Joint and several liability

The joint and several liability applies to salaries, tax deductions and employers' National Insurance contributions in cases where the contractors breach their obligations. A need for additional labour on a project is often met by employing hired labour. As a client, you should be aware of the risk of joint and several liability.

A client that issues a contract can be held responsible for the obligations the contractors down the contract chain have. The joint and several liability applies to salaries, tax deductions and employers' National Insurance contributions in cases where the contractors breach their obligations.

Who is covered by the joint and several liability, and when will it occur?

The joint and several liability applies to clients, both the supplier and the subcontractors, in a contract chain in industries where generalised collective agreements are applicable. Joint and several liability means that the client is liable for the contractor’s unpaid claims.

Joint and several liability will occur when the contractor has not fulfilled the following obligations by the due date:

• Withholding tax
• Employer’s National Insurance contributions
• Minimum wage, holiday pay and other allowances the contractor’s employees are entitled to, when working on the project under the client’s disposal

If the contractor fails to fulfil its obligations related to withholding tax or employer’s National Insurance contributions, the chief municipal treasurer may file a claim against the client for non-payment.

If the contractor fails to fulfil its obligations related to minimum wage, holiday pay or other allowances the employee can file a claim against the client for non-payment. The claim must be in writing and submitted within three months. If there are several clients in the contract chain, the employee can decide which client he or she will forward the claim to.  

As a client it is important to ensure that your subcontractors complies with their obligations, both towards its employees and towards the Norwegian authorities.

Exemption from joint and several liability for a foreign employer

General exemption

Temporary-work agencies, registered in the Norwegian Labour inspection register, can apply for an exemption from Joint and several liability for their clients.
The applicant that will take on the responsibilities as an employer is required to document:

• Signed confirmation from a bank or auditor/accountant that a tax withholding account has been established. Further the name of the company owner of the tax withholding account and the account number has to be stated in the documentation.

Exemption according to a contract:

Which requirements must be met in order to be granted an exemption from joint and several liability according to a contract?

• The contract number must be entered in the application.
• Signed confirmation from a bank or auditor/accountant that a tax withholding account has been established. Further the name of the company owner of the tax withholding account and the account number must be stated in the documentation.
• The contractor and the client`s contract.
• A written agreement signed by both parties with information about who is responsible for fulfilling the duties of the employer.

In order to be exempt, the employer must

• Register the contract and employees in the Norwegian Assignment and employee register (RF - 1199 and RF – 1198)
• Submit A-Messages for the months with activity in Norway.
• Transfer the tax you have deducted from the employee`s salaries to the tax deduction account or hold a bank guarantee covering the tax deduction.

Duration of the exemption

An exemption can be given for up to one year at a time, however the first-time application is only applicable for up to 6 months.

How to apply

Both the client and the contractor. They will need to login to Altinn and fill in and submit the form RF – 1532.

From when will the exemption apply from

The exemption from joint and several liability will, at the earliest, apply from the date the Norwegian Tax Administration receives the application with all necessary enclosures.

Extensions

For the exemption to be extended with no break, a new application must be submitted within the end of the current granted period.

Also read: All you need to know about the Norwegian tax report system – a-melding

Exemption from joint and several liability for a Norwegian employer

Exemption from joint and several liability to the Norwegian authorities can be attained by submitting an application.

Who in the contract chain should apply for exemption from joint and several liability?

The contractor can apply for exemption from joint and several liability by sending an application. The application must be signed by both the client and contractor. A separate application must be submitted for each of the contractor’s contracts.

When an exemption from joint and several liability is granted, the exemption applies to all clients in the contractor chain.

For more information about how we can assist you, please see our website: Work in Norway

Which requirements must be met in order to be granted an exemption from joint and several liability?

In order to attain an exemption from joint and several liability, the following documentation must be submitted in the application:

• A written agreement between the parties with information about who is responsible for fulfilling the duties of the employer
• Information about the name, personal number and working period of the employees working on the assignment, and the duration of the assignment
• Confirmation that the contractor is compliant with the tax deduction conditions

Where to send the application?

The application for exemption from joint and several liability must be sent to the Tax Collection Office where the client has registered office address.

When will the exemption from joint and several liability apply?

Exemption from joint and several liability will, at the earliest, apply from the date the Tax Collection Office receives the application with all necessary enclosures.

Also read: Do the right thing when doing business in Norway

Article first published June 2020. Updated December 2021