Salary
Employee benefits can be a good alternative to a pay rise
If you can't get a pay rise, you should have alternatives ready so that you still get something out of the salary negotiation.
These can include extra days off, paid training or other fringe benefits, which in some cases can also give you a tax advantage. Here you can read more about what you can bring into play if you can't get more in your salary package at your salary negotiation.
What are employee benefits?
Employee benefits can be either better working conditions or material things you get from your employer in addition to your salary. Many people focus solely on their basic salary, but employee benefits can also help to add value to the overall salary package.
You can negotiate employee benefits at your salary negotiation in the same way as you negotiate a raise, and sometimes it's easier to get your manager to approve than a salary increase in cash.
What employee benefits can you negotiate in salary negotiations?
Employer-paid training
Many courses are expensive and can be difficult to fund yourself, but they can also help give you skills your employer needs. That's why you may have more luck asking for additional courses or training than a pay rise at your salary negotiation. Training doesn't just have to be courses. It can also be membership of a network or trade union.
More holidays or shorter working hours
If you cannot increase your salary, you may be able to reduce your hours by negotiating extra holiday days or a shorter working week and thus get something out of your salary negotiation.
Since each extra day of paid leave is equivalent to 0.45% of your annual salary, it can have a total value of many thousands of DKK.
If you are a private sector employee, you can also try to negotiate an increased holiday allowance over and above the 1% to which you are entitled under the Holiday Act.
Performance-related pay or bonus
If you cannot get a fixed salary increase, performance pay can be a good solution as a supplement to your basic salary. This gives your employer security because the money must only be paid when you have completed certain tasks or reached your agreed goals. Before you accept an offer of performance pay, however, you must consider the following:
- Can you earn more with a performance-related salary compared to a fixed salary? You need to have the prospect of a significantly higher salary before it makes sense to opt for performance pay, as it comes with an element of uncertainty compared to a fixed salary.
- Are the objectives clear? It should be clear what you have to achieve to get your performance pay. For example, if your goal is to sell 10% more than your competitor, you can't predict when you'll reach your goal. In addition, it should be very clear how your bonus will be calculated.
- Do you thrive on performance pay? Some people are motivated by chasing a target, but if you're stressed by constantly being measured and not knowing your final salary in advance, you should opt out of performance pay.
Examples of material employee benefits: free mobile phone, home computer, newspaper or car
Most IDA members receive material employee benefits through their work. According to the 2023 salary statistics, the most common employee benefits are:
- Fruit and coffee scheme (83%)
- Health insurance (77%)
- Mobile phone (64%)
- Lunch scheme (61%)
- Internet at home (54%).
- Fitness, massage, wellness (26%)
- Company-paid home computer (18%)
- Employee shares/bonds (16%)
- Newspapers/magazines (10%)
- Extra holiday allowance (10%)
Read more about the rules on employee shares and see when they benefit you
How are employee benefits taxed?
In principle, you must pay tax on the employee benefits you receive or which are provided by your job. The employee benefits must be valued at market value - the amount you would have paid to receive the goods yourself. However, there is a triviality threshold for when employee benefits are taxable. In 2023, they are:
- DKK 7,000 per year for work-related benefits. This could include free newspapers at work, free food and drink in special cases or a car for business travel.
- DKK 1,300 for private goods. These are generally all goods worth less than DKK 1,300 and will typically be Christmas gifts, chocolate, wine or tickets to entertainment.
Not all employee benefits are taxable either. For example, health insurance and a parking space at work are employee benefits that are not taxable.
If you receive employee benefits as a regular part of your pay package, it is your employer's responsibility to report them to the Danish Tax Authority, but if you receive a gift that exceeds the triviality limit, you must report them yourself. In general, the rules on how different employee benefits are taxed vary widely, but you can find a complete overview of the taxation of employee benefits on the SKAT website.
What are flexible pay packages/gross pay schemes?
The terms flexible pay packages, gross salary scheme, gross salary agreements and salary adjustment agreement all mean the same thing. They refer to an agreement whereby you, as an employee, receive a number of employee benefits, but in return receive a reduction in gross pay.
This can give you a tax advantage if the goods are taxed less or are completely exempt from tax compared to if you have to buy them yourself. For example, you might take a pay cut but in return get health insurance whose value exceeds your pay cut and which is not taxable.
But if you are fully taxed on the value of an employee benefit, you might as well get a correspondingly higher salary and buy the benefit or product yourself.