Key Takeaways

  1. A Greenland Employer of Record (EOR) offers a faster, simpler market entry by handling compliance without the need for a local entity.
  2. The Greenland EOR firm manages all payroll services, tax deductions, and filings with the Greenland Tax Agency, ensuring accurate compliance with local tax obligations.
  3. Greenland EORs streamline hiring and onboarding by managing employment contracts, payroll, and benefits administration, simplifying compliance with Greenlandic labor laws.
  4. Beyond initial hiring, the Greenland EOR company provides continuous support for employment-related issues, ensuring compliance with any changes in local laws and helping with contract amendments if needed.

Are you thinking about hiring employees in Greenland? A Greenland Employer of Record (EOR) company can help you hire employees in Greenland quickly and cost-effectively. The Greenland EOR becomes the official employer of your Greenland workforce, taking care of payroll and employment compliance on your behalf. 

Here we explain how Greenland EOR services work, and how they might benefit your company when hiring in Greenland.

What is a Greenland Employer of Record?

A Greenland Employer of Record (EOR) is a specialized service provider that acts as the legal employer for companies seeking to hire workers in Greenland without establishing a local entity.

Although Greenland is an autonomous territory within the Kingdom of Denmark, it operates under its own government and has distinct labor regulations influenced by both Danish and Greenlandic statutes.

By partnering with a Greenland EOR, foreign companies can quickly onboard employees, handle payroll, and ensure compliance with local laws, all while avoiding the complexities and expenses involved in creating a full-fledged branch or subsidiary.

One of the primary advantages of engaging a Greenland EOR lies in its familiarity with Greenland’s unique regulatory environment. While some Danish rules—such as social welfare considerations—apply, Greenland also maintains its own legal frameworks and tax obligations.

Employers must account for local requirements like pension contributions, vacation pay regulations, and statutory working conditions, which can differ from Danish or European norms. An EOR’s expertise ensures that employment contracts, payroll, and benefits align with current Greenlandic laws, helping businesses mitigate risk and avoid potential legal disputes.

Start hiring with an Greenland EOR

Let us handle the complexities of hiring, compliance, and payroll in Greenland while you focus on growing your team.

  • Hire employees in Greenland with a Greenland EOR
  • No local entity is needed
  • Pricing starts at USD 199 per employee
  • Remote People can also help you find the best talent in Greenland
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Greenland Employer of Record vs Legal Entity in Greenland

The procedure for registering a legal entity in Greenland can be difficult and expensive because Greenland is a Danish territory, and Greenland’s legal rules are part of Denmark’s legal system. It would require local legal advice, knowledge of tax laws, and an enormous capital.

The process of setting up a legal entity will begin with your company deciding the type of legal entity it wants to set up, such as a sole proprietorship, partnership, or limited liability company (A/S or ApS). Then, you’ll need to register with the Greenland Business Authority (Erhvervsstyrelsen) and obtain your Central Business Registration (CVR) number.

On the other hand, working with a Greeland EOR can make it easier for your company to move through the different stages. EORs handle all aspects of employment, including contracting, salary processing, and other employment benefits, enabling you to start operating in the Greenlandic market more easily and with less bureaucratic interference.

How Does a Greenland Employer of Record Help with Payroll and Taxes?

Unlike other European or Nordic countries, Greenland, as a member of the Kingdom of Denmark, has its own taxation and payroll regulations. One of the biggest issues some companies face in managing payroll and taxes while expanding into Greenland is understanding the legislation of the specific region.

Payroll Management

  • Calculation of gross pay, statutory deductions, and net pay.
  • Accurate processing of tax withholdings, with all deductions submitted to the Greenland Tax Agency (Aningaasaqarnermut Akileraartarnermut Aqutsisoqarfik or A.K.A.).

Failure to properly manage taxes can result in penalties and legal trouble.

Social Security Contributions

  • The Employer of Record (EOR) ensures the correct deduction of social security contributions from employee wages.
  • These contributions are then remitted to the appropriate authorities, ensuring compliance with local laws.

Tax Compliance and Filings

  • The EOR handles the completion of monthly or quarterly payroll tax returns.
  • They also ensure the annual income tax returns for each employee are filed according to Greenlandic tax laws.

Without proper management, businesses face the risk of legal penalties and fines for tax mismanagement. The EOR helps avoid these risks by ensuring absolute compliance with Greenland’s tax and payroll regulations.

How Does a Greenland Employer of Record Help with Benefits Administration?

One of the most important roles of an employer in Greenland is benefits administration. These benefits often present challenges for local management because local legislation governing them requires the employer to contribute.

For example, by law, Greenland employers are supposed to make contributions to social security programs that cover health insurance, unemployment insurance, as well as pensions. The EOR is in charge of enrolling employees in these programs and overseeing the firm’s contributions, as required by law. 

Furthermore, pension schemes continue to be an important component of employee benefits in Greenland. Greenlanders typically make their contributions to the ATP Livslang Pension, with the employer contributing on their behalf.

The Danish Parliament established ATP as a self-governing institution through legislation in 1964. The Greenland EOR company is responsible for these deductions as long as it is confirmed that employees’ salaries are reduced by the correct figure and the required amount is remitted to the pension fund.

Besides, the Greenland EOR provider is involved in other aspects of benefits administration, for instance, on vacation allowances, which are compulsory in the Greenland territory. Employees can get paid leave, and the EOR is required to mandate and track the vacation pay as required by the rules governing them.

What Labor Laws Apply to Hiring in Greenland?

Greenland has specific employment laws that govern contracts, work hours, holidays, social security, and other aspects. The present legislation of Greenland is based on the Employment Contracts Act for Greenland. Here are some of the most important labor regulations an EOR helps you to manage:

Employment Contracts

In Greenland, every employment contract must be written. According to the Employment Contracts Act for Greenland, adopted by the Parliament of Greenland, the contracts must also define the employees’ employment conditions, such as wages, working hours, and contract termination.

The labor market in Greenland consists of private and public sectors, and in both sectors, working conditions are regulated by this legislation. The contracts should follow local labor laws to ensure fair treatment of the employees and employers. An EOR handles the administration of these contracts and ensures that they are legally binding.

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Working Hours and Paid Holidays

In Greenland, the normal working week is typically 40 hours a week, though it depends on the industry. Overtime pay is required to be 50% higher than the regular rate.

Employees are provided with paid annual leaves, including national public holidays in Greenland, following the Greenland Working Environment Act. These public holidays include New Year, Easter, Christmas, etc.

The EOR is in charge of verifying the accuracy of the reported working hours and ensuring that employees receive adequate compensation, including overtime, as needed. 

Moreover, the EOR systematically checks the company’s compliance with the paid legal statutory leaves, ensuring the correct calculation and usage of the vacation days following the Greenland law.

Social Security Contributions

According to Greenland’s social security legislation, only employers must contribute to the system. Employers must pay payroll taxes at the rate of 0.9%. In Greenland, social security contributions are paid through taxes, so the Greenland Tax Agency regulates them.

The EOR calculates how much is to be paid and equally ensures that all amounts indicated are deducted from the contracts and paid to the right authorities. These contributions provide for necessities like health services, pensions, etc.

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Worker’s Compensation

Employers in Greenland are required to provide employees with insurance in the event of a workplace accident under Royal Order No. 991 2009, which enforces the Danish Workers’ Compensation Act.

This is another area where EOR is useful because they verify that all legal employees’ compensation insurance is available and all the claims stand by the right Greenlandic law.

This protects both the employee’s and the employer’s rights, particularly in cases of workplace incidents. In addition, employers must report workplace accidents to the “Center for Arbejdsskadesikring” and the “Arbejdstilsynet” in Greenland.

Taxes (Greenland Tax Agency)

The Greenland income tax system operates a progressive flat tax rate system, so the employees have to pay rates dependent on their income. Their tax system has been different from Denmark’s since the grant of home rule in 1979.

The government tax organization is the Greenland Tax Agency, also known as A.K.A., and the employer is responsible for withholding tax from the employee’s income.

The EOR company manages this by making sure that the right amount of tax is deducted, remitted, and paid to the tax authority within the stipulated time. 

They also deal with year-end tax reporting. Depending on the workers involved (foreign or domestic), their tax rate ranges from 35% to 44%, which is quite high; however, full-tax-paying individuals are entitled to annual allowances.

Parental Leave

In Greenland, parental leave is available to both mothers and fathers. A mother is entitled to maternity leave beginning two weeks before your due date and lasting up to 15 weeks afterward.

In the case of twins, this could be extended to 19 weeks after birth. A  father is entitled to 3 weeks of paternity leave within the first 15 weeks after your child’s birth or the first 19 weeks if you have twins. This time off is also the same for adoption.

Probation Periods

Probation periods are well recognized in Greenland. They are limited to 3 months and must be clearly stated in the company’s employment contract. The EOR helps with probation management, ensuring that it is legal and assisting in the termination or continuation of employment after the probation period.

Union Membership

Greenland’s employees are protected by labor laws that allow them to join unions, and various workers are under collective bargaining agreements. The EOR also guarantees that all the collective bargaining for employees is honored, and all the terms, including wages, etc., will follow the agreements reached.

Employment Termination

Employment in Greenland can be terminated only following the obligatory norm of notice periods and just cause. According to Greenland labor laws, the employer cannot terminate an employee without any reason or appropriate procedure. The EOR assists businesses in conducting lawful terminations and ensuring compliance with legal requirements such as severance pay and notice pay.

How Much Does a Greenland Employer of Record Cost?

The price of hiring an EOR service in Greenland is determined by the services required and the degree of complexity associated with employee benefits, taxes, and payment. Some forms of charges often comprise setup fees, monthly administrative fees, and others for particular services such as recruitment or legal compliance.

The cost of the services is slightly higher in Greenland because of the higher cost of living and logistical challenges. This shows the need to evaluate the consequences of entering the Greenlandic market without a physical presence, which may, in most cases, be expensive and will take time.

Is Employer of Record Legal in Greenland?

It is lawful and acceptable to implement an EOR in Greenland. An EOR is an off-paper employer providing all legal obligations for employment, and your company retains employee control of the work tasks and goals.

What Are the Pros and Cons of a Greenland Employer of Record?

One of the primary benefits of a Greenland EOR service is that it streamlines compliance with all of a country’s labor laws. From managing payroll to taxes and benefits for its employees, it minimizes legal consequences for companies that may not be well acquainted with the Greenland laws.

Secondly, it allows for quick market access without the need to establish a legal entity, saving both time and money. EORs also offer local expertise, so no hitches are expected in operations.

Like all HR solutions, EOR services come with pros and cons. The cons include that the operational costs incurred for EOR services may be relatively higher long-term compared to setting up a legal entity.

Companies also have limited control over their employees when working with an EOR. An EOR would work well for a company that wants to quickly enter a new market but is not the most effective model for long-term business operations.

Engage an Employer of Record in Greenland with Remote People

An Employer of Record can be an excellent option to work with if you want to hire professionals in Denmark or Greenland because they ensure that their clients operate legally.

EOR relieves businesses of the administrative burden of managing employment, including recruitment, employment contracts, wage payment, and employee benefits, allowing them to focus on business operations.

If enterprises aim to understand and work within Greenland’s regulatory framework without having to worry about paperwork and bureaucracy, they will benefit a lot from getting an EOR.

Ready to grow your team in Greenland? Follow these 9 steps to use an Employer of Record (EOR) for compliant and streamlined hiring. Contact us today to discuss how an EOR can support your business needs in Greenland.