What are Employee Benefits?
Employee benefits are the compensation and perks given to an employee by the employer or organization besides wages and salary. Employee compensation includes life insurance, health insurance, profit sharing, paid time off, retirement benefits, and everything indirectly paid or provided to an employee. After all, the success of an organization is directly related to satisfied employees.
If you decide to start a business overseas in Norway, you must provide some employee perks and benefits for better functioning of the organization. With a host of enticing opportunities, the compensation and benefits policy in Norway makes it a hotspot for a talented workforce. Norway has 75% of its population employed and bags the second position as the happiest workforce in the world. This indicates that the country has a healthy working environment where you can quickly establish a business. Besides, the availability of talents as required hints at enhanced work productivity.
The country takes pride in its booming economy. Therefore, entrepreneurs can expect promising returns on their investments. To expand your business in a foreign country, you must know the compliances around employee benefits and contracts. Besides, company expansion also implies attracting talent by offering more than the bare minimum other companies may offer. Here is an in-depth look at employee compensation and benefits in Norway.
Compensation Laws in Norway
The different compensation laws that formulate employee benefits in Norway are listed below:
- The Norwegian Working Environment Act shapes the relationship between the employee and employer. Failing to abide by the laws of this Act obligates the Norwegian Labour Inspection to take action.
- Norway’s Directive 96/71/EC (Posted Workers Directive) pays attention to the posting of employees.
- The Norwegian Labour Market Act oversees the employees’ incentives and grants.
- The General Application of Wage Agreements facilitates rules for collective agreements and wages of employees.
- Under the Norwegian Holiday Act, employees are entitled to 25 working days. It also mentions the holiday pay system.
- The Data Protection Act provides surveillance of employees’ data. It regulates the principles of processing employers’ personal data at the workplace.
- The Equality and Anti-Discrimination Ombudsman implements rules and regulations in Norway against discrimination on various grounds.
- The Occupational Pension Act, the Defined Contribution Pension Act, and the Company Pension Act regulate employee pension schemes in Norway.
How to Design an Employee Benefits Program for Employees in Norway?
Although different countries have different employee benefit programs for employees, the basic structure remains the same. To develop a beneficial compensation structure in Norway, these are the steps you can consider:
Step 1: Identifying the objectives, benefits, and budget of the organization
- Identifying the objectives of the business organization will help select and design the benefits.
- Consider the benefits for both the employer and the employee.
- Consider essential factors like location, employer size, collective bargaining agreements, and business industry.
- Determine a budget to avoid cost constraints.
Step 2: Conducting a needs assessment
- A needs assessment can determine the best benefits and compensations for employees.
- It can include the perception of employers on how they would want to be benefitted, tax laws and regulations, employees’ needs, and competitors’ benefits.
- An approach to conducting market research to understand the current market trends helps plan employee benefits.
Step 3: Formulating a benefits plan program
- Now that you have completed the needs analysis, create the design for the new benefits plan program.
- Follow an order of priority to determine and assess the cost against the budget.
- Consider essential factors like cost savings, administrative costs, employer contributions, etc.
Step 4: Communicating the benefits plan to the employees
- Gather inputs from the employees beforehand and share them with them for feedback.
- Communicating the benefits plan program to the employees creates awareness and conveys that the organization cares for its employees.
Step 5: Checking the effectiveness of the plan with a periodic evaluation
- It is necessary to review the benefits plan program periodically to determine if it is meeting the business objectives and employees’ demands.
- Economic, business climate changes and workforce demographics can impact employee benefits and offerings.
- Employers should consider taking measurements and developing goals to assess the benefits programs.
Types of Guaranteed Benefits in Norway
Irrespective of the business entity, every employee gets employee compensation and benefits in Norway. The employee compensation policy in Norway includes these mandatory benefits:
- There is no restriction on minimum wage in Norway.
- The wage is determined after negotiation between the employer and the employee.
- The collective agreement follows a minimum wage.
- Industries with collective agreements include :
- Agriculture and gardening industry
- Maritime and shipbuilding industry Construction sites
- Working hours are restricted to nine hours every 24 hours.
- Total working hours in a week should be at most 40 hours.
- After 5 hours and 30 minutes, every employee is entitled to a lunch break.
- For every 24 hours, an employee must have 11 hours of continuous off-duty.
- The holiday entitlement takes care of the leave benefits in Norway.
- According to the Holidays Act, every employee in Norway gets 25 workdays as a holiday every year.
- The holiday payout must be 10.2% of an employee’s annual remuneration.
- Employees get a day off on public holidays like New Year’s Day, Maundy Thursday, Good Friday, Easter Monday, Labour Day, Constitution Day, Ascension, Whit Monday, Christmas Day, and Boxing Day.
Injury and illness of employees
- According to the leave benefits in Norway, an employee gets a sick leave of three days.
- Sick leave beyond three days needs a medical certification.
- The employee gets sick pay on the first and sixteenth day of the month.
- Every employee gets sick pay equivalent to six times the amount of National Insurance.
- The employee benefits insurance in Norway is responsible after the employee’s sick leave expires.
Maternity and paternity rights
- The maternity benefits in Norway provide maternity leaves to every pregnant employee, especially during prenatal examinations.
- Before delivery, the pregnant woman gets a leave of three weeks.
- After delivery, the mother gets a leave of six weeks or until she can provide a medical certificate.
- The medical benefits for employees in Norway recognize paternity leaves.
- After the child’s birth, the father gets a leave of two weeks.
Discrimination and harassment
- Any kind of discrimination toward the employee is considered unlawful.
- The possible grounds for discrimination include gender, race, political views, sexual orientation, disability, age, and membership in a trade union.
Retirement and pension plan
- Employers create a mandatory social security fund.
- Employers pay 14% of the employee’s gross income to the social security fund.
- This social security fund covers unemployment benefits, disability pensions, sick pay, occupational injury benefits, etc.
- Employees get rewarded with bonus payments for their performance.
- Individual agreements govern bonuses.
- Apart from money, employers can pay bonuses through shares, co-ownership, or funds.
Employee Benefits for Expatriates
Norway is an economically secure country that strives hard to enhance its economy. For this, the country cordially welcomes expatriates from around the world. Skilled and talented professionals can venture into Norway as working professionals. The workers compensation in Norway is similar to those offered to local employees.
From the leave benefits in Norway to medical facilities, insurance, working hours, and travel allowances, expats can avail of every employee benefit and compensation. Besides these, expats are also entitled to retirement plans, pension plans, and benefits for travel and relocation.
How are Employee Benefits Taxed in Norway?
Besides the employee compensations and benefits in Norway, you should also be aware of the taxes charged on these benefits and perks in Norway. The Social Security Laws of Norway formulate laws for the taxation of employee benefits in Norway. In Norway, all employees are subjected to a 7.9% tax rate. The Parliament sets these tax rates, and they are subject to change yearly as the annual income primarily guides this.
Employees receiving remuneration from Norway in exchange for their services are liable to pension contributions and social security. These are paid along with the income tax. Foreigners are wholly or partly exempted from social security contributions. Regarding employee contributions, these are the conditions applied to both self-employed individuals and employees working in a Norwegian organization:
- Individuals with income within NOK 64,650 are exempted from taxation. Income levels more than NOK 64,650 have to pay a tax of 25% of their earnings.
- Income earned by individuals under 17 years and over 69 years is subject to a low tax rate of 5.1%.
In 2021, rules on giving gifts in the workplace changed slightly. In most cases, you do not have to pay taxes for giving or receiving gifts in your Norwegian workplace. However, some exceptions exist. After 2021, employees can receive a gift of KR 5,000 without taxation. But these gifts have to be in kind or gift cards and not in cash. Tax liability is implied on gifts that exceed NOK 5,000.
Restrictions for Norway Benefits and Compensation
A wide range of benefits and compensations in Norway for employees are taxable. Hence, you can be assured of fixing a company budget and calculating the tax amount payable to the employee. As an employer, you are responsible for making the required timely payments to the respective authorities.
Before preparing a benefits plan program, all employers in Norway must ascertain a legally operational business without any loopholes. Employers must be punctual in paying remunerations to their employees depending on the different industries to which they belong. Above all, employers in Norway are bound to follow Norwegian labor laws and regulations while dealing with their employees.
Supplemental Benefits for Employees in Norway
These supplemental benefits, belonging to the compensation and benefits policy in Norway, work as an added advantage to hiring the best talents for your business:
Private and supplemental health insurance
Employees in Norway benefit from universal health coverage. This limits private healthcare in Norway. Employees in Norway looking for a job change are not given supplementary health insurance benefits. This allows employers to provide more valuable incentives to employees.
Additional paid time off and flexible leave
Norwegian remote workers get the advantage of flexible working hours. However, this is not a statutory perk. This makes companies more appealing to employees, especially those interested in maintaining a healthy work-life balance.
How Multiplier Can Help with Benefits Management in Norway
To establish a business abroad and hire talent, it is mandatory to comply with local rules and regulations. To prepare an appealing employer-employee contract and to determine benefits that rule out the market challenges, employers must have a detailed idea about the local rules and laws. This long procedure can be streamlined systematically by an efficient global PEO platform like Multiplier.
With Multiplier, you get to simplify the labor rules and regulations of Norway. Besides, we make hiring global talents easy for you. Without setting up a subsidiary, our team members can effectively and efficiently handle the workforce. Therefore, you can conduct ongoing market research and keep track of employment costs.