DENMARK: Annual Update – Expected labour law changes in 2016

Restrictive covenants

Introduction of new rules on restrictive covenants: As of January 1, 2016, new rules are in place which impose new conditions on employers’ use of non-compete and non-solicitation clauses. For example, employers will have to provide employees with certain information about the restrictive covenants and the employee will need to be compensated for the covenants to be enforceable.
The most drastic change is that all non-solicitation of employees clauses entered into after January 1, 2016 will be invalid, unless they are entered into as part of a business transfer.
Action required:
(1) Employers should become familiar with the new rules and re-assess their approach to covenant drafting.
(2) Previous compensation payment practices may need to be amended.
(3) Consider training HR staff on the new rules.


Abolition of automatic retirement at age 70: As of January 1, 2016, employment contract provisions which provide for automatic retirement at 70 will be unenforceable.
Action required: Employers should update their employment contracts and policies so they are compliant. Automatic retirement provisions must be removed.

Share remuneration

“Tax free” share-based remuneration: Companies may be able to grant their employees share-based remuneration, without taxing it as “salary”. A proposal on this is expected to be submitted during the Spring.
If implemented, employees will not have to pay tax until they sell their shares. In addition, when they are taxed on sale, the income will be taxed as “equity income” and not “salary”, which means a lower tax rate.
Action required: Monitor how the law is developing in this area, and keep the proposal in mind when dealing with share-based remuneration.