Effective January 1, 2024, the definition of an employee will change. Currently, the law defines an employee as "anyone who performs work in someone else's service," according to section 1-8 of the Norwegian Working Environment Act. After the amendment, an employee will be defined as "anyone who performs work for and is subordinate to another." In this blog, we'll summarize these new and upcoming changes in the Norwegian labor law field.
Clarification of the definition of an “employee”
The purpose of this change is to make it easier to distinguish between employees and contractors, ensuring that those who are, in reality, employees are classified as such and receive the protections they are entitled to under the law.
When determining who is an employee, factors such as
- whether the individual continuously provides their personal labor, and
- whether the individual is under the control, management, and supervision of another, will be considered. The general rule and presumption are that such relationships should be considered an employer-employee relationship, unless the employer makes it highly probable that there is an independent contractor relationship.
Employer responsibility in corporate groups
Effective January 1, 2024, changes related to employer responsibility in corporate groups will be introduced. The new rules will strengthen employees' protections and rights in the context of restructuring and downsizing within corporate groups.
The new rules specify that termination will not be justified when other positions are available within the corporate group. Additionally, employees who have been terminated will have preferential rights to employment within the same entity and other entities within the corporate group unless the employee is not qualified for the position.
The purpose behind these rule changes is to ensure that businesses do not use short-term business downturns or restructuring as a means to replace or dispose of employees.
How will Foreign Corporations be affected by the Law change?
The preparatory work for the legal changes does not directly address how the change will affect foreign corporations operating in Norway, particularly in regard to the new rights employees will have for employment in other parts of the foreign corporation if the Norwegian branch is closed. This remains to be seen.
Information and discussion in corporate groups
Effective January 1, 2024, new rules related to information and discussions within corporate groups will also be introduced.
These rules will only apply to corporate groups with entities that employ at least 50 workers regularly. The rules require the parent company to be responsible for establishing a framework for information and discussions between the company and its employees within the corporate group. This collaboration must be established with a majority of the corporate group's employees or unions representing the majority of the corporate group's employees.
If the corporate group plans expansions, cutbacks, or changes that may significantly impact employment within parts of the corporate group, these changes must be discussed and communicated as early as possible. However, the discussion rule can be deviated from by a collective agreement.
Limitation on waiving the appointment of safety representatives
Effective January 1, 2024, there will be a limitation on the ability to waive the obligation to appoint safety representatives.
Current regulations allow companies with fewer than ten employees to agree to an alternative arrangement instead of having safety representatives. This possibility will be removed, with the rationale that safety representatives are essential for ensuring employee involvement in workplace health, safety, and environment matters.
The right to waive the appointment of safety representatives will be maintained for companies with fewer than five employees.
Additionally, there will be an expansion of the responsibilities of safety representatives. Their responsibilities will now also include temporary workers and self-employed contractors. This change is a result of the requirement for a safe working environment for all individuals working for or with a company, with safety representative systems being a crucial part of achieving this.
New changes in the hiring rules – Exception for events
The government has proposed an additional exception to the hiring rules, this time for businesses in the event industry. The need for this exception is due to the very short-term labor needs in parts of the event industry, often for only a few hours or days at a time. The ability to temporarily hire labor is essential for conducting such events.
There are already exceptions to the hiring rules for the healthcare sector and for consultants with specialized expertise.
Staffing agencies sue over hiring ban
This summer, the EFTA Surveillance Authority (ESA), which monitors that the EFTA countries of Norway, Iceland, and Liechtenstein implement and follow the rules of the EEA Agreement, opened a case against the hiring ban by sending a formal opening letter to the Norwegian government in July. It states that Norway has introduced "unjustified and disproportionate" rules for hiring from staffing agencies and concludes that the legislative changes violate both the temporary agency work directive and the right to the free movement of services. These rules are derived from the EEA Agreement, which Norway is bound by.
This autumn, several parties are filing civil lawsuits against the government for breaching the EEA Agreement, with a preliminary claim of at least 32 million Norwegian kroner, according to Rett24 (article from August 17, 2023).
Certification scheme for staffing agencies
Effective January 1, 2024, a certification scheme for staffing agencies will be established. This means that hiring from staffing agencies will only be allowed from businesses approved by the Norwegian Labor Inspection Authority, and new requirements will be introduced for companies to meet in order to gain approval. The certification will later be publicly available in a registry.
This new certification scheme aims to weed out unscrupulous staffing agencies and make it easier for client companies to choose reputable labor providers.
There will be a transitional arrangement for companies that have applied for approval but are still awaiting a decision, allowing hiring from these companies to continue until March 31, 2024.