The Danish labor market operates largely through agreements between labor unions and employer organizations, rather than government legislation.

This system, known as the "Danish model," results in collective agreements that dictate pay, working hours, and other conditions. A key feature is "flexicurity," where hiring and firing are relatively easy, but employees are protected by unemployment benefits (dagpenge) if they are members of an unemployment fund (a-kasse).

Most Danish employees belong to a labor union, which defends their interests.

If unions and employers can't agree, strikes or lockouts can occur, though the government may step in to end disputes.

Workplaces also have employee representatives, like shop stewards, and health and safety representatives, who ensure good working conditions and promote democracy in the workplace.