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. 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. See 5.1 Mobile Work for further details.
The government has proposed to extend the legal requirements to the written employment contract to implement the EU directive 2019/1152 on Transparent and Predictable Working Conditions. The proposal includes among other several new minimum provisions to the written employment contract, and shorter time limits for when the written employment contract must be entered into or changes must be reflected in an addendum.
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.
It is stipulated in the Working Environment Act that employees as a main rule shall be employed in full time positions. Before entering into part-time employment agreements, employers are required to document the need for part-time employees. The question of part-time employment must be discussed with the employee representative, who shall be provided with documentation from the employer regarding the need of temporary employment.
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 extra shifts and 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 a CBA 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 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 NOK118,620), 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 paid.
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 NOK118,620), 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 NOK118,620), 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 2.1 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 Norwegian Work from Home Regulation was originally implemented in 2002. Necessary amendments and revisions have been made since then to adapt the regulation to a more modern working life. This Work from Home Regulation applies in addition to the requirements set out in the Working Environment Act.
Unless working from home only happens sporadically or is subject to government orders, it is required that the employer and the employee enter into a separate agreement regarding working from home. Such agreements shall be pursuant to Section 2 of the Work from Home Regulation and at least include:
The employer is obliged, as far as practically possible, to secure that the employee has responsible working conditions - see Section 3 of the Work from Home Regulation. This includes, among other things, ensuring that the working place and conditions at home do not cause the employee any physical harm, and that the psychosocial work environment is satisfactory.
Without regard to the statutory Leaves of Absence as described under 1.5 Statutory Leaves of Absence, Norwegian employers are not obligated to grant their employees sabbatical leave. Upon application from an employee it is up to the employers discretion whether or not to grant sabbatical leave.
It is an increasing trend in Norway that employers no longer provide individual offices to the employees, but rather offer desk sharing in open spaces or group offices. The Norwegian Environment Act does not set out any legal requirements with regard to office layouts.
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 in 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.
As of 1 January 2024 the obligation for the employer to offer vacant positions is extended from within the Norwegian branch, to apply on group level within Norway.
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.
Generally, the main rule for disputes is physical attendance both in court hearings and witness examinations. During the pandemic there was an increase in digital court proceedings, which lead to changes towards more flexibility regarding digital attendance in the Dispute Act Schedules 13-1 and 21-10. Despite the legal framework now providing higher flexibility for remote hearings, we are of the impression that the trend of physical attendance is largely back to normal as it was before the pandemic.
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.
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In recent years, Norwegian employment law has been characterised by the following trends and developments.
From 1 January 2023: Strengthened Protection for Posted Workers in Norway
The regulations concerning posted workers have been amended. The adopted changes implement EU Directive 2018/957 concerning amendments to the posting of workers.
Previously, only certain provisions of the Norwegian Working Environment Act applied to all posted workers in principle, irrespective of the length of posting. As of 1 January 2023, the posting of workers to Norway for more than one year is covered by most Norwegian employment rules, except certain specific provisions. Pursuant to these exceptions, significant regulations such as employment protection, restrictions on temporary employment and the act on mandatory occupational pensions do not apply.
Further amendments concern clarification of the posted worker’s required pay and that the responsibility for ensuring correct pay and working conditions when an employee hired from a staffing agency is posted from Norway, lies with the staffing agency. Additionally, the new regulations introduce stricter documentation requirements related to the duration of the posting, and the expected number and identity of posted employees.
From 1 April 2023: Restrictions to Hiring From Staffing Agencies
Restricted access to hire labour from staffing agencies
Since 1 April 2023, the temporary character of specific work may no longer be utilised as the legitimising basis for hiring labour from staffing agencies. A general exception may be made by way of agreements with shop stewards provided that certain collective bargaining agreements (CBAs) are in place. Hence, for most practical purposes, hiring from staffing agencies will only be permitted for temporary replacements/stand-ins for absent employees.
Two matter-specific exceptions have been introduced with the new restrictions, still permitting hiring from staffing agencies although the work is of a temporary character:
Further exceptions were proposed in June 2023 for undertakings in the event industry. These are yet to be adopted.
The new restrictions on hiring workers from staffing agencies have had a significant effect on staffing agencies and their business, and on employers accustomed to hiring workers from staffing agencies. The latter may have to organise their need for staffing differently and obtain labour by other means than by hiring.
Regional ban on hiring from staffing agencies within the construction sector
A general ban on hiring from staffing agencies for construction sites in Oslo, Viken and former Vestfold has been implemented. This prohibition has provided substantial challenges within this sector.
Clarification of the definition of hiring from staffing agencies
As of 1 April 2023, a new regulation was introduced, expressly stating the most relevant components and decisive factors in the assessment of whether a service agreement between two undertakings may indeed be classified as hiring of personnel. The purpose of the amendment is to prevent circumvention of the provisions on hiring from staffing agencies.
Although the definition now introduced is not intended to entail any material changes, it does highlight the increased regulatory focus on staffing agencies and reflects the intention for there to be increased and closer scrutiny of staffing agencies and hiring.
Strengthened right to permanent employment for staff hired from staffing agencies
As of 1 April 2023, employees who have been hired from a staffing agency on a continuous basis for more than three years are entitled to permanent employment with the hirer. Previously, the right to such permanent employment occurred after three or alternatively four years, depending on the legal basis for hiring from the staffing agency.
Letter of formal notice from ESA to Norway
Given the significant restrictions now introduced, and their effect on businesses in general, and staffing agencies and employees in particular, the EFTA Surveillance Authority (ESA) issued a formal notice on 19 July 2023 that Norway – by implementing provisions which prevent the use of temporary agency workers when the work is of a temporary nature, and by prohibiting all use of temporary agency workers for work on construction sites in Oslo, Viken and former Vestfold – is in breach of the Temporary Agency Work Directive and the freedom to provide services across the EEA.
ESA opening a case against Norway does not necessarily imply that the provisions will be amended or revoked. Consequently, employers still have to comply with the new rules.
New approval scheme for staffing agencies
The current system of registration for staffing agencies will be rescinded and replaced by an approval scheme. Consequently, staffing enterprises that are registered pursuant to the current scheme, must obtain positive and formal approval from the Norwegian Labour Inspection Authority. To get approval, staffing agencies must provide documentation that they fulfil certain legal obligations, including the requirement for written employment contracts and occupational injury insurance.
The approval scheme comes into force on 1 January 2024. Transitional rules apply until 31 March 2024, during which period, hiring of labour from staffing agencies whose applications are pending approval, will still be permitted.
From 1 January 2023: Full-Time Employment as a Default Rule
On 1 January 2023, a new and formal default rule of full-time employment was adopted and came into force. Any need for deviations from this default rule, for example, the need for part-time employment, must be documented. Furthermore, part-time employment is now also a subject for consultation with employees’ elected representatives/shop stewards.
Part-time employees already enjoy a conditional preferential right to have their posts extended at the expense of employers creating new positions. As of 1 January 2023, such preferential right to an extended post even applies at the expense of hiring from staffing agencies, and part-time employees have a preferential right to extra shifts.
From 1 January 2024: Changes to the Working Environment Act Come into Force
Clarification of the definition of an “employee”
Most parts of the Working Environment Act only apply to employees but (typically) not to independent contractors. Acknowledging the apparently growing importance of the distinction, a new and clearer definition of an “employee” for the purpose of the Working Environment Act will enter into force. It expressly states the most relevant components and factors in deciding whether a person is an employee or independent contractor. Although not intended to materially change the law, it reflects increased emphasis on the matter and could help prevent employees from being misclassified as individual contractors.
Also, a materially new rule of presumption is being introduced, stating that a person is presumed to be an employee unless the client can provide arguments making it highly probable that the person is an individual contractor.
In light of this increased focus, there will be a need for many businesses to scrutinise their use of individual contractors, and the possibility of incorrect classification and contravention of the Working Environment Act.
Extended employer obligations for group companies during downsizing
The current general rule is that the employee’s employment protection and the employer’s responsibilities during downsizing remain with the specific legal entity that formally employs the employee. As of 1 January 2024, this employment protection and several such employer responsibilities will be extended if the employer belongs to a group.
Dismissal due to downsizing is not objectively justified if the employer has other suitable work in the undertaking to offer the employee. Currently, this obligation applies to the specific employer entity. The employer’s search and obligation to offer other suitable work will now be extended into other group companies.
Similar changes will be made to the preferential right to new employment after redundancy. Under the current rule, downsized employees have a conditional preferential right to new employment at the same undertaking for 12 months following the expiry of the notice period. This right will extend into group companies.
Undertakings in Norway belonging to foreign groups are covered by the new provisions. However, the obligation to offer other suitable work and the expansion of employees’ preferential rights will be limited to activity in Norway.
Employers in a group will be required to obtain an overview of potentially vacant posts across the group.
New requirements for establishing frameworks for co-operation, information and consultation in groups with more than 50 employees
As of 1 January 2024, groups with more than 50 employees will be subjected to an obligation to establish frameworks for co-operation, information and consultations between the group and the employees across the group. The form and body of co-operation will be established by the parent company, in co-operation with the majority of the employees or a trade union representing the majority of the employees.
As far as intergroup co-operation goes, this represents an innovation in the Working Environment Act. Significantly, the co-operating body must, for example, handle as early as possible, through information and consultation, any plans for expansions, cut-backs or restructuring that might have significant impact on the workforce situation of multiple undertakings in the group.
Right to permanent employment after three continuous years of temporary employment
Currently, employees who have been temporarily employed on an ongoing basis for more than three or alternatively four years (dependent on the legal basis for the temporary employment), will be deemed to be permanently employed. From 1 January 2024, this limitation to continuous temporary employment will generally be reduced to three years, regardless of the legal basis for the initial temporary employment.
New requirements for establishing working environment committees and safety representatives
The obligation to establish a working environment committee currently rests with undertakings of 50 employees or more. This threshold will now be reduced to 30 employees. Furthermore, if so requested, a working environment committee must be established in a company with ten or more employees (as opposed to the current 20 employees).
Additionally, under the current legislation, undertakings with less than ten employees can agree upon a different arrangement than safety representatives, including not having one. This option is now only available to undertakings with less than five employees.
Furthermore, safety representatives’ duties have been extended to apply to hired workers and individual contractors performing work in close connection with the undertaking.
Requirements for annual consultation for all forms of staffing other than permanent full-time employment
Employers currently have an annual obligation to consult the employees’ elected representatives regarding the use of part-time employment, temporary employment and hiring from staffing agencies. As of 1 January 2024, the obligation to consult will apply correspondingly to the use of independent contractors and the purchase of services from other companies which may impact the staffing situation. Consequently, all forms of staffing other than full-time permanent employment will be a matter for consultation each year, or upon a claim by one of the parties.
From 1 January 2024: Clarification of the Prohibition of Sexual Harassment in the Working Environment Act
The Working Environment Act contains a general prohibition against harassment, and it is widely acknowledged that the prohibition already covers sexual harassment. In relation to Norway ratifying the ILO Convention No 190, concerning the elimination of violence and harassment in the world of work, the general prohibition against harassment will, as of 1 January 2024, nonetheless be amended to expressly state that sexual harassment is also prohibited. Furthermore, definitions of harassment and sexual harassment will be included in the Working Environment Act, reflecting the definitions in the Equality and Anti-discrimination Act.
The Supreme Court Decisions
Employers cannot make deductions from employees’ tips
In April 2023 the Supreme Court held that an employer could not make deductions from an employee’s wages to make up for the employer’s contributions and administrative costs imposed through an employee’s tips.
Starting from fiscal year 2019, employers have been required to pay employers’ National Insurance contributions on tips accruing to employees, and make advance deductions.
To cover these costs, two hotels in Oslo therefore decided to take deductions from their employees’ tips. The employees disputed the legality of such deductions.
The Supreme Court held that the employees were entitled to full payment without deduction, as the tip was a payment from the guests to the employees, not to the undertaking. Furthermore, the court held that the obligation to pay the employer’s contribution and administrative costs rests with the employer, not the employee.
Teacher who lacked relevant professional and educational qualifications not entitled to permanent employment
A school in Norway did not receive applications from applicants who fulfilled the qualification requirements. One of the applicants was hence employed on a temporary basis. When the woman had been continuously employed on a temporary basis for three-and-a-half years, she claimed permanent employment pursuant to the Working Environment Act.
The Supreme Court held that an employee who does not fulfil the statutory qualification requirements is not entitled to permanent employment.
Important ruling on its way to the Supreme Court: definition of “whistle-blowing”
An employee’s protection against retribution after “whistle-blowing” has emerged as a “hot topic” in Norway during the past few years, especially as the working environment and harassment in the employment relationship are considered protected areas for whistle-blowing in Norway. This spring the Court of Appeal ruled in a case where an employees’ elected representative sent a heated email to the manager of the employee’s superior, accusing the employee’s superior of bad behaviour in a meeting where the employee was given a written warning. Afterwards, the employees’ elected representative also received a written warning and a forced relocation. The Court of Appeal held that the email from the employees’ elected representative was not protected by the whistle-blowing regulations.
This decision was appealed to the Supreme Court by the union and is pending a decision in the near future. The use of whistle-blowing in employment conflicts and situations relating to alleged harassment appear to be increasing. The Supreme Court’s ruling is therefore highly anticipated.
Proposal for New Rules for Employee Representation in Financial Undertakings
Acknowledging the need for new and updated regulations for employee representation in financial undertakings, the government has proposed to amend the scope of the general Representation Regulations and apply these correspondingly to the election of employee representatives in financial undertakings, in combination with certain sector-specific adaptations.
The Transparency Act
One year has passed since the Business Transparency and Work on Fundamental Human Rights and Decent Working Conditions Act (the “Transparency Act”) came into force on 1 July 2022. With the purpose of promoting businesses’ respect for fundamental human rights and decent working conditions in connection with the production of goods and provision of services, the Act established several legal requirements for larger enterprises to report on the work they do to ensure compliance with fundamental human rights and decent working conditions in the enterprises themselves, in their supply chains and with their business partners.
The Transparency Act introduced three main obligations:
During the Transparency Act’s first year, the Norwegian Consumer Authority (CA) mainly spent its time providing guidance on the Act and establishing its own routines, in addition to processing complaints. However, the CA has announced that it will now carry out inspections going into year two, focusing particularly on the disclosure obligation, and that it will impose sanctions in the case of clear and obvious violations.
Proposal for New Rules to Ensure More Predictable and Safe Working Conditions
The government has proposed several changes to the Working Environment Act to ensure more predictable and safe working conditions for employees. The amendment is a result of Norway’s implementation of the 2019 EU Directive on transparent and predictable working conditions.
New requirements for employment contracts
It has been proposed that the list of required inclusions in the employment contract should be expanded. Pursuant to the proposal, employment contracts for all employees, should also contain:
It has also been proposed that the additional information required in the employment contracts of employees who are sent to work abroad should be expanded.
Furthermore, it is proposed to shorten the deadline for when a written employment contract must be in place, from one month to seven days, as well as to shorten the deadline for adopting changes in the employment contract.
It has also been proposed that two presumption rules should be introduced. The first rule states that if the employer fails to inform the employee that the employment is temporary, the employee may assume that the employment is permanent. As for the second rule, it states that if the employer fails to inform the employee about the scope of the position (full time or part time), the employee’s claimed scope will be assumed. In short, a lack of information or clarity may lead to both permanent and full-time employment.
New rules for probationary periods
The government proposes to limit the duration of the maximum probationary period permissible under fixed-term employment of less than 12 months, to half the length of the fixed-term employment.
For employees renewing their contracts with the same employer, the government proposes that a new probationary period cannot be agreed if the new position is essentially the same as the position that the employee previously held with the employer.
Request for more predictable and safe working conditions
Furthermore, it is proposed to require employers to provide a written and reasoned response if an employee who is temporarily employed or employed part time requests a form of employment with more predictable and secure working conditions. The employer is obliged to respond to the request within one month.
The right to such written response only applies to employees who have been employed by the employer for more than six months and have completed a probationary period. The employer is not obliged to respond to such a request if less than six months have passed since the employee’s last request.
The above must be reviewed by the Norwegian parliament for final approval. If (or rather when) the proposal is approved, the new requirements for employment contracts will apply to all employment contracts agreed after the proposal has come into force. For existing contracts, employers are given a two-month deadline to supplement the contracts upon request from the employees. Although it is uncertain when the amendments will come into force, this will likely happen on either 1 January 2024 or 1 July 2024. In practice, this means that employers should start the process of updating their employment contract templates to meet the new information requirements this autumn.
Proposal for Requirements for Gender Balance on Boards
Starting in 2024, Norway proposes to gradually introduce the requirement for at least 40% gender balance on the boards of medium-sized and large undertakings. By 2028, these new rules could apply to approximately 20,000 undertakings.
Firstly, it is proposed that by 31 December 2024, undertakings with more than NOK100 million of operating and financial income should meet the new requirement. Eventually – in 2028 – it is proposed that such rules should apply to undertakings with more than 30 employees or with an operating and financial income of more than NOK50 million.
Should these proposals be accepted, many undertakings will have to change the composition of their boards. If this is the case, calculations show that the recruitment of almost 13,000 new board members will be required.