regulations on the matter. It is worth bearing in mind that different countries in the European Union, the European Economic Area and Switzerland may have different rules from those set by the European Commission. The rules related to the calculation of posting periods in Denmark are not entirely clear, but according to the official position of the European Commission, each posting period should be counted separately for individual services. When assessing whether it is the same assignment, not only the type of service is taken into account, but also the scope of work and the places where the service is provided. If the same employer sends successive employees to perform the same task in the same location, then the posting periods of these employees add up.
The regulations do not specify exactly the maximum duration of the posting, however, they divide it into two basic types:
I. Short-term posting, which lasts up to 12 months.
II. Long-term posting, which exceeds a period of 12 months.
The type of posting, whether short-term or long-term, affects the working conditions that must be provided to an employee during his or her posting. Employers should therefore carefully review the regulations for both types of posting to ensure compliance with legal requirements and appropriate conditions for employees.
If a company is posting an employee for a period of up to 12 months, or up to 18 months after filing the appropriate notification in the host country, it is necessary to ensure that employment conditions comply with local laws or applicable collective bargaining agreements. These requirements include:
- The terms and conditions of employment should include allowances or reimbursements for travel, food and lodging, if required during the assignment.
- If the employer provides accommodation in the host country, appropriate standards of such accommodation should be included.
- The employee's salary must include all mandatory components and be set in accordance with national law or applicable collective bargaining agreements.
- Minimum rest periods and maximum working hours must comply with local regulations.
- A minimum number of paid annual leave days is also required.
- The employer should comply with occupational health and safety regulations.
- Protective measures must be provided for pregnant women, women after childbirth and young people under the age of 18.
- The principles of equal treatment of men and women must also be observed during the assignment.
When you delegate employees abroad on behalf of a temporary employment agency, you are obliged to provide them with at least the same terms and conditions of employment that apply to temporary employees in the host country. If the working conditions in Poland are more favorable than those in the delegation country, you must maintain Polish standards throughout the delegation. However, in such a case, the following are not taken into account:
- regulations on procedures related to the conclusion and termination of the employment contract,
- regulations relating to supplementary capital plans for employees,
- regulations relating to non-competition clauses.
In addition, you are required to comply with Polish regulations on the employment of temporary workers and the provision of temporary labor services.
Posting employees abroad involves numerous obligations and formalities that fall on both the employer and the employee. Employers who decide to send their employees to work in another country must comply not only with Polish labor law, tax regulations and social security rules, but also with the regulations in force in the destination country. In addition, adherence to international norms on the posting of workers and the coordination of social security is essential.
If you run a company providing services in Denmark or are employed outside the country, you should know and comply with the local laws that apply there. Providing services in Denmark on a temporary basis for a foreign employer who is posting you involves complying with the Posting of Workers Abroad Act. In addition, you are also bound by Danish regulations on wages, equal treatment, non-discrimination and certain regulations relating to working time.
The posting of employees is temporary, meaning that it cannot last indefinitely and must have a clearly defined duration. An employer who posts an employee for a short period of time has the option of extending this period to a maximum of 18 months, provided that he submits an appropriate, reasonable notice of extension. This notification should be made officially before the expiration of 12 months from the start of the posting. If such reasonable notice is given by the employer, the employer is obliged to provide adequate working conditions that comply with the regulations on short-term posting for the entire duration of the posting, that is, up to a maximum of 18 months.
If you are a posted employee, you are entitled to a safe and healthy working environment under the same rules as employees employed in Denmark. Although your home country's regulations mainly apply to your vacation entitlement, you are ensured minimum standards in accordance with the Danish Holiday Act.
The state to which the employee has been posted usually requires the employer to provide the reasons for the extension, but the employer has no right to challenge them, since the extension of the posting is treated as an information obligation and not as a request, which means that the state cannot deny the extension in any situation.
There is no statutory minimum wage in Denmark. Instead, wages are determined by collective bargaining agreements, which are the result of negotiations between employer organizations and trade unions.
Although the salary of a posted worker may differ from that of local workers, the components and rules for calculating it must be comparable. Note, however, that this rule does not apply to temporary workers, whose wages should be equal to those of local workers employed by the employer in the country to which they are posted.
Regardless of whether the posting is short-term or long-term, the wages of posted workers should be set and paid in accordance with the applicable rules from the first day of the posting. The posted worker must be paid a salary that takes into account all mandatory components required by national regulations or collective bargaining agreements commonly used in the sector or region. In practice, this means that the delegated worker's salary must include all elements and allowances that are provided for local workers in the same industry and region.
It should be borne in mind that amounts for actual expenses related to the posting, such as travel, food and accommodation costs, should not be included in the posted worker's salary. Such expenses should be reimbursed to the employee or paid separately. Therefore, they should not be included in comparisons between the remuneration paid to the employee and the amounts that are in accordance with the host country's regulations.
International hiring of labor is a phenomenon that is becoming increasingly common in a globalizing economy. This form of employment allows companies to manage their human resources flexibly and adapt to local labor market needs. Employees, thanks to this, gain the opportunity to gain experience in different countries and develop their professional skills in an international environment. When an employee, having an employment contract with one company (the formal employer), provides his or her services abroad for another company (the actual employer), there is an international hiring of labor.
The Danish tax authorities, known as SKAT, have published an official guide that explains in detail the rules of the new tax on the hiring of foreign labor. In the guide, the term “international hiring of labor” refers to situations in which employees hired by foreign companies are seconded to work for Danish companies, performing tasks that are crucial to their operations. In such cases, there are three entities involved: the employee who is tax resident in Poland, the employer from Poland or another country (the formal employer) who posts the employees to Denmark, and the Danish company for which the Polish employee performs work, acting as the de facto employer.
The SKAT guide also stresses the importance of cooperation between employers and the Danish tax authorities. Such regulations are aimed at avoiding tax loopholes and ensuring fair competition in the Danish labor market.
Law L921, which came into effect on September 19, 2012, regulates the tax on the hiring of foreign labor and covers issues related to the hiring of employees. According to the provisions of this law, a Danish entrepreneur to whom an employee provides services may be considered by the Danish tax authorities as a “de facto employer” in the context of Act L921 and the double tax treaty. The term “de facto employer” refers to an employer who actually uses the employee's labor, bearing responsibility and risk for the employee's performance, as distinguished from a formal employer with whom the employee is bound by an employment contract. Tasks that are an integral part of the Danish entrepreneur's business range from activities related to the company's core business to routine support services, such as cleaning and accounting services.
When you are an employee seconded from a Polish company to a Danish company, you may want to avoid paying Danish tax for the first six months. However, SKAT may consider that you have been hired by a Danish company, which may mean that you are obliged to pay Danish tax from the very first day of your stay in Denmark. In the situation that arises, the following rules apply:
- The Danish company is responsible for remitting tax to the relevant institutions.
- Tax rates are 8% so-called am-bidrag and 30% income tax.
- These regulations apply to the hiring of employees, regardless of whether the foreign employer is registered as a tax payer in Denmark.
The wages of foreign workers are taxed at a special rate set by Law L921, which is 35.6%. It is the Danish entrepreneur employing Polish workers who is responsible for collecting this tax. The basis for calculating the tax is the gross salary of the Polish employee, which is reported by the Polish company employing the employee. This tax consists of two components: 30% of the labor hire tax, which includes the labor market tax, and 8% of the labor market tax, calculated on gross income.
Tax residency is determined based on two criteria, one of which is sufficient.
I. Having a center of personal or business interest in the territory of Poland - The employee has his or her principal place of life or business in this country.
II. Being subject to unlimited tax liability in Poland - the obligation to account for all income, including remuneration for work, regardless of where it is earned, provided you are a Polish tax resident.
The obligation to pay the collected tax falls on the Danish entrepreneur by the 10th day of the month following the month in which the tax was withheld and the invoice payment was settled. On the other hand, Danish companies that settle on an advance tax payment basis must pay the tax no later than the last day of the accounting month.
When paying for an invoice issued by a Polish contractor, the Danish entrepreneur is required to withhold the tax. Each month, he should prepare a list of all employees performing services and the amount of tax withheld. The withheld tax and wages are presented in Danish currency, at the exchange rate in effect on the date of withholding. These obligations cover both situations where Polish employees are hired directly by a Danish company under a contract with a Polish employer, and cases where employment and payment of wages are made through a temporary employment agency or another employer.
For the application of the provisions of the Law on the Posting of Workers Abroad, it is necessary to have an employment relationship between the employee and the company that posts or makes its employees available to another entity. In addition, the posting employer must have an actual place of business in its home country, which in practice means conducting business in that country. If you manage a company based in Poland and employ workers, you can temporarily send them to work in another European Union (EU) country, the European Economic Area (EEA) or Switzerland as part of your company's services. In this situation, your company acts as the posting employer.
Delegation of employees to provide services in another country can occur in the following situations:
- When an employer sends employees to a branch or company that is part of the same corporate group as its own company.
- When the employer executes a contract between his company and an entity doing business in another country.
A foreign company may send its employees to Denmark in certain situations:
- When the purpose of the posting is for the employee to provide services to a recipient in Denmark, such as an individual client or another company.
- When it posts an employee to a company that is part of the same corporate group or is otherwise directly related to the posting company.
- When the company has a temporary employment agency or other arrangements to hire an employee to work for the company in Denmark.
A posted employee is a person who permanently works in one country, but has been temporarily transferred to Denmark or another country by his employer in the course of the services performed. In this case, despite daily employment in the home country, the employee performs his duties in another country. The definition of a posted worker varies depending on the laws of the destination country. In other countries of the European Union, the EEA or Switzerland, work performed on the basis of a contract of mandate is treated as semi-subordinate and co-subordinate employment by the delegating company. In practice, also a person employed in Poland on the basis of a contract of mandate can be considered a posted employee.
Also, a foreign national - a citizen of a third country who works for a company with its registered office or permanent place of business in Poland - can be a delegated employee, provided that he stays and works in Poland legally. Such an employee can be delegated to another EU, EEA or Swiss country on almost identical terms as for a Polish citizen. However, before delegating, it is important to check whether the host country requires additional documents, such as an appropriate visa, to allow the employee to work.
A company that posts its employees to Denmark to provide services must register with the RUT system (www.virk.dk/rut), which is administered by Erhvervsstyrelsen. The registration should be done no later than the day the employee begins his work. For subsequent assignments, it is necessary to carry out a new registration, taking into account information about the employees and the location where the services will be provided.
If the posted employee is engaged in white-collar work, the employer must cover all costs related to his travel and stay in Denmark. This rule applies when an employee is sent from his or her current place of work in Denmark to a new location to perform work on a temporary basis. White-collar work includes typical tasks such as office work, trading and sales.
In the case where a salaried worker assigned to a job performs domestic duties or agricultural work, and housing is included in his salary, the employer must provide him with modern and comfortable living conditions. In addition, the provision of clean towels and linens is also the responsibility of the employer. In addition, it is the employer's responsibility to cover the cost of insuring the employee's movable property, which should meet household insurance standards.
Regulations governing the posting of drivers apply to employees hired by companies based in other EU countries. If a driver performs transportation of goods or passengers in Denmark, participates in the road section of a combined transport, or performs international transportation, which is not bilateral, within Denmark, he or she is treated as posted to work in Denmark.
In many situations, temporary employees may be entitled to more favorable terms and conditions of employment than the standard rules that apply to other employees. Typically, the better conditions are determined by:
- laws applicable in the country where the worker is posted,
- collective agreements generally applicable in the country,
- collective bargaining agreements applicable to the specific employer who has posted the employee.
Regardless of the circumstances, before the posting process begins, the user employer should inform the temporary employment agency of the employment rules that apply in his company.
An increasing number of entrepreneurs are choosing to delegate their employees to work abroad. In such cases, the Social Insurance Institution (ZUS), as the relevant institution, issues an A1 document, which confirms that delegated employees remain covered by the Polish social insurance system. This means that their insurance premiums continue to be paid to the Polish Social Insurance Institution. Given that Poland is one of the leading countries in the European Union in terms of the number of posted employees, it is worth learning more about how the A1 certificate works.
When you decide to delegate an employee to another EU, EEA or Swiss country to perform services, doubts may arise as to where health and social security contributions should be paid for that person. In such cases, it is necessary to clarify in which country these insurance obligations should be regulated.
The regulations stipulate that the employee should be subject to the legislation of one country. Most often, this means that social and health insurance should be paid in the country where the employee performs his work, i.e. the host country during the posting period. Nevertheless, it is possible for contributions to be paid in the sending country, i.e. Poland, if the relevant conditions are met. If the employee does not meet the requirements for insurance in Poland, it will be necessary to register him for social and health insurance in the country where he is on assignment.
While on assignment, employees are entitled to receive medical benefits in the country to which they are posted. These benefits are provided in accordance with local regulations and are available at facilities that have a contract with the local health insurance fund, corresponding to the Polish National Health Insurance Fund. To access these services, you need a European Health Insurance Card (EHIC). An application for an EHIC card can be submitted to the appropriate NFZ branch that serves the employee's place of residence. Both the posted employee and his authorized employer have the opportunity to apply for an EHIC card.