Norwegian employment contracts – do’s and don’ts

Many foreign employers are surprised at the protection employees in Norway have. The Norwegian regulations are especially stringent when it comes to the mandatory system for holiday and holiday pay, the regulations relating to working hours and the dismissal rules. Also, your employees needs clarity. The employer needs freedom to manage.  Ensure that your Norwegian employment contracts are flexible and precise. So how do you draft the employment contracts in order to preserve your freedom to manage?

Written employment contracts are required

In Norway, all employments must be based on written employment contracts between the employer and the employee. This is stated in section 14-5 of the Working Environment Act.

In cases where there is no written employment contract, uncertainty often arises.  But, even without a written agreement the employee is still employed by the company and has the same protection (based on the regulations in the Working Environment Act) as employees with written contracts. If there is a dispute between the employer and the employee and there is no written employment contract, the risk of such unclarity lay with the employer and the agreement will normally be interpreted in the employer's disfavour.

Written employment contracts reduce risk

In other words, it is the employer that takes the greatest risk if there is a dispute about the employment relationship and there is no written employment contract.

The employee has a need for clarity and predictability. The employer needs to preserve the freedom to manage.  So, our advice is to ensure that your company has well written employment contracts that are both flexible and precise.

Also read: Working hours in Norway – calculation based on a fixed average

Outdated standard contracts

Many employers reuse old standard contracts which may be outdated. Such contracts may contain clauses which do not reflect current legal requirements. To give an example the Working Environment Act was amended in 2016 to reflect the new non-compete clause and adhering compensation clause. Are these changes reflected in your standard employment contracts?

Another example is the Working Environment Act § 15 – 9 which was amended as of January 1, 2019; permanent employment is now the rule of law. Do your employment contracts have permanent employment as the general rule? 

Also read: Be aware of the strict rules for termination of employment in Norway

Unclear or non-flexible employment contracts

It may also be that the company’s employment contracts are unclear or not exact enough. In the event of a conflict between an employee and the employer, unclarity will often be interpreted in disfavour of the employer. Thus, it is important to spend effort in writing precise contracts which ensures the employer enough flexibility.

A good advice is to write in the employment contract that the employee’s workplace may change upon the employer’s own discretion. This gives the employer more flexibility (within limitations of course) to shift its staff to where it is needed.

We also advise the employer to include a clause in the contract which entitles the employer to make deductions from the salary and holiday pay in the event an incorrect payment was made. Without this provision, the employer cannot correct if too much salary was paid.

Also read: 9 things to remember for a foreign company hiring a Norwegian employee to work in Norway

Which provisions should be included in the employment contract?

Based on the Working Environment Act § 15-6 and our experience we have made a list of mandatory and recommended provisions to be included in the employment contract.

Mandatory provisions

As a minimum the following provisions shall be included in the employment contract:

• the identity of the parties
• the place of work. If there is no fixed or main place of work, the contract shall contain a provision that the employee is employed at various locations and the registered place of business or, where appropriate, the home address of the employer
• a description of the work or the employee's title, position or category of work
• the date of commencement of the employment
• if the employment is of a temporary nature, its expected duration and the legal basis for the appointment
• where appropriate, provisions relating to a trial period of employment
• the employee's right to holiday and holiday pay and the provisions concerning the agreement of holiday period
• the notice period related to termination
• the salary, any supplements and other remuneration not included in the standard salary, for example pension payments and allowances for meals or accommodation, method of payment and payment intervals for salary payments
• duration and timing of the daily and weekly working hours. If the work is to be carried out periodically, the contract shall specify or provide a basis for calculating when the work is to be carried out
• length of breaks
•  agreement concerning a special working-hour arrangement
• information concerning any collective agreements regulating the employment relationship. If an agreement has been concluded by parties outside the company, the contract shall state the parties to the collective agreements

Recommended provisions

In addition, it is recommended to include the following provisions:

• Information on the company's pension and insurance schemes and that these may be changed / discontinued by the employer within the legal boundaries
• The company's retirement age
• Provisions on travel / dietary allowance
• Confidentiality
• Competition and no-hiring clause
• Information about the employer's right to extend probation
• Employer's right to make changes in the employment within the legal boundaries
• If the employee will have a position of managerial or other particularly independent  nature and be exempt from large parts of the provisions of the Working Environment Act related to working time
• Right to deduct salary
• Duty to return the company's assets at the end of the working relationship or long-term absence (e.g. leave and sick leave)
• Requirement to inform employer about other work / duties during employment which may affect the employment
• Rights to work results
• Restrictions to use assigned job email account for job related purpose only and information about employer’s access in accordance with applicable data privacy legislation

Also read: Calculation and payment of holiday pay in Norway

Do you need help drafting employment contracts in Norway, or assistance in reviewing your existing contracts?