Minimum Wage

As of 2024, Greenland does not have a statutory minimum wage. Instead, wages are typically determined through collective bargaining agreements or individual contracts. The absence of a minimum wage means that employers and employees have the flexibility to negotiate salaries based on the specific job role, industry standards, and the employee’s experience. However, it is essential for employers to offer competitive compensation packages to attract and retain talent in the local labor market.

Minimum Wage Status	Details
Statutory Minimum Wage	None
Determination	Based on collective agreements or contracts

Income Tax

Greenland employs a progressive income tax system, with rates ranging from 36% to 44% depending on the individual’s income level and municipality of residence. Residents are subject to full tax liability on their worldwide income, while non-residents may be taxed at a limited rate on income sourced within Greenland.

Income Tax Bracket	Tax Rate
Up to DKK 58,000	36%
DKK 58,001 – DKK 250,000	40%
Above DKK 250,000	44%

In addition to these rates, residents can claim a standard deduction set annually by the Greenlandic Parliament. As of recent years, this standard deduction is approximately DKK 48,000 per year. An additional allowance of DKK 10,000 is available for residents.

Payroll Cost

Employers in Greenland are responsible for various payroll costs beyond just employee salaries. This includes mandatory contributions to social security and other taxes. The primary components of payroll costs include:

• Gross Salary: The total salary agreed upon with the employee.
• Employer Contributions: Employers must pay approximately 0.9% of payroll towards social security.
• Income Tax Withholding: Employers are required to withhold applicable income taxes from employees’ salaries.

For example, if an employee’s gross salary is DKK 50,000:

• Gross Salary: DKK 50,000
• Employer Contribution (0.9%): DKK 450
• Total Payroll Cost: DKK 50,450

Payroll Component	Amount (DKK)
Gross Salary	50,000
Employer Contribution	450
Total Payroll Cost	50,450

Overtime Pay

In Greenland, overtime regulations can vary based on individual contracts and collective agreements. There is no statutory requirement for overtime pay; however, many employment contracts specify compensation for overtime work.Typically, overtime pay may be calculated as follows:

• For hours worked beyond the standard 40-hour workweek, employees may receive:
  • 150% of their regular hourly rate for the first two hours of overtime.
  • 200% for any additional hours worked beyond that.

Overtime Type	Rate (%)
First two hours	150%
Additional hours	200%

Understanding these components—minimum wage, income tax rates, payroll costs, and overtime pay—is essential for employers operating in Greenland to ensure compliance with local laws and effectively manage workforce expenses.

Regular & Maximum Working Hours

In Greenland, the standard working hours are governed by the Employment Contracts Act, which sets a daily maximum of 8 hours and a weekly maximum of 40 hours. Typically, employers adopt a standard workweek of 37 hours, spread from Monday to Friday. Employees are entitled to an 11-hour rest period every 24 hours, and breaks during work hours are expected to be reasonable and can be negotiated if not specified in contracts.

Working Hours Type	Standard Hours	Maximum Hours
Regular Workweek	37 hours/week	40 hours/week
Daily Maximum	8 hours/day	10 hours/day (with agreement)
Rest Period	11 hours every 24 hours	N/A

Leave

Employees in Greenland are entitled to various types of leave, which are essential for maintaining work-life balance. The main types of leave include:

• Annual Leave: Employees are entitled to a minimum of five weeks of paid vacation per year. This is typically accrued based on the length of service.
• Sick Leave: Employees are entitled to sick leave, which is generally compensated for a specified duration, often requiring a medical certificate after a certain number of days.
• Parental Leave: Parents can take parental leave, typically available for both mothers and fathers following the birth or adoption of a child.

Leave Type	Entitlement
Annual Leave	Minimum of 5 weeks/year
Sick Leave	Varies based on service length
Parental Leave	Available post-birth/adoption

Holidays

Greenland observes several public holidays throughout the year. Employees are entitled to time off on these holidays, which include:

1. New Year’s Day (January 1)
2. Maundy Thursday
3. Good Friday
4. Easter Sunday
5. Easter Monday
6. General Prayer Day
7. Ascension Day
8. Whit Sunday
9. Whit Monday
10. Greenland’s National Day (June 21)
11. Christmas Eve (December 24)
12. Christmas Day (December 25)
13. Second Day of Christmas (December 26)
14. New Year’s Eve (December 31)

Holiday Name	Date Observed
New Year’s Day	January 1
Maundy Thursday	Date varies
Good Friday	Date varies
Easter Sunday	Date varies
Easter Monday	Date varies
General Prayer Day	Date varies
Ascension Day	Date varies
Whit Sunday	Date varies
Whit Monday	Date varies
Greenland’s National Day	June 21
Christmas Eve	December 24
Christmas Day	December 25
Second Day of Christmas	December 26
New Year’s Eve	December 31

Understanding these aspects—working hours, leave entitlements, and public holidays—is essential for employers operating in Greenland to ensure compliance with local laws and foster a supportive work environment for their employees.

Termination Requirements

In Greenland, termination of employment is governed by the Salaried Employees Act and various collective bargaining agreements. Employers must provide a valid reason for termination, which can include performance issues, redundancy, or misconduct. Written notice is required for all terminations, and immediate dismissal is only permissible in cases of serious misconduct. The law ensures that employees are treated fairly during the termination process.

Termination Grounds	Description
Performance Issues	Termination due to inadequate job performance.
Redundancy	Termination due to economic or operational reasons.
Misconduct	Immediate dismissal for serious violations.
Mutual Agreement	Termination by mutual consent between employer and employee.

Notice Period

The notice period required for termination varies based on the length of service. Employers must adhere to the following statutory notice periods:

• Less than 6 months: No notice required.
• 6 months to 2 years: 1 month notice.
• 2 to 5 years: 3 months notice.
• 5 to 9 years: 4 months notice.
• 9 years or more: 6 months notice.

Employees can terminate their employment with a notice period of 1 month, regardless of their length of service.

Length of Service	Employer Notice Period
Less than 6 months	No notice required
6 months to 2 years	1 month
2 to 5 years	3 months
5 to 9 years	4 months
Over 9 years	6 months

Severance Pay

Severance pay in Greenland is not universally mandated but may be specified within employment contracts or collective bargaining agreements. Generally, severance pay may be applicable in cases of redundancy or unfair dismissal after a minimum period of employment (typically after 8 years). The amount of severance pay can vary based on the length of service and the terms outlined in the employment agreement.

• For employees terminated without cause after at least 8 years, severance pay may be negotiated but is not guaranteed by law.

Severance Pay Criteria	Details
After 8 years	May be specified in contracts
Redundancy	Potential entitlement based on agreements
Unfair Dismissal	Possible compensation depending on terms

Probation Periods

Probation periods are common in Greenland but are not mandated by law. Typically, probation lasts for 3 months, during which either party can terminate the agreement with a notice period of 14 days. This allows both employers and employees to assess fit before committing to a long-term employment relationship.

Probation Duration	Notice Requirement
Up to 3 months	14 days

Understanding these components—termination requirements, notice periods, severance pay, and probation periods—is essential for employers operating in Greenland to ensure compliance with local laws and maintain fair employment practices.

Misclassification

In Greenland, distinguishing between independent contractors and employees is crucial, as it significantly impacts rights, benefits, and obligations for both parties. Misclassification occurs when an employer incorrectly labels an employee as a contractor, which can lead to legal and financial consequences.The legal framework governing this classification is influenced by Danish labor law. Courts in Greenland often apply the “control test,” which assesses the level of control an employer has over a worker. If the employer exerts significant control over how work is performed, the worker may be classified as an employee rather than a contractor.

Aspect	Independent Contractors	Employees
Level of Control	More autonomy; employer focuses on results	Employer controls work methods and hours
Benefits	Not entitled to employee benefits	Entitled to benefits like health insurance
Tax Responsibilities	Responsible for own taxes	Employer withholds taxes
Contractual Flexibility	Greater flexibility in contract terms	Terms typically defined by employment law

Contractual Agreements

When hiring independent contractors in Greenland, it is essential to have well-drafted contracts that clearly outline the scope of work, payment terms, duration, and other relevant conditions. Contracts should specify that the contractor is not an employee and is responsible for their own taxes and social contributions. Common contract structures include:

• Fixed-price contracts: A set fee for completing a specific project.
• Time-based contracts: Payment based on hourly or daily rates.
• Performance-based contracts: Compensation linked to achieving specific results or milestones.

Contract Type	Description
Fixed-price	Set fee for specific project completion
Time-based	Payment based on hourly or daily rates
Performance-based	Compensation tied to achieving results

Taxation

Independent contractors in Greenland are responsible for managing their own tax obligations. This includes income tax based on net profits (income minus deductible business expenses) according to a progressive tax scale. Rates can range from 0% to 42%, depending on annual income levels. Unlike salaried employees, contractors are not automatically enrolled in social security but can voluntarily contribute to the Social Insurance Scheme (SIK) for benefits such as pension and healthcare coverage.

Tax Type	Description
Income Tax	Progressive rates from 0% to 42%
Social Security Contributions	Voluntary for contractors; not automatic

Compliance and Classification

Correct classification is vital to avoid penalties associated with misclassification. Employers should ensure that the individual qualifies as an independent contractor under Greenlandic law by considering factors such as:

• The level of control exerted by the employer.
• The contractor’s ability to work for multiple clients.
• The method of payment (e.g., hourly vs. project-based).

Misclassification can lead to significant legal and financial repercussions, including back taxes and required employee benefits.

Benefits and Protections

Unlike employees, independent contractors in Greenland are not entitled to benefits such as paid leave, health insurance, or pension contributions. This makes contracting a more flexible but less secure option for workers. It is essential for contractors to understand their rights and responsibilities under their contracts to ensure compliance with local laws.Understanding these aspects—misclassification risks, contractual agreements, taxation responsibilities, and compliance—is crucial for both employers and independent contractors operating in Greenland. Proper management of these factors helps foster a transparent working relationship while minimizing legal exposure.