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Payroll In Norway

Employer’s Guide On Norwegian Labor Law

Norway shows immense investment potential in the energy, maritime, manufacturing, financial services, and retail sectors. Thanks to the well-built infrastructure and favorable investment policies, the World Bank ranked the Scandinavian country as the ninth ​​easiest country to do business within 2020. 

Furthermore, Norway provides the best chances of tapping into potential talents, making it a profitable venture for startups and enterprises. However, global employers must understand local labor rules and regulations to comply with legal obligations while hiring new employees. Some basic aspects of Norwegian labor laws include: 

  • A maximum of 50 hours of weekly work, including overtime
  • A minimum of 25 days of annual vacation leave 
  • A moderate 14.10% of statutory employer payroll tax in Norway
  • 49 weeks of fully paid parental leave

There are many more provisions per the Norwegian employment laws aiming for a safe, productive, and supportive work environment. Employers hiring from Norway must follow the rules regarding working hours, overtime compensation, holiday & leave schemes, payroll, taxes, dismissal, employee privacy, and more. 

So, here is the detailed employment law in Norway guide for understanding regulations and provisions regarding hiring and managing employees. 

Applicability of the Act

The Working Environment Act (Arbeidsmiljøloven) principally governs employer-employee relationships in Norway. 

Norwegian labor law applies to all employees, regardless of their nationality. Foreign employees with a valid residence work permit have the same rights as native employees under Norwegian employment laws. Moreover, no restrictions are placed on the number of foreign employees a company can employ. However, executives or particularly independent positions are outside the scope of specific labor act rules in Norway concerning working hours and overtime compensation. 

It must be noted that trade unions are quite significant in Norway. The Norwegian Confederation of Trade Unions (LO) is Norway’s largest workers’ organization. In terms of collective agreements made by such trade unions, they are valid nationwide in Norway. That means all employees in the country in a particular industry follow the same employment rules, regardless of which company they work with and their working conditions. 

Employment Contract

Norwegian labor act rules require employers to draft a written contract with their employees. This applies to all types of positions within the company: permanent, temporary, or contractual. 

Labor regulations in Norway enforce employers to conclude a fixed-term contract when hiring a temporary replacement for another person(s). Additionally, employers must document the need for hiring individuals in part-time positions. 

Employees and employers must sign the employment contract mentioning the following minimum information within one month of starting work:

  • Type of contract 
  • Description of work
  • Date of start of employment
  • Duration of employment
  • Information about the probationary period
  • Employee’s right to vacation, holiday pay, and rules to determine the vacation’s duration
  • The notice period for both employers and employees 
  • Salary and other benefits
  • Daily or weekly working hours, including length of breaks 
  • Collective agreements affecting the employment 

Norwegian labor regulations invalidate the agreement if any condition in the employment contract is against the basic provisions of law. 

Key Provisions of the Act

Employers may frame employment rules and negotiate individual contracts based on the following: 

  • National legislation concerning labor act rules in Norway (for example, the Working Environment Act (WEA) 2005, the Holiday Act of 1988, the National Insurance Act of 1997, the Act on Mandatory Collective Pension Schemes of 2005 and the Equality, and Anti-Discrimination Act of 2017 and more.)
  • Collective bargaining agreements 
  • European Union directives on employment (for example, GDPR)
  • Norwegian labor courts’ case laws and industrial practices

Together, they form Norwegian labor law. Some basic law provisions concerning working hours, leave schemes, payroll taxes, dismissal rules, data protection, and employee privacy have been discussed below.  

Working hours

  • Employers in Norway may prescribe a usual working period of nine hours a day or 40 hours weekly. 
  • Norwegian working hours law, i.e., the Working Environment Act (Arbeidsmiljøloven), allows employers to fix relatively long hours but counterbalance them with shorter work hours at other times. 
  • However, working hours per Norwegian labor laws are generally restricted between 9 pm and 6 am.

Overtime compensation

  • The labor act rules in Norway enforce statutory obligations on employers to pay employees for overtime work. 
  • Norwegian employment rules stipulate overtime work of at most 10 hours per week, 25 hours a month. The annual restriction stands at 200 hours a year.
  • Employers must extend the right of an additional wage of 40% of salary for overtime work to all eligible employees. 

Minimum wage

  • Norwegian labor law does not provide employees with a mandatory right to minimum wage. However, the labor regulations in Norway advocate the prevention of social dumping. 
  • The phenomenon of social dumping is associated with cases where foreign workers in Norway receive significantly lower pay than Norwegian workers. 
  • Employers may avoid it through individual contractual terms and also pass the obligations down through the contract chain for subcontractors. 

Public holidays 

Norwegian labor law mandate 11 commemoration or religious holidays per year, including:

  1. The 1st of January, New Year’s Day
  2. Maundy Thursday
  3. Good Friday
  4. Easter Sunday
  5. Easter Monday
  6. The 1st of May, Labour Day
  7. The 17th of May, Constitution Day
  8. Ascension
  9. Whit Monday
  10. The 25th of December, Christmas Day 
  11. The 26th of December, Boxing Day 

Leave schemes

Parental leave

  • Employers offer maternity leave in Norway for foreigners and natives for 12 weeks (six weeks during the pregnancy and six weeks after the birth). 
  • Additionally, the shared paternity leave in Norway applies to eligible parents and is usually offered as follows:
    1. 49 weeks with 100% paid coverage  (15 weeks are reserved for each parent) or 
    2. 59 weeks with 80% paid coverage (19 weeks are reserved for each parent).
    3. Parents can decide mutually on the remaining leave period.
  • Employers must extend the same Norwegian paid maternity leave provisions to adoptive parents. However, in such cases, the shared paternity leave in Norway is three weeks shorter. 
  • Employers may extend all the Norwegian paid maternity leave benefits to only those employees who have been employed for six months in the last ten months before childbirth. 
  • The labor act rules in Norway do not enforce mandatory salary payment during parental leave. Still, they must facilitate the transfer of benefits from the National Insurance Scheme capped at 669,000 kroner (until May 2023).  
  • Some employers also make voluntary contributions to pay the difference between the employee’s regular salary and the statutory parental benefits. 

Annual leave:

  • The Holiday Act (Ferieloven), part of the Norwegian Labor Code, prescribes at least 25 days of paid annual leave. 
  • The labor act rules in Norway mandate employers to offer a minimum of three consecutive weeks of annual leave between 1 June–30 September. 
  • Further, employers can request employees to break the remaining annual leave into weeks or days.
  • The labor regulations in Norway have made it compulsory for employers to extend annual leave pay one week before the actual commencement of the holiday.  
  • Norwegian employment rules allow employers to fix employee holiday payments based on their previous calendar year’s salary. Thus, the annual leave for new employees may be unpaid for the first year.

Other leaves 

Sick leave:

  • The labor regulations in Norway stipulate employers grant up to 52 weeks of paid leave for illness or recovery from an accident. 
  • Norwegian employment law clarifies that the employer is obliged for sick pay for the first 16 days, after which the National Insurance scheme takes over for the remaining period of sick leave. 
  • Employers may seek a medical certificate to grant paid sick leave. 
  • Furthermore, they may extend the benefits to only those employees who have worked for more than four weeks before sick leave. 

Religious leave:

  • Norwegian labor law mandates employers to offer two days of unpaid religious holidays to employees who are not members of the Church.  
  • Further, employers may seek compensation from such employees for the religious leave taken in terms of work on extra hours without overtime pay.

Carer leave:

  • Norwegian labor law stipulates employers grant up to 60 days of care leave for employees to take care of their close relatives. 
  • Employers are not obliged to cover salary payments during the leave period. However, they must facilitate pay under the National Insurance scheme. 

Payroll taxes & obligations

Here is a brief account of payroll tax obligations for employers per Norway’s labor law for the financial year that runs from 1 January to 31 December.

  • Any employer in Norway must ensure the following while managing payroll:
    1. Deduct and withhold taxes and social security contributions from the salaried employee
    2. Pay social security premiums & file withheld taxes to respective Norwegian authorities the following month. 
  • Income taxes deduction:
    1. Employers must deduct a base income tax of 22% from employee salary. 
    2. An additional social tax of 5% for income over 750,000 NOK per year is applicable. 
    3. Employers must withhold and report taxes in addition to base tax accordingly: 

Bracket Income Tax

Annual Employee Salary

1.70%

190,350 NOK – 267,900 NOK

4.00%

267,900 NOK – 643,800 NOK

13.40%

643,800 NOK – 969,200 NOK

16.40%

969,200 NOK – 2,000,000 NOK

17.40%

2,000,000 NOK and above

  • Social Security Contributions:

Statutory benefits

Employer contribution

Employee contribution

Social Security (depending on zone)

Up to 14.10%

5.10% – 8.20% (Income)

  1. Employers must not deduct contributions from employees whose income is below 64,650 NOK. 
  2. From 2022, employers have to contribute an additional 2% of the gross salary to the Occupational Pension Fund (OTP).
  3. Further, the employee contribution is capped at 25% of the income for amounts over 64,650 NOK.

Dismissal rules

  • Norwegian employment law on termination mandates employers to end employment contracts with a prior written warning. 
  • Employers shall ask employees to serve a minimum of one month of notice period before terminating the employment contract. 
  • The notice of dismissal must contain the employee’s right to demand negotiations and institute legal proceedings.
  • The actual procedure under employment law in Norway for termination of the contract depends on the grounds for dismissal, years of service, and the employer’s size as a company.  

Whistle-blowing protection

  • Norwegian labor law mandates employers to ensure the legal protection of the concerned employee (whistleblower). 
  • Whistleblowing can include the report of any suspicious corruption to severe harassment at the workplace. 
  • Employers must frame appropriate internal rules to strike a balance between the person accused of improper conduct and the whistleblower.

Data protection and employee privacy

  • Norwegian labor act rules on employee privacy mandate employers to follow the European Union’s General Data Protection Regulations (GDPR) for gathering, storing, and processing employee data. 
  • Further, employers shall use employee data for various reasons like background checks, payroll processing, workplace or remote surveillance, email retrieving, etc. 

Penalties 

The Labour Inspection Authority supervises compliance with the WEA. The Labour Inspection Authority can issue orders to uphold the employment laws in Norway. The Labour Inspection Authority can impose coercive fines, halt work, or impose administrative fines. Employers can also face imprisonment of up to three years. 

Compliance Strategies for Employers

Employers must abide by labor regulations in Norway while hiring and managing employees. The following details show how employers can comply with employment laws. 

  • Standard templates:
    1. The WEA prescribes guidelines for working conditions like working hours, annual leave, etc. 
    2. Employers can work with standard templates and ensure that they are compliant with the guidelines from the WEA. 
  • An in-house team:
    1. Employers can have an HR team to manage and hire employees. 
    2. This department can draft contracts, distribute employee benefits, look after payroll management, and more while maintaining compliance with Norwegian labor laws. 
  • Partner with third-party solutions:
    1. When companies hire globally, they usually prefer partnering with third-party firms. 
    2. These firms specialize in compliance with local regulations, payroll management, hiring, drafting contracts, conducting background checks, etc. 
    3. Usually, this is a cost and time-effective option while hiring and managing employees globally. 

How Can Multiplier Help?

While hiring and managing employees globally, compliance with local rules is time-consuming and challenging. Misinformation or not knowing recent changes in employment laws can leave the company vulnerable to legal action. Failure to comply with these regulations can lead to fines or even imprisonment. 

Therefore, it is a good practice to partner with third-party solutions, like Multiplier, specializing in compliance while hiring and managing employees globally. 

Multiplier is a PEO-EOR firm that provides compliance solutions for 150+ countries. It can help with employment contracts, payroll management services, tax reports, and more. It also provides solutions for hiring and managing employees in Norway.

Frequently Asked Questions

Yes, trade unions are an important entity in Norway. Most collective agreements in Norway are followed nationwide.

As of March 2023, the maximum period of temporary employment is three or four years. However, from 1 April 2023, employees who have worked temporarily continuously for three years are entitled to permanent employment.

Employers from private and public sectors must comply with prohibitions against direct and indirect discrimination according to the Working Environment Act 2005 and Anti-Discrimination Act. However, preferential treatment is allowed for objective and legitimate reasons.

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