The past 12 months have seen hectic activity in the employment law area and the Norwegian government has proposed several initiatives to strengthen the rights of employees.
There have also been a number of employment cases before the courts, of which the following are particularly noteworthy.
The main rule is that all employees have the same employment protection under Norwegian law and there is no legal distinction between blue-collar and white-collar employees.
Nevertheless, the following apply:
Forms of Employment
The main rule is that employment should be permanent. This implies that the employment is for an unlimited period of time, that the employee is ensured a minimum number of paid working hours (which means that zero-hour agreements are not permitted) and that the provisions on termination of employment in the Norwegian Working Environment Act apply.
Temporary employment is, however, permitted in certain cases:
The regulation on temporary employment is particularly strict in Norway, and the main rule is that an employee must be employed permanently. Should the requirements for temporary employment not be met in respect of a temporarily employed employee, the employee may claim permanent employment with the employer. Employees are also considered permanently employed if they have been temporarily employed for four years (if the legal basis is work of a temporary nature) or three years (if the legal basis is work as a temporary replacement or in combination with work of a temporary nature).
Written Employment Contract
The employer must ensure that a written employment contract is entered into within four weeks of commencement of employment if the duration is more than one month (or immediately, if the duration is shorter than one month). Subsequent changes to the terms of employment must be reflected in an addendum to the employment contract, or a new agreement, within three weeks of the changes taking effect.
The employment contract must include certain minimum provisions on:
The employment contract must be signed by both parties (digital signatures are acceptable).
If employees work from home, a separate agreement governing working from home must be entered into. Exceptions to the requirement are when working from home happens sporadically or is due to a government order.
The statutory maximum working hours are nine hours per day and 40 hours per week. Employees are entitled to a daily break of at least 30 minutes if they work more than 5.5 hours per day. Different regulations may follow from collective bargaining agreements (CBAs), where the working hours are normally agreed at 7.5 hours per day and 37.5 hours per week.
Work exceeding the statutory limits is considered overtime and must be compensated with an overtime supplement of at least 40% per hour. Time off in lieu can be agreed, but the overtime supplement must nevertheless be paid. CBAs will typically include a higher overtime supplement (50–100%) per hour.
Overtime work must not exceed ten hours per seven days, 25 hours per four weeks and 200 hours per year. These limits may, however, be extended by a collective agreement or by approval from the Norwegian Labour Inspection Authority.
Flexibility of working hours
It is possible to agree to an average calculation of the normal working hours (either with the individual employee, in a CBA or by approval from the Norwegian Labour Inspection Authority) to provide more flexibility to cover peak workloads.
Employees may also be entitled to flexible working hours and reduced working hours (on certain conditions) if this can be arranged without major inconvenience to the employer.
Working hours for employees in part-time positions must be set out in the employment contract or a work schedule. Part-time employees who regularly work beyond the agreed working hours over a 12-month period are entitled to an increased position, unless the employer can document that the additional work is no longer needed. Part-time employees also have a preferential right to an increased position, including parts of a role.
Exemption from working hours regulations
Leading and particularly independent positions may be exempt from the working hours regulations. However, the exemption for employees in leading and particularly independent positions can only apply to a few employees in the undertaking and should not be applied too extensively.
There is no statutory minimum wage requirement in Norway. Minimum wage is normally agreed as part of CBAs and will apply to the employers bound by such agreements. In addition, wage and terms of employment defined in CBAs have been made generally applicable within certain sectors, which means that the minimum wage requirements agreed in the CBAs will apply to all employers within the relevant sector (eg, construction work, cleaning, electro work, agriculture, shipyards, fisheries and transportation). For the purposes of obtaining a work permit, the agreed salary must correspond to the rates in the applicable CBAs or meet certain minimum thresholds for a bachelor/masters degree.
It is quite common for employers to offer a bonus scheme, and the bonus scheme will typically be based on the achievement of targets relating to company results, individual performance or a combination of these.
The government has prepared regulations which apply to the compensation of certain groups of employees:
Holiday and Holiday Pay
Pursuant to the Norwegian Holiday Act, employees are entitled to a minimum of 25 days (which corresponds to four weeks and one day) of annual leave. The holiday year runs from 1 January to 31 December and there is no accrual of holidays throughout the year. It is quite common for employers to offer 30 days (five weeks) of annual leave.
The employer is responsible for determining the holiday and ensuring that employees take their annual leave. Employees are entitled to take three weeks' consecutive leave during the main holiday season between 1 June and 30 September. Employees who become ill during their employment are entitled to postpone their holiday (with certain requirements) and holiday which the employee has not been able to take will transfer to the following year. The employer and the employee may also agree to transfer two weeks of holiday to the following year, and the employer may only cash out holiday that has not been taken in connection with a termination of employment.
Employees who are absent on holiday receive holiday pay instead of salary. Holiday pay is accrued in the year prior to payment (accrual year) and is based on salary payments (both fixed and variable) paid to the employee in the accrual year. The holiday pay rate is 10.2% of the employee's remuneration in the accrual year if the employer offers 25 days of annual leave and 12% of the employee's remuneration in the accrual year if the employer offers 30 days of annual leave. The right to take holiday applies regardless of whether the employee will be entitled to holiday pay. Although the Holiday Act provides that holiday pay must be disbursed on the last ordinary pay day before the holiday is taken, it is common practice in Norway to include a section in the employment agreement stating that holiday pay is disbursed in lieu of salary in the month of June regardless of when holiday leave is taken. For the rest of the year, the ordinary monthly salary is paid.
Employees above the age of 60 are entitled to an additional week of annual leave with an increased holiday pay rate of an extra 2.3%.
Statutory Leaves of Absence
Norwegian law provides for a number of paid and unpaid leaves of absence.
Employees are entitled to sick pay for a period of up to 52 weeks (provided that certain minimum tenure requirements are fulfilled). The employer pays sick pay for the first 16 days, thereafter the sick pay is paid by the Norwegian national insurance. The sick pay is limited to 6 G (G presently equals NOK111,477), but many employers offer to pay the difference between full salary and the sick pay from the national insurance.
Pregnant employees are entitled to leave of absence to attend prenatal examinations if such examinations cannot reasonably take place outside working hours. Such leave is unpaid.
A pregnant employee is entitled to leave of absence for up to 12 weeks during the pregnancy. Such leave is unpaid, but the employee may be entitled to benefits from the national insurance.
Leave in connection with childbirth/adoption
The co-parent is entitled to two weeks' unpaid leave in connection with childbirth to assist the mother. Adoptive parents/foster parents are entitled to two weeks' unpaid leave when taking over responsibility for a child.
Parents are entitled to parental leave for a period of up to 12 months or during such time when parental leave pay is paid from the national insurance. Employees receive parental leave pay from the Norwegian national insurance for a period of 49 weeks at a 100% compensation rate, or 59 weeks at an 80% compensation rate. The parental leave pay is limited to 6 G (G presently equals NOK111,477), but many employers offer to pay the difference between full salary and the parental leave pay from the national insurance. At the moment, three weeks are reserved for the mother prior to birth and 15 weeks (19 weeks if opting for the 80% compensation rate) each are reserved for the mother and co-parent. The parents may freely allocate the remaining 16 weeks (18 weeks if opting for the 80% compensation rate) between them.
Additional parental leave
Parents are entitled to take unpaid parental leave immediately in connection with the paid parental leave for a period of up to 12 months.
Nursing mothers are entitled to one hour as time off per day to breastfeed a child.
Child's or childminder's sickness
Employees are entitled to ten days of annual leave (15 days if the employee has three or more children, and up to 20 days for disabled/chronically ill children) to care for a child if the child or the childminder is sick, until the year the child turns 12 (18 years for disabled/chronically ill children). Additional leave is granted in the case of hospital stays, when the child needs continuous monitoring or has a life-threatening injury or illness. The employee is entitled to similar compensation as during their own sick leave.
Care for close relatives
Employees are entitled to 60 days to nurse close relatives/persons in the home during the terminal stage. Employees are also entitled to up to ten days per year to care for parents or a spouse/partner/disabled or chronically ill child above the age of 18. Such leave is unpaid, but the employee may be entitled to benefits from the national insurance.
Employees are entitled to educational leave after completing two years of service. Such leave is unpaid.
Employees are entitled to leave in connection with mandatory military or civil service. Such leave is unpaid.
Employees who are not a member of the Church of Norway are entitled to up to two days of unpaid leave per year in connection with religious holidays.
In addition, several CBAs set out additional rights to leave of absence.
During employment, employees have a duty of confidentiality as part of their duty of loyalty towards the employer. Some categories of employees also have a statutory duty of confidentiality (eg, health personnel, lawyers, priests, etc), and additional provisions on confidentiality are commonly included in the employment contract.
Trade secrets are specifically protected against misuse under the Norwegian Trade Secrets Act which came into force in January 2021.
The duty of loyalty covers non-disparagement requirements to a certain degree. Contractual provisions on non-disparagement are sometimes found in termination agreements, but seldom in employment contracts.
The employer is liable for damage caused by the employee, either wilfully or negligently, during the performance of work for the employer. Limitations apply if the employee has gone beyond what could reasonably be expected, given the nature of the business or the work.
Pursuant to the Norwegian Working Environment Act, non-compete and non-solicitation of customer clauses are agreed between the employer and the employee, and are subject to mandatory regulations.
An employer may enforce a non-compete obligation if the employer can substantiate that it has a specific need for protection against competitive actions from the employee after termination of employment. The specific need relates to protection of business secrets, know-how and other confidential information, and the employer must demonstrate that the employee, through their role, has had access to such information.
The non-compete obligation may prohibit the employee from taking employment with, starting, running or participating in a competing business for a period of up to 12 months from the expiry of the notice period. The protection would generally be limited to the area in which the employee has worked.
The non-compete undertaking must be made in writing in advance. The employer must also pay consideration to the employee during the restrictive period at least equal to the statutory minimum consideration of 100% of the remuneration (both fixed and variable) up to 8 G (G presently equals NOK111,477), and thereafter a minimum of 70% of the remuneration exceeding 8 G. The consideration may be capped at 12 G in total, and deductions may be made for other income for up to half of the consideration.
The employer must actively invoke the restrictions within certain time limits (details below) by giving a written statement to the employee. The written statement must outline the employer's special need for protection, as well as the scope and geographical area of the restrictions. The employee may also, at any time during the employment, request such statement from the employer. The written statement must be provided within the following limits:
The written statement must be provided at the employee's request or upon termination of employment, subject to a short deadline. Failure to meet these criteria will render the non-compete obligation void. The employer's position in the statement is binding for three months or until the end of the notice period.
The non-compete obligation may not be enforced if the employment is terminated for reasons other than those attributable to the employee, or if the employer has given the employee reasonable grounds to terminate the employment.
The chief executive of the company may waive these rights in return for severance pay. The restrictions imposed on the chief executive must nevertheless be reasonable.
Non-solicitation of Customers
Non-solicitation obligations with regards to customers may prohibit employees from contacting customers for a period of up to 12 months after expiry of the employment contract. The obligations may only be applied to customers with whom the employee had contact or for whom the employee was responsible during the last 12 months of the employment.
There is no requirement to pay consideration for non-solicitation obligations, but the requirement to actively invoke the restrictions through a written statement (see 3.1 Non-competition Clauses) applies. The written statement must also identify which customers are covered by the obligation.
Non-solicitation of Employees
Norwegian law does not imply any restrictions on agreements between an employer and an employee with regard to non-solicitation of employees following termination of employment. Nevertheless, such obligations must be reasonable. Agreements between an employer and another undertaking preventing or limiting an employee's opportunity to take up an appointment in another undertaking is prohibited. Exceptions apply in connection with business transfers, and the employer may enter into an agreement on non-solicitation of employees during the negotiations of such business transfers as well as for a period of up to six months after completion of such transfer. Such agreements are only valid if the affected employees are informed about the restrictions in writing.
The Norwegian Act on Processing of Personal Information of 2018 (which implements the GDPR) applies to the employment sphere. Specific regulations apply with regard to, for example, the employer's access to the employee's email or personal storage space, as well as use of video surveillance in the workplace.
Citizens from outside the EU/EEA will need a work permit to work in Norway, and may not, in general, commence work before such permit is granted.
Employers who engage employees without the necessary work permits may be punished with fines or imprisonment.
EU/EEA citizens who intend to work in Norway must register with the police within three months of arrival in Norway.
Non-EU/EEA citizens must register with the police upon arrival to receive their residence card. The employee cannot commence work before an application for a residence card has been filed.
The number of organised employees has been relatively stable over the last ten years at around 50% of the workforce. It has decreased somewhat since the 1980s and early 1990s. Unions play a significant role on the Norwegian labour market. It is common in Norway for undertakings to be bound by CBAs.
As a main rule, CBAs are not compulsory. To be bound by a CBA, the employers must usually be part of an employers' organisation (although direct agreement with a union is also possible). Normally, at least 10% of the employees must be part of the trade union in order for a CBA to be applicable. If that is the case, then the relevant trade union will be entitled to demand that the employer is bound by a CBA. However, if the trade union does not demand an agreement, the employer will not automatically be bound by a CBA.
Changes and legislation in the employment law area are often the result of three-party collaboration between the government, the main employer's association and the main unions. The current government has expressed its intention to increase the influence of the unions and has made several proposals to effectuate this.
There are several large nationwide unions (with LO being the biggest) and most local or company-specific unions have an affiliation with these. The legislation allows the nationwide unions to enter into agreements which may deviate quite significantly from the main rules of the Working Environment Act, eg, with regard to working hours.
Employers with more than 50 employees have a statutory obligation to consult with employee representatives in matters which may affect the workforce, terms and conditions of employment, etc. Best practice may also require consultation in other matters. There is no specific statutory obligation to elect employee representatives or a works council for this purpose, so the extent and level of employee representation will vary.
Employee Representatives on the Board of Directors
In limited liability companies, the employees are entitled to elect directors to the company's board of directors based on the number of employees:
The employee representatives will be elected by and among the employees and will serve as ordinary directors on the board of directors for a period of two years.
In companies with more than ten employees, at least one health and safety representative must be elected. In companies with more than 50 employees, a working environment committee must be established. The working environment committee consists of representatives from the employer and employee side of the business and the committee is responsible for discussing health and safety matters.
CBAs generally imply an obligation on the employer's part, bound by the agreements, to establish local forums for communication and collaboration with the union representatives.
CBAs are entered into between a union on one side and an employer's association or an employer directly on the other side, and are concerned with wages and/or working conditions for employees.
In Norway, CBAs are generally divided into three levels:
CBAs normally apply for a period of two years, and there is a general duty of peace during the term of a CBA preventing industrial action during such period.
Terminations under Norwegian law must comply with both material and procedural requirements to be valid. The employer must substantiate and document that the requirements have been fulfilled.
A termination of employment initiated by the employer must be objectively justified in reasons relating to the employee (eg, performance or misconduct) or the employer (eg, redundancy).
Termination due to employee performance, etc
Termination based on performance will require that the employee's performance has for some time been of a significantly lower standard than what could reasonably be expected, and that the employee has been given the means and opportunity to improve. There is great variation in the nature and seriousness of the circumstances relating to the employee that could form the grounds for termination. However, a circumstance relevant for termination does not necessarily sufficiently warrant termination in the individual case and this will depend on, inter alia, the severity and duration of the circumstance, the extent to which warnings have been given, to what extent the employer has communicated its reasonable expectations and contributed to enabling the employee to succeed, etc. Generally, the threshold for termination of employment for reasons relating to the employee is quite high.
Termination due to redundancy, etc
A reduction in workforce due to insufficient workload or the downscaling of operations or restructuring will normally be accepted as sufficient and valid cause. In the event of such redundancy, the redundant employee(s) must be selected from a relevant pool of employees (which, as a starting point, will include the legal entity in Norway) based on recognised selection criteria (which will typically include qualifications, years of service and weighty social reasons). The employer must also investigate whether there are other vacant roles to offer the soon-to-be redundant employee(s) and must weigh the company's need to terminate the employment against the disadvantages such dismissal will have on the employee.
The process is in principle the same regardless of the reason for the termination. The employer must call the employee to a discussion meeting before a decision to terminate the employment is made. The purpose of the meeting is to explain the reasons for the potential termination and the employer's assessments in this respect. The employee will be allowed to comment and supplement such information. The employee is allowed to bring a representative to the meeting. The employer must make its decision taking all the facts of the case into consideration after completing the relevant discussion meetings. A notice letter may then be issued (see 7.2 Notice Periods/Severance).
If ten or more employees are made redundant within a 30-day period, the redundancies are considered a collective redundancy. A collective redundancy will trigger a requirement for prior consultations with the employee representatives as well as written notification to the Labour and Welfare Authority about the terminations. The aim of the consultations is to avoid a collective redundancy or, if that is not possible, to mitigate its effect on the employees.
Prior consultations with the employee representatives may be required if the employer is bound by a CBA, even if the redundancies do not qualify as a collective redundancy.
The statutory minimum notice periods will depend on the employee's age and years of service:
It is customary in Norway for employees to agree to a notice period of three months, with six months' notice being the market standard for executive employees. The statutory minimum notice periods will prevail over contractual notice periods if the statutory notice period is longer.
The notice period will start to run on the first day of the month after notice is given. There are no formal requirements with regard to a notice of resignation provided by the employee, although written format is recommended. For the employer, the notice of termination must be provided in writing, include certain information and be delivered personally or by registered mail.
There are no statutory rights to severance pay.
A summary dismissal implies that the employment is terminated with immediate effect without a notice period.
An employer may summarily dismiss an employee if the employee is guilty of gross breach of duty or other material breach of contract. Norwegian employment contracts do not typically list the reasons for summary dismissal, as this will need to be assessed on an individual basis taking into account the seriousness of the breach and relevant case law. The threshold is generally high and the employer carries the burden of proof. The summary dismissal must be proportionate and the employer must consider whether the purpose can be achieved by a termination with notice, which is considered a less onerous reaction.
The same procedural requirements as apply to a termination with notice apply to a summary dismissal. The employer will therefore be required to hold an individual discussion meeting with the employee before a decision is made and a notice letter must be delivered personally or by registered mail (see 7.2 Notice Periods/Severance).
Employees may contest the validity of a summary dismissal in the same manner as a termination with notice (see 8.1 Wrongful Dismissal Claims), but the employee would not be entitled to remain in the position during the dispute.
The employer and the employee have contractual freedom to enter into termination agreements in connection with the termination of employment (or at any stage of the employment relationship). There are no formal requirements to consider when entering into such agreements, but the agreements should be made in writing. Certain provisions have also developed into market practice and the terms of a termination agreement must not be unreasonable. There is no requirement for the employee to obtain independent legal advice.
Norwegian law includes several categories of employees who enjoy specific protection against termination of employment:
In these instances, the Norwegian Working Environment Act applies a presumption that a termination of employment during such absence will be based on the absence unless the employer demonstrates other highly probable grounds for termination.
An employee who alleges that a termination of employment (or summary dismissal) is invalid, may request negotiations with the employer within two weeks of the termination. The employee can further instigate legal proceedings claiming reinstatement within eight weeks from the conclusion of the negotiations (or the termination, if negotiations are not held). If the employee only claims compensation, the deadline is six months from the conclusion of the negotiations (or the termination, if negotiations are not held).
Employees who are successful in their claim are entitled to reinstatement (unless this has not been claimed), compensation for suffered and future economic loss, as well as compensation for non-economic loss.
Employees are entitled to remain in the position until the dispute is settled. This implies a right to work and receive salary until the dispute is either settled by mutual agreement or by the courts. The salary paid during this time is non-refundable even if the employee's claim is found to be unmerited. Exceptions apply to employees whose employment is terminated during the trial period or who have been summarily dismissed, unless a court rules otherwise.
The Norwegian Equality and Anti-Discrimination Act, together with the Working Environment Act, set out protected characteristics under Norwegian law.
Direct, or indirect, discrimination on the basis of any of the characteristics listed is prohibited:
However, differential treatment may be lawful if it (i) has an objective purpose, is necessary to achieve the purpose and does not have a disproportionately negative effect on the persons subject to differential treatment; or (ii) is considered permitted positive treatment in line with the law.
The prohibition against discrimination applies to all aspects of employment, including announcements of positions, recruitment, reassignments and promotions, training and skills development, wage and working conditions as well as termination of employment.
The employer has a duty to actively promote equality and prevent discrimination. Public companies and private companies with more than 50 employees must conduct regular risk assessments and implement measures to counteract discrimination, and must provide information about such efforts in the annual account (or in another publicly available document).
If an employee alleges they have been discriminated against, the burden of proof is reversed, meaning that the employer must substantiate that unlawful discrimination has not taken place.
Employees who have been discriminated against are entitled to damages for economic and non-economic loss.
Most employment disputes will be tried before the ordinary courts.
Disputes concerning CBAs are to be tried before the labour court, which is a specialist court. Such proceedings may only be initiated by the employer's association (or the employer, in the event of a direct agreement) or the union that is party to the CBA.
Certain employment issues will be heard by the Dispute Resolution Tribunal before they are brought before the ordinary courts. Matters concerning discrimination may be heard by the Equality and Anti-Discrimination Tribunal before being brought before the ordinary courts.
Class actions may be initiated if several persons have claims or obligations for which the factual or legal basis is identical or substantially similar. It is a further requirement that the claims may be heard by a court with the same composition and principally the same procedural rules. Class action is the most appropriate method of hearing the claim, and a class representative may be appointed. Class actions are not very common within employment matters in Norway.
The Dispute Act also allows for multiple claimants or defendants in a matter, upon fulfilment of certain conditions.
The chief executive may agree to arbitration in a written advance agreement, but this is not very common. Other employees may agree to arbitration once a dispute has occurred, but this is also very uncommon in Norway.
For the ordinary courts, the main rule in Norway is that the prevailing party will be awarded attorney's fees. The court may exempt the losing party (fully or partially) from this liability, if the court finds that compelling grounds justify exemption.
For the labour court, attorney's fees are not awarded.
+47 23 11 11 11www.thommessen.no
Following the pandemic, the Norwegian labour market has been characterised by the following.
Several of the development characteristics described in the previous edition of the Trends and Developments section in Chambers Employment Guide 2021 still apply to trends in Norwegian labour and employment law in 2022. For example, the importance of equality and diversity in the workplace and decent working conditions are still a focus, and continue to spark controversy. The focus on decent working conditions and transparency has been particularly relevant in the last few months, and has resulted in increased duties and work for many employers, as they have been preparing for the enforcement of a new Transparency Act in Norway (see below).
New Regulations Relating to Working from Home
The COVID-19 pandemic and the authorities' directing of employees to work from home has, over the last couple of years, had a material impact on working life and general business conditions in Norway. Even though Norwegian society was fully reopened during the first quarter of 2022, many large employers have continued to facilitate, and many employees have wished to continue, working from home to some extent.
As a result of this development, and with the aim of adapting legislation to a more modern working life, the Norwegian Regulations relating to working from home were amended with effect from 1 July 2022.
Working from home must now be covered by a written agreement, unless such work is "brief" or "sporadic" (meaning less than one day a week on a regular basis), or imposed by the authorities (as was the case during the COVID-19 pandemic).
The general provisions relating to working hours in the Norwegian Employment Act, and the duty of the employer to ensure a fully satisfactory working environment, both in terms of physical and mental health and safety, also apply in full when employees work from home.
A New Transparency Act Focused on Decent Working Conditions
The Norwegian Transparency Act came into force on 1 July 2022 and applies to enterprises that are resident in Norway, offer goods and services in or outside Norway and meet two of the following three criteria:
The Act also applies to foreign companies that offer goods and services in Norway and are tax liable in Norway.
The purpose of the Transparency Act, which is based on the OECD guidelines for multinational enterprises, is to promote companies' respect for fundamental human rights and decent working conditions, as well as to ensure public access to the following information.
The Act imposes, among other things, a duty to carry out due diligence assessments to investigate and manage the risk of adverse impacts on human rights and decent working conditions in the company and the entire supply chain.
The due diligence assessments must be included in a report, which must be published. Through stricter requirements for transparency and accountability, the legislation will contribute to preventing human rights violations and unsatisfactory working conditions in the undertaking's business relationships and supply chains.
Public information access
Anyone can request access to the assessments and reports made by companies subject to the requirements of the Transparency Act. Interested parties have, among other things, a right of access to information about conditions at production sites related to a particular product or service that the company offers.
A Safe and Organised Working Life – Strengthening the Right to Permanent and Full-Time Positions
The current government programme for Norwegian working life is largely based on the assessments and recommendations of an expert committee, led by Wiersholm partner Jan Fougner, mandated to consider different contractual relationships and business structures in Norwegian working life. The expert committee was put together by the former government as a response to structural changes in Norwegian working life, and to social research, which demonstrated that approximately 10% of the workers in Norway were not permanently employed in line with the core principle of permanent employment under Norwegian law (but were employed as hired employees, on fixed-term contracts, or as independent contractors). The committee proposed several changes that will strengthen employee protection and set stricter requirements for how employers may organise their business and workforce.
The Norwegian government has promoted several of the proposed legal amendments, in addition to extensive restrictions on the use of hired labour.
Removal of general access to temporary employment
General access to temporary 12-month employments in Norway was removed with effect from 1 July 2022. This means that temporary (fixed-term) employment contracts may now only be used to cover a temporary need for employment.
Restoration of labour unions' right to institute legal proceedings against unlawful hiring
With effect from 1 July 2022, trade unions have a right to institute legal proceedings against companies that use hired labour, irrespective of whether individual members are party to the case.
Part-time positions: more stringent requirements
With the aim of strengthening the right to permanent and full-time positions, the government has further proposed stricter rules for the use of part-time positions. The proposed changes include:
The said documentation and discussion duty, as well as the extended preferential right to employment, may lead to prolonged recruitment processes, especially in undertakings with a high turnover and frequent employment processes.
Reduced access to hired labour – tightening of rules relating to workers from staffing companies
New and stricter regulations relating to hired labour are expected to come into force from 2023 and will include the following.
It is further proposed to strengthen hired employees' right to permanent employment with the hirer. According to the current legislation, employees who have been hired for more than four consecutive years to perform work of a temporary nature, and for more than three consecutive years as a temporary replacement for another person(s), shall be deemed to be permanently employed. The proposed rule entitles the hired employee to permanent employment when the hired employee has been consecutively hired for more than three years, irrespective of the legal basis for the hiring.
These legal amendments will greatly impact the staffing industry, as well as companies that largely depend on temporary and hired workers due to fluctuations in the demand for labour. There is reason to expect increased use of temporary employment contracts, and also increased use of temporary lay-offs of permanent employees in periods of reduced activity.
Agreements on temporary hiring may still be entered into with employee representatives to cover work of a temporary nature, eg, related to seasonal fluctuations, work peaks, or when there is a need for skills that are not otherwise available in the company. Such agreements on hiring with trade unions will, for the same reasons, probably also play a greater role in Norwegian working life in future.
Reclassification of contractors and staffing contracts
The Norwegian government has also promoted a new provision in the Norwegian Employment Act to more easily distinguish between the hiring of employees and service agreements (bemanningsentrepriser). The proposed legislation may lower the threshold for classifying service agreements as hiring instead of contract work, which may be regarded as illegal in the absence of a legal basis and give workers the right to claim employment with the client. The Ministry has particularly emphasised that the intention of the proposal is not to restrict the right to outsource support functions, such as cleaning and canteens. At the same time, there is a clear risk that, to a greater extent than before, outsourcing of core business will be classified as hiring and not contract work.
In addition, new legislation relating to the classification of self-employed workers as employees is expected during 2022 and will, together with recent case law, result in a greater focus on the reclassification of consultants and self-employed workers as employees.
Overall, the intention of the legal developments is to strengthen and increase the use of direct and full employment within hiring companies, and require thorough consideration and contract reviews when external labour resources are used.
New Supreme Court Judgment – Stricter Standards on the Handling of Salary Deductions in the Event of Erroneous Payments
A recent judgment by the Supreme Court of Norway has led to amendments in most standard employment agreements and impacts employers' ability to make deductions from employees' salaries in the event of erroneous payments to employees. In the judgment, the Supreme Court concluded that standard clauses in employment agreements on salary deductions in the event of incorrect payments were in breach of the Norwegian Employment Act's strict conditions for salary deductions. The ruling means that many employers will have to change their practice for contractual regulation and handling of erroneous payments.
Standard clauses regarding salary deductions in the event of future erroneous payments by an employer, corresponding to the one in the particular case under consideration, are very common in Norway. The judgment means, however, that general advance agreements on deductions in the event of future erroneous payments cannot form a legal basis for salary deductions, since they – according to the Supreme Court – do not sufficiently specify the salary deduction to ensure predictability for the employee. Following the judgment, salary deductions as a result of incorrect payments by employers will therefore require that a deduction agreement be entered into in connection with or after the incorrect payment has been discovered.