Norway is known for its high standard of living, social welfare system, and thriving economy. According to the World Bank, this Scandinavian country has seen a 28% annual growth to $520.9 billion in GDP as of 2022, making it the 26th largest economy in the world. It is worth noting that Norway’s economic success is attributed to its government’s long-term economic policies, which prioritize sustainable development, social welfare, and income equality.
Historically, Norway’s economy has relied heavily on natural resources such as oil, gas, and fish. However, with the technology boom, the country has also diversified its economy recently, with IT and service sectors experiencing significant growth. The high rate of development within Norway has led to economic investments from organizations worldwide. Consequently, several job opportunities have been created in the country. Such significant economic growth has eventually resulted in a low unemployment rate ranging between 3.1% to 3.4% in 2022 due to many companies hiring in Norway.
The country’s government has several laws that facilitate an easy hiring process for Norwegian citizens. Read on to learn more about how to hire employees in Norway!
Things to Know Before Hiring in Norway
Being one of the more developed countries with a high literacy rate, companies are always looking towards recruitment and selection in Norway. However, before you start hiring from and in Norway, there are certain things you need to be mindful of.
- Norwegian and Sami are the official languages in the country, with Norwegian being more commonly spoken.
- The indigenous language of Sami is spoken primarily in areas of Northern Norway by the Sami ethnic group.
- Norwegian has two written forms: the widely-used Bokmål form based on written Danish and the Western Norway-based Nynorsk form.
- Swedish and Danish languages are similar to Norwegian.
- Norwegians have high proficiency in English.
- Companies operating primarily in English can hire staff in Norway with ease.
- While Norwegian and Sami are generally the languages for employment contracts within the country, employers can also use other languages. There aren’t any legal restrictions on the contract’s language.
Unlike many European countries like Greece, companies hiring in Norway must provide their employees with a written contract. This mandatory contract has to be drafted irrespective of the job type and is an essential step of recruitment and selection in Norway.
An employment contract must outline the following basic terms of employment:
- Both parties must have verified identification.
- The commencement date of the job. For temporary workers, the job’s duration has to be mentioned (ranges between 12 months to 3 or 4 years, depending on the temporary employment basis).
- A detailed description of the workplace, including the workplace culture and the dos and don’ts.
- Holiday pay and the total number of holidays
- Duties and responsibilities as part of the job description
- Breaks and working hours
- Information regarding the fundamental salary, additional perks, and benefits, alongside specifics about the payment process.
- The probation period must be mentioned, not over six months.
- References and details of collective agreements
- Terms and conditions of the notice period
- The Norway Working Hours Act restricts daily working hours to nine, with weekly working hours not exceeding 40.
- Most companies have a collective agreement with employees, which restricts their weekly working hours to 37.5 hours.
- Any working hour exceeding the weekly or daily quota is considered overtime in Norway.
- There is a limit to overtime work: 25 hours over four weeks and no more than 10 hours in one week.
- Employees working overtime in Norway are entitled to an additional payment of 40% on top of their regular salary.
- If the overtime work is performed on the weekend, the payment should double the standard overtime rate.
Break & resting hours
- In Norway, giving employees a minimum of 11 hours of continuous rest between two consecutive working days and at least 35 hours of undisturbed rest per week is mandatory.
- Additionally, the weekly rest day should fall on a Sunday.
- Annually, Norway workers can take up to 25 annual leaves, including Saturdays.
- If you are hiring employees in Norway who are over 60 years, the annual leave is extended by six working days or one working week.
- During Norway’s main holiday period between June and September, employees are entitled by law to enjoy up to three weeks of leave.
- Whit Sunday and Easter Sunday are part of the 11 national holidays employees in Norway get.
- In Norway, mothers and fathers have equal rights to take parental leave.
- The length of parental leave depends on the chosen remuneration level and can either be 49 weeks at 100% pay or 59 weeks at 80% pay.
- Each parent is entitled to 15 weeks of exclusive leave.
- Additionally, mothers are granted an additional three weeks to be taken before birth, which is included in their parental leave entitlement.
- The remaining 16 weeks can be shared between the parents as they see fit.
- Mothers can start their maternity leave up to 12 weeks before the birth of their child.
- The first six weeks after birth are reserved exclusively for the mother, after which they can take further parental leave according to statutory regulations.
- Furthermore, the mother’s companion on the child’s birth is entitled to two weeks of additional leave, which is paid.
- With recent amendments to paternity leave rules, these two weeks are now counted as part of the total parental leave.
- After completing the initial 12 months of parental leave, parents can take an additional 12 months to tend to their child. It’s important to note that this extended leave period will be without pay.
Payroll & salary
- In Norway, employees are paid salaries once a month.
- Norway does not have a system of minimum wages. However, some professions may have a minimum pay negotiated through collective agreements.
- There are no rules within Norway that make it compulsory to pay bonuses.
- The law mandates that companies that hire staff in Norway must pay for sick leave up to the 16th day of such a leave.
- Norwegian National Insurance covers employees with sick leave benefits every additional day after the initial 16-day period.
- When an employee takes a leave in Norway, they are entitled to receive holiday pay accrued from the previous year of employment and reserved by the employer for this specific purpose.
- Typically, for employees below 60 years of age, the holiday pay amounts to 10.2% of their yearly salary.
- For employers, the government levies a 22% standard corporate tax rate.
- Employers must also bear the 25% Value Added Tax (VAT).
- On the other hand, employees pay a 22% flat tax rate on their income, including their municipal, county, and state taxes.
- There is an additional wealth tax of 1% and 1.1% on income exceeding NOK 1,700,000 and NOK 20,000,000, respectively.
- Higher-income employees have to pay an additional tax:
Income in Norwegian Kroner
Above NOK 190,350
Above NOK 267,900
Above NOK 644,700
Over NOK 969,200
Over NOK 2,000,000
- In Norway, the employee has to contribute 8% of the gross salary to the country’s National Insurance Scheme.
- The National Insurance Scheme receives 14.1% of the employee’s gross salary from employers.
- Introduced in 2022, employers must contribute an additional 2% of the gross salary to the Occupational Pension Fund (OTP).
- Companies must also give a temporary additional 5% to the National Insurance scheme for any income exceeding NOK 750,000 annually.
Termination of employment
- Mutual termination and resignation are the default ways of employment termination.
- Continuous show of incapable performances may result in termination.
- Under special circumstances, long-term ailments can lead to contract termination.
- Business-related problems like downsizing, recession, or redundancy can lead to termination.
- The employer has the right to terminate if there is gross misconduct by the employee in the workplace.
- A breach of the contract signed on the employee’s part can also cause termination.
- In Norway, employees who intend to resign must provide a notice period that does not exceed three months.
- No notice period is necessary if the employee is dismissed for gross misconduct or violating the employment contract.
- It’s worth noting that employers have no legal requirements to provide severance pay to departing employees in Norway.
- According to Norwegian laws, the employee’s age and length of service play an important role in determining the notice period length.
Length of Service
Notice Period Depending on Age
Above ten consecutive years
Aged above 50 years: Four months
Aged above 55 years: Five months
Aged above 60 years: Six months
Between five and ten years
Two months regardless of age
Below five years
One month regardless of age
14 days regardless of age
The Cost of Hiring an Employee in Norway
As of January 2023, the index of the cost of labor in Norway amounted to 137.5 points. Here are some other costs that companies should consider while hiring in Norway:
- Travel expenses
- Translator costs
- Legal consultation fee
- Background check costs
- Job advertisement expenses
- Annual salaries
- Recruitment costs through HR
- Training expenses
- Social Security and tax contributions
What Does a Company Need to Hire Employees in Norway?
To start hiring staff in Norway, it is necessary to classify the company as a Norwegian employer. Direct recruitment and selection in Norway are only possible with a legal entity if and when the company partners with an Employer of Record (EOR).
Forming a subsidiary in Norway is the way to go if businesses want more freedom in choosing their staff and location. The most frequently selected subsidiary structure by companies in Norway is the Aksjeselskap (AS), a private limited liability company. Once the AS has been established in compliance with the Norwegian authorities, companies can hire in Norway.
In addition, companies are also required to fulfill the following criteria:
- The minimum age of the employee should be 18 years.
- Employees under 15 but above 13 years can only do light work that doesn’t affect their health and development.
- Employees hired 15 or above have limited working hours and restricted types of work.
- Companies should apply for relevant work permits and licenses before hiring in Norway.
- Apply for Employee Pension Scheme
- Companies should enroll in the Worker’s Injury Insurance Scheme
Various Options for Hiring Employees in Norway
Companies take various options to hire employees in Norway:
The legal entity option
The legal entity path provides an option for recruitment and selection in Norway. In this option, companies use legal channels to establish their subsidiary within the Norwegian borders. Once the subsidiary has been set up, companies can hire depending on the vacancies. However, this process may be time-consuming and expensive due to hiring new HR staff, legal consultation fees, etc.
The EOR option
Due to the legal entity route being a significant investment of money and time, several companies have decided to use an Employer on Record (EOR). A Norwegian Employer of Record (EOR) provides businesses with a convenient solution for hiring and employing workers in Norway. They take full responsibility for ensuring compliance with local employment laws and handling HR functions such as onboarding, payroll, and benefits.
The Steps to Hiring in Norway
If companies want to know how to hire in Norway, the following steps will be helpful:
Step 1: Notifying the NAV
The first step to hiring employees in Norway is to notify the NAV agency or the Labor and Welfare Administration of vacancies within the company.
Step 2: Posting ads
To attract potential candidates for a job, it is crucial to create a job advertisement and post it in prominent locations. These adverts are usually in either the local Norwegian language or English.
Although local newspapers can be a good option, Norwegians mostly search for jobs online. Some of Norway’s most widely used job sites include Arbeidsplassen, LinkedIn, Finn, Gule Sider, and EURES.
Step 3: Screening of applicants
Once potential candidates have submitted their applications, the employers must screen them to select suitable candidates. Generally, hiring managers or EORs take care of choosing the best applicants. Background and credit checks are an important part of the hiring process in Norway.
Step 4: Interviewing suitable candidates
After shortlisting the candidates, it is necessary to invite them for an interview, which can be conducted online or in person. Employers can better understand the candidate’s professional and educational experiences during the interview. By asking relevant questions, employers assess the candidates’ skills, qualifications, and suitability for the job.
Step 5: Offer letters
Offer letters come into the hiring equation once candidates have been selected. Offer letters can either be a full copy of the employment contract or highlights of what will be provided in the contract.
Step 6: The onboarding process
Once the contract is signed and all the relevant paperwork completed, the company can begin onboarding the new hire. The onboarding of employees serves as the final result of recruitment and selection in Norway.
Let Multiplier be Your EOR Platform in Norway
Multiplier offers a robust infrastructure for hiring the most talented individuals in Norway, along with payroll management solutions and straightforward processes for obtaining work permits. Plus, with everything conveniently available in one platform, you can save time and expenses and focus on growing your business.