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Pay Limit Scheme: What to know about the changes to Denmark’s work permit programme

The Local Denmark
The Local Denmark - [email protected]
Pay Limit Scheme: What to know about the changes to Denmark’s work permit programme
Denmark has added a Supplementary Pay Limit Scheme to its existing work permit programme, allowing foreign recruitment on lower annual salaries. Photo by cetteup on Unsplash

From April 1st, new rules relating to work and residence permits came into effect for the Pay Limit Scheme, a key pathway by which foreign professionals can be granted Danish work permits.

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The Danish parliament last month voted to ease some work permit requirements, in a move designed to make it easier for companies to hire internationally.

The bill eased rules on a number of work permit application schemes but a headline change is a permanent reduction of the minimum wage required under the Pay Limit Scheme (Beløbsordning).

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The amendments to the Pay Limit Scheme, which came into force on April 1st, mean that non-EU citizens hired to work in Denmark will need to earn a minimum of only 375,000 kroner per year, down from 448,000 kroner under the old rules.

It should be noted that jobs given to non-EU citizens hired internationally are subject to international classifications ensuring that if the role being hired for was normally paid 425,000 kroner, for example, employers will still have to pay this level, and not the 375,000 kroner minimum.

READ ALSO: What are Denmark’s new residence permit rules for foreign students who have graduated?

Kevin Goggins, vice principal at Sankt Josef's Roskilde International School, told The Local that the changes to the Pay Limit scheme would open up new employment opportunities for the school.

"There's always a struggle to recruit good quality teachers, so this change means we can potentially expand our search for staff. We have never invited people from outside the EU to apply for jobs with us before, as it was just not worth the hassle but now we can look into it," he said.

The new rules could benefit a broader target group of foreign professionals who see opportunities in Denmark.

The lower pay threshold “may be a game changer for the smaller companies hiring employees within industries with lower salary thresholds where the new hire has only a few years of experience”, Rikke Wolfsen, country manager Global Immigration practice with the Danish section of financial services company EY, told The Local in earlier comments about the lower salary thresholds. 

What are the rules and criteria?

The Supplementary Pay Limit Scheme (it is technically a separate programme rather than a revision of the existing one) can be applied for by third-country (non-EU) nationals that are offered an annual salary of at least 375,000 kroner by a Danish employer. Working hours must be at least 37 hours per week.

Unlike other types of work permit scheme, applicants do not need a specific educational background and the job does not need to be within a specific professional field.

As well as regular monthly salary, other salary components can count towards the 375,000 kroner minimum annual wage. These can include fixed supplements and bonuses which are guaranteed salary, contributions to labour market pension schemes and paid holiday allowance.

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Supplements such as paid canteen use, free use of a car, a paid phone, or paid internet, living or housing expenses do not count towards the minimum salary.

The salary must be paid into a Danish bank account. This rule was retained despite criticism from business organisations, who have argued that bureaucracy means new foreign hires can sometimes go for months without a salary.

A bank account needs to be set up within 90 days of the residence permit being granted or the employee entering Denmark. But for a new arrival in Denmark to get a Danish bank account, they first need to get a residency permit, then a CPR number, a Danish address, access to the MitID digital identification service, and a health insurance card.

READ ALSO: Why Danish businesses want to scrap bank account work permit rule

There are also some requirements related to how the job has been advertised. For example, it must be posted on the Danish portal Jobnet and the EURES portal for at least 2 weeks prior to application. If the job is posted on other portals, this condition will not be met.

The employer must therefore declare that the job position has been posted on Jobnet and EURES for at least 2 weeks prior to applying. The Danish Agency for International Recruitment and Integration (SIRI), which processes the application, runs spot-checks to verify the declarations. 

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The Supplementary Pay Limit Scheme can only be used when seasonally adjusted gross unemployment has not exceeded 3.75 percent on average in the three months prior to applying. Because Denmark is currently experiencing a labour shortage, this is not likely to happen in the imminent future, but it could eventually come into play.

These last two labour market-related conditions – the national unemployment level and a requirement to advertise the job on specified portals – distinguish the Supplementary Pay Limit Scheme from the regular Pay Limit Scheme, which still has a higher minimum salary of 465,000 kroner.

What happens if I have been granted a work permit under the scheme?

You can stay in Denmark for the period of time for which the permit is valid.

There are certain conditions attached to the work permit: You must not give up your Danish address or stay abroad for longer than 6 successive months, and the permit does not allow you to work in other Schengen countries, although you can stay in the Schengen area for up to 90 days within a 180-day period. 

The permit is linked specifically to your job. If you change job or lose your job you must inform SIRI and apply for a new permit. In the latter instance, you can apply for a six-month residence permit to look for a new job (if you were laid off through no fault of your own, for example your company decided to cut staff).

While your family members can be granted residence permits to join you in Denmark, they are not allowed to receive public welfare benefits.

You will be entitled to free Danish lessons but will have to pay a deposit – which you could lose if you don’t pass the modules within set timeframes.

A step-by-step guide to submitting an application for a Danish work permit under the Supplementary Pay Limit Scheme can be found on SIRI’s website.

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