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Board-level Representation

Employee representation at board level starts in companies with 35 employees and these representatives have one third of the seats.

Under Chapter 8 of the Danish Companies Act, employees in Danish companies, both public limited companies (A/S) and limited companies (ApS) employing 35 employees or more, are entitled to elect a number of representatives to the board of directors. However, a majority of employees must vote in favour of having employee representatives before this right can be exercised.

 

The number elected by employees should correspond to half the number elected by those who own the company at the general meeting, and should be at least two (or at least three on the board of the parent company of a group). In effect, this is equivalent to one third of the members of the board of directors. However, on small boards, or if the owners choose an uneven number of board members, the proportion of board members representing the employees may be slightly higher than a third. For example, on an eight-person board of a parent company, with five shareholder representatives, there will be three board members representing the employees.

 

Employees should also elect the same number of alternate members to stand in for the full members if necessary.

 

There is a two-tier system for public limited companies and a choice between a one-tier or two-tier system for private limited companies. In smaller companies the board of directors is directly responsible for the management of the business. But in larger companies, this is carried out by executives, with the board taking a supervisory role.

 

The employee representatives, who are elected by the whole workforce, have the same rights and responsibilities as other board members, although they cannot be involved in decisions on industrial disputes, as this would be seen as involving a conflict of interest. Their term of office is also the same as that for other board members, and it expires with the closing of the annual general meeting held no later than four years after their election. Employee board members have the same protection against dismissal as union representatives.

 

Unusually the Danish Companies Act (§141) extends the votes to employees in one or more foreign subsidiaries, where employee representatives are to be elected to the board of a parent company. However, the decision to do so is in the hands of the general meeting, that is the shareholders. There is no absolute right for foreign employees to participate. Danish employees are also guaranteed a minimum level of representation. If there are any Danish employees, they get at least one representative on the board, if they make up at least 10% of the total, they get two seats.

 

The details of the voting procedure and other issues are regulated in separate implementation provisions, and the latest version came into force in April 2012.[1] These define employees as someone over the age of 15 performing work as an employee either in Denmark or working in an EU/EEA country. The request to have an initial vote on whether there is to be employee representation can be made by: the union in the company – provided it represents:

  • at least 10% of the employees;
  • a majority of the employee-side members of the cooperation committee; or
  • 10% of the employees.

 

The voting can be in writing or by email, but it must be secret, and all employees can vote. The elections are run by an electoral committee made up of representatives of management and the employees, who are chosen by the employee members of the cooperation committee.

 

Candidates to be employee representatives at board level must have 12 months’ service, and, once elected, they serve for four years.

 

There are no quotas for women on Danish boards.

 

A majority of employees (55%) in companies with a board have an employee representative on that board (figures from 2011). However, employee board members are much more likely to be found in larger companies. There are employee representatives on the boards of 13% of companies with fewer than 100 employees, 32% of companies with between 100 and 200 employees, 54% of companies with between 200 and 500 employees, and 65% of companies with more than 500 employees.[2]

 

Relations between employee and owner representatives are usually characterised by consensus and mutual trust, based on a shared interest in the survival and development of the company. However, a study found that employee representatives – when comparing their attitudes with those of the representatives of the owners – are more likely to take broader stakeholder interests into account, and not just employee interests, but also environment and local community interests.[3]

[1] Bekendtgørelse om medarbejderrepræsentation i aktie- og anpartsselskaber 2012

[2] . Håndbog for medarbejderrepræsentanter, by Martin Lavesen & Jesper Kragh-Stetting, Erhvervsskolernes Forlag 2011

[3] Medarbejdervalgte bestyrelsesmedlemmer I danske virksomheder, by Caspar Rose in Tidsskrift for Arbejdsliv, 7, 3, 34-50, 2005

L. Fulton (2020) National Industrial Relations, an update. Labour Research Department and ETUI (online publication). Online publication available at http://www.worker-participation.eu/National-Industrial-Relations.