Are you representing a foreign company looking to hire a Norwegian to work in Norway? Ensuring compliance with Norwegian regulations is crucial. Here’s a concise overview of the most important aspects to consider when hiring Norwegian employees.
All employees in Norway are covered by the Norwegian Working Environment Act and are entitled to a written employment contract, applicable to both permanent and temporary positions. It is the employer's responsibility to prepare and have the contract signed by both parties. The employement contract must include information on all major employment terms as specified by the Act.
Also read: Norwegian employement contracts - do's and don'ts
In Norway there are strict limits on working hours:
The regular working hours may be calculated based on a fixed average if the average number of hours worked are within the limit for normal working hours. In certain periods you may work more than the threshold for normal working hours in exchange for working correspondingly fewer hours during other periods.
The working hours must be stated in the written contract between the employer, and the employee and the employer are obligated to keep accounts of the employee’s working hours.
For overtime work, the employees are entitled to at least 40 % of the agreed hourly pay.
Also read: The rules for working hours and overtime in Norway
There is no general minimum wage in Norway, but within specific industries, employees are entitled to a minimum wage. For example, within the construction sector. The minimum wage is stated in generalized applicable collective agreements. The purpose of these regulations is to prevent that foreign workers are subject to poorer pay and working conditions than others.
In Norway, vacations are generally unpaid. The employees are not entitled to ordinary salary during holiday absence. Holiday allowance is paid instead of regular salary during the holiday absence.
The holiday pay is earned the year prior to the year the holidays are taken. The payment is calculated based on the employee's salary during the year of accrual.
Employees who did not work the previous year are entitled to holidays, but not to holiday allowance.
Minimum holiday pay is set to be 10,2 per cent of the salary paid during one calendar year (4 weeks + 1day). For employees over the age of 60, the rate is 12,5 per cent.
Many employees have an agreement with their employer or are a part of a collective agreement that gives them holiday pay at a rate of 12 per cent of the salary paid during one calendar year (5 weeks). For employees over the age of 60, the corresponding rate is 14,3 per cent.
Also read: Calculation and payment of holiday pay in Norway
Employees are in certain cases entitled to paid or unpaid leave of absence.
The leave could either be paid by the employer or by NAV. In some cases, the payment is made directly to the employee and in other cases as a refund to the employer.
Examples of paid leave:
Examples of unpaid leave:
The employer is required to set up an occupational pension scheme for their employees under specific conditions.
This requirement covers the following:
Employers that have employees who can document A1 sheet (confirmation of National Insurance payment in home country) are exempted from the above-stated pension requirement.
The employer is obligated to sign insurance agreements on behalf of the employees, to make sure that they are covered in case of accident and death related to work.
An employment relationship is usually terminated by a dismissal/resignation by one of the parties.
In cases of dismissal with notice by the employer, the employer is obligated to comply with strict rules stated in the Act.
Also read:Be aware of the strict rules for termination of employement in Norway
Based on internal law, the threshold for becoming subject to corporate tax is rather low.
The starting point is that any foreign enterprise will become subject to Norwegian corporate tax if it conducts business activities within Norway or if it hires out employees to work in Norway.
However, Norway has tax treaties with about 90 countries, which may provide exemption from Norwegian tax liability. An assessment of tax liability must therefore be made specifically for each foreign enterprise and based on the relevant tax treaty.
The basic rule in the tax treaty is that a foreign enterprise becomes subject to tax if it has a so called “permanent establishment” or “PE” in Norway.
A PE may exist e.g. if the foreign enterprise:
Also read: Corporate tax in Norway - the basics for non-Norwegian enterprises
For foreign companies operating in Norway The Norwegian Working Environment Act can be overwhelming, yet crucial to follow. If you need guidance and advice on how to ensure your operations are complaint with the act, please feel free to contact us.
Visit our website for information about how we can help your company with Norwegian Labour law.
Article first published August 2019, updated June 2023.