EMPLOY IN NORWAY WITH EASE
- Access and hire global talent & deploy them anywhere in the world
- Remove restriction from only hiring from local markets
- Enter any international market without the requirement of opening a local entity
Global expansion is a step to make for any business, regardless of what you wish to achieve. The opportunities that can come with an expansion can be both incredibly exciting as well as intimidating and confusing, especially when you consider all of the registration procedures that needs to be done and documentation required.
Expanding to countries such as Norway – which is characterized by a productive and international workforce, strong labor and tax laws, a world-renowned infrastructure network and leading sectors in agriculture, industry, and services – can bring both excitement to the possibilities, but also significant stress to ensuring the entity with the country’s rigorous legal structures and laws.
Ensuring compliance without the sufficient knowledge of the country’s laws also adds to the stress of getting your new entity off the ground and ready to test new markets. Going at it without the proper support can increase the costs, time and risks involved.
Each new markets bring new challenges, and these can be worked through more efficiently and cost-effectively with the support of an International Professional Employer Organization (PEO) such as Bradford Jacobs, especially through our Employer of Record (EOR) framework. This can be best utilized when businesses are just beginning their expansion process and require more information before committing to incorporating an entity and fully establishing themselves in that market.
Norway – The Economy
The economy of Norway is a highly developed mixed economy with state-ownership in strategic areas. The government controls key areas, such as the vital petroleum sector, and the government maintains control over a number of large-scale state enterprises – some of them fully owned, and some publicly traded, but where the government has controlling interests.
Although sensitive to global business cycles, the economy of Norway has shown robust growth since the start of the industrial era.
Norway is a modern, energy-rich country, and is considered one of the world’s wealthiest countries with a GDP per capita based on purchasing power parities (PPP) exceeding USD 63,500. Incomes are also more evenly distributed, making every person a consumer.
The country has a very high standard of living compared with other European countries, and a strongly integrated welfare system.
Norway’s modern manufacturing and welfare system rely on a financial reserve produced by exploitation of natural resources, particularly North Sea oil. The country is richly endowed with a number of natural resources – petroleum, hydropower, fish, forests, and minerals – but is highly dependent on the petroleum sector.
The oil and gas industries play a dominant role in the Norwegian economy, providing a source of finance for the Norwegian welfare state through direct ownership of oil fields, dividends from its shares in Equinor, and licensure fees and taxes.
Norway is the world’s 3rd largest exporter of natural gas and 15th largest exporter of crude oil. Its large merchant shipping fleet is one of the most modern among maritime nations and ranked the 4th largest by value. Other major industries, such as offshore shipping, shipbuilding, fishing and fish farming, information technology, pulp and paper products, and light metals processing have prospered as well.
Norway is located in Northern Europe and is a part of the Scandinavian Peninsula. Jan Mayen and the Arctic archipelago of Svalbard are also part of Norwegian territory.
Most of the country shares a border to the east with Sweden; its northernmost region is bordered by Finland to the south and Russia to the east; and Denmark lies south of its southern tip across the Skagerrak Strait. Norway’s extensive coastline is facing the North Atlantic Ocean and the Barents Sea.
Norway is not a member of the European Union (EU) but is linked to the EU through the European Economic Area (EEA) agreement. By virtue of the EEA, Norway is practically part of the EU’s single market, except in fisheries and agriculture.
Norway is also part of the Schengen Agreement, which guarantees free movement of persons and the absence of internal border control between 22 of the 27 EU Member States, as well as Norway, Iceland, Switzerland, and Liechtenstein.
Small and Medium-Sized Companies
97% of all firms in Norway employ less than 50 people. The SME definition in Norway differs from the definition in use in most EU countries.
The structure of the Norwegian business economy is significantly different from the European average. While in the European Union about 58% of the value added is generated by SMEs, the equivalent share in Norway is about 71%.
At the same time Norwegian SMEs account for about 68% of all persons employed in the Norwegian business economy, which is only 1 percentage point higher than the EU average. This large disparity is mainly caused by micro- firms which generate 40% of total value added in Norway, almost twice as much as the EU average.
However, Norway’s share in employment is lower than in the EU. This indicates that Norwegian micro-firms are highly productive.
|No. of States/Provinces||11 counties|
|Principal Cities||Oslo, Bergen, Trondheim, Stavanger, Tromsø, Ålesund, Bærum, Kristiansand, Fredrikstad|
|Local Currency||Norwegian krone (NOK)|
|Time Zone||Central European Standard Time (GMT+1)|
|Country Dial Code||+47|
|Border Countries||Sweden and Finland (East), Russia (Northeast)|
|Tax Year||1 January to 31 December|
|Taxpayer Identification Numbers||National Identity Number (Tax Number)|
Norwegian Identification Number (Public Services & Authorities)
D Number (Temporary Number – Foreigners)
|Leading Sectors||agriculture, industry, services, oil and gas, hydropower, aquaculture|
cars, refined petroleum, broadcasting equipment, petroleum gas, and crude petroleum
|Main imports||cars, refined petroleum, broadcasting equipment, petroleum gas, and crude petroleum|
|Main exports||crude petroleum, petroleum gas, non-fillet fresh fish, refined petroleum, and raw aluminum|
|Main trading partners||United Kingdom, Germany, Netherlands, Sweden, and France|
|Government Type||Unitary parliamentary constitutional monarchy|
|Current Prime Minister/President/Monarch||Harald V (Monarch), Jonas Gahr Støre (Prime Minister), Masud Gharahkhani (President of the Storting)|
The Main Sectors of the Norwegian Economy
The country focuses on the following key sectors, which all have a significant impact on the country’s economy:
- Agriculture – Norway is a high-cost producer with agricultural policies focused on maintaining a high degree of self-sufficiency. To maintain agricultural production, Norway’s subsidies for most agricultural products exceed those of the EU. High tariffs, quantitative restrictions, and technical barriers to trade severely limit competitive products from entering the Norwegian market.
Tariff-rate quotas exist for grains, meat, and a range of horticultural products. Additionally, Norway extends rebates to food processors in compensation for the high cost of agricultural inputs and to ensure that Norwegian processed products can compete with imports.
- Aquaculture – Aquaculture is the farming of various sea animals and plants (such as fish, algae, and crustaceans) for food.
Norway is regarded as a major world leader when it comes to seafood farming, production, and export. The country’s seafood industry is tied to its geographical location which includes 60,000 miles of coastline situated along the cold waters of the Atlantic Ocean as well as its abundance of fjords teeming with a variety of aquatic life.
Over the years Norway has increasingly stepped up its efforts to maintain sustainable fishing practices and presently exports its seafood products to about 140 nations across the globe.
- Shipping – Due to its location shipping has always been an important industry in Norway. The country is well known for its history of maritime exploration especially during the time of the Vikings when these adventurers ruled the seas. Today shipping is still vital to the country’s economy with a growing stress being placed on creating more environmentally friendly ways to transport goods.
The Norwegian government has ambitious plans to turn their fjords into zero emission zones by the year 2026. This means that any vessel travelling through these areas must operate using electrical power.
Also, in keeping with Norway’s ongoing goals to combat climate change, the country has played a key role in propelling the International Maritime Organization’s decision to adopt a policy which aims at drastically cutting emissions from the global shipping industry by at least 50% by 2050.
- Tourism – According to figures from 2016, the Norwegian tourism industry accounted for 4.2% of the country’s yearly GDP. Furthermore, one out of every fifteen workers in Norway are employed in some aspect of the lucrative tourism industry.
Because of its often frigid and harsh weather conditions, however, the majority of visitors travelling to the Scandinavian country do so from the months of May and August.
- Oil And Gas – Norway’s petroleum industry is extremely important to the nation’s economy. Aside from an array of Middle Eastern countries, Norway holds the title of being the largest oil and gas producer in the world.
This particular industry is so important that it accounts for almost half of Norway’s total exports and some twenty percent of its national GDP (gross domestic product).
The first discoveries of oil and gas reserves in Norway were made in the North Sea in the 1960s. Since that time, this industry has grown to become a very important contributor to the Scandinavian nation’s overall economy.
- Hydro-Power – along with oil and gas, hydropower is another major energy sector that plays a key role in fueling the Norwegian economy. The Nordic country is home to a wide array of hydro-power plants which are located throughout the country.
Some of these stations that are presently operational include the Aura Hydroelectric Power Station in Sunndal, Evanger Hydroelectric Power Station in Voss, Lysebotn Hydroelectric Power Station in Forsand, and Tyssedal Hydroelectric Power Station in Odda.
- The Norwegian Tax Administration (Skatteetaten) – a government agency responsible for resident registration (National Population Register) and tax collection in Norway.
The agency is subordinate to the Ministry of Finance and is based at Helsfyr in Oslo. It is organized in six regional organizations, based in Oslo, Skien, Bergen, Trondheim, Mo i Rana and Tromsø, in addition to local tax offices.
- The Norwegian Labour Inspection Authority (Arbeidstilsynet) – is a governmental agency under the Ministry of Labour and Social Affairs, focused on occupational safety and health.
The Labour Inspection Authority has approximately 600 employees and consists of a central office – the Directorate, seven regional offices and 16 local offices throughout the country.
The Directorate in Trondheim regulates the agency’s overall strategy, programmes, and information. The district offices guide and supervise individual enterprises in local communities.
Labor Contracts Law
The employer-employee relationship in Norway is governed by the Working Environment Act, which stipulates the employer must draft a written contract to be entered into no later than one month after the start of work. Any changes to the working conditions should be written into the contract within one month after they were implemented.
Verbal contracts are equally binding on employer and employee, but not advised as they are harder to enforce in the case of dispute; employers may be considered ‘at fault’ for not having provided a written contract.
General requirements apply to all contracts. These include:
- Written contracts detailing essential elements of the job are required for all employees. In the case of foreign employees, the contract should be in a language they fully understand. If an agreement is verbal, it is equally binding legally.
- The contract includes the following: Names and addresses of employer and employee; the workplace location, role and start date of employment; duration if fixed-term or temporary and any probation provisions; holidays and holiday pay; terms of notice; salary and payment schedule; working hours and breaks; and collective agreements affecting the employment.
- All employees must be registered with the State Register for Employers and Employees.
- Employers with 10 or more employees in office, industrial or commercial establishments must post staff rules in the workplace.
- The emphasis is on permanent open-ended contracts, although fixed-term contracts are allowed within certain restrictions. Temporary employment agreements cannot exceed 15% of the total workforce.
The main types of contracts and significant factors are seen below:
- Indefinite, Open-ended, Permanent Employment Contracts: These are the favored option and remain in force until terminated by either party, according to rules on termination as set out by the Working Environment Act.
- Fixed-Term Employment Contracts: Since July 2015, these contracts have been permitted for up to 12 months without the employer having to justify specific circumstances for the time limit. If the fixed-term employment stretches over three years – or in some permitted cases four years – the employee is entitled to a permanent position. If fixed-term employment lasts less than four years but contravenes the legal requirements of the Working Environment Act, the employee becomes entitled to a permanent position. Employees on fixed-term contracts have a preferential right to employment if vacancies appear in their former place of work within 12 months of their contract ending.
- Probationary or Trial Periods: The legal maximum is six months and cannot be extended by the employer. In the case of sick leave during probation, the trial period can be extended by an equivalent amount of time.
- Part-time, Temporary and Agency Employees: Employers cannot discriminate against these categories in relation to the rights, benefits and entitlements applying to permanent employees. Part-timers have the right to work extra hours if they wish and the employer needs extra labor.
- Collective Bargaining Agreements: Collective bargaining and trade union agreements cover a significant proportion of workers in Norway, covering such areas as wages, working hours, notice periods, overtime, general working conditions and vacations. Such agreements overwrite other statutory minimums where they provide a higher level of benefits.
Agreements generally come in three levels. The Basic Agreement deals typically with the obligations of employers; the Business Sector Agreement contains provisions for employees; Special Agreements are local, company level agreements between management and shop stewards.
Payroll – Tax Contributions and Benefits
Individuals become tax residents by living in Norway for more than 183 days in a 12-month period or for 270 days over three years and pay tax on their worldwide income. Non-residents are liable for taxes on certain categories of income earned in Norway and since 2019 have been able to opt for a Pay-As-You-Go (PAYE) system. Norway has a dual tax system with a flat rate of 22% applying to ‘general income’ and four rates from 1.7% to 16.2% applying to ‘personal income’. The tax year generally runs from January 1 until December 31.
Health and Social Insurance: Norway’s National Insurance Scheme (NIS) provides for universal health and social care regulated by the Patient Rights Act and the National Insurance Act. The government is responsible for funding while primary, preventative and nursing care is organized locally. Norway has four regional health authorities responsible for hospital and specialty care.
Access to services from the Norwegian Labor and Welfare Administration depends on membership of the NIS, to which employees and employers contribute varying rates. Employers generally contribute 14.1% with lower rates applying in regions with smaller populations. Employees pay 8.2% of their gross income; the self-employed contribute 11.4%.
Sick Leave: Sickness benefit (sykepenger) for employees is paid partly by employers and from the Norwegian Labor and Welfare Administration (NAV) for individuals who are members of the National Insurance Scheme (Folketrygden) and under 70 years old.
Leave begins from the day the employer is informed by a medical certificate. Employers pay sickness benefit for the first 16 days at full salary, thereafter benefit is paid by NAV, generally calculated on average income over the preceding three months.
Paid Vacations: Norway’s Holidays Act stipulates a minimum of 21 days annually, though most employers allow five weeks. However, the concept of ‘paid vacations’ in Norway is quite different to the arrangement in most other countries. Holiday pay entitlement is a percentage of salary, bonuses, and other pay from the preceding year. It must equate to at least 10.2% of salary in that year, or 12% for five weeks’ vacation.
Over-60s receive a minimum of 12.5% or 14.3% in the case of six weeks’ holiday as they are entitled to ask for an extra week’s vacation. For those with full entitlement from the previous year, the ‘holiday pay’ month typically sees a larger amount paid.
Holiday remuneration is generally paid in June, before the traditional July vacation and is liable for taxation. Employees taking leave in their first year do not receive the holiday pay but are accruing it for the following year.
Employees working on a public holiday will have a right to pay and extra pay in the same way as if they work on a Sunday. In businesses with a collective agreement, the extra pay is 100% of normal hourly rate.
Employees shall not work from 6 pm on the day before a public holiday or until 10 pm on the day before the next working day.
On Christmas Eve, and on the Saturdays preceding Easter Sunday and Whit Sunday, no work shall be performed from 3.00 p.m. until 10.00 p.m. on the day preceding the next working day. Work performed during these periods shall be regarded as work on Sundays and public holidays.
On public holidays from 00 hrs to 24 hrs – such as Easter, Pentecost, and Christmas Eve – after 4 pm, no one anywhere must disturb with undue noise; so, work is generally not done during these times.
The following are designated national holidays in Norway:
- New Year’s Day – January 1
- Maundy Thursday – April
- Good Friday – March / April
- Easter Day – March / April
- Easter Monday – March / April
- Labor Day – May
- May 17 Constitution Day – May
- Ascension Day – May
- Whit Sunday – June
- Whit Monday – June
- Christmas Day – December 25
- Boxing Day – December 26
Maternity Benefit: Maternity benefit is based on annual income, capped at NOK 608,106 (€59,051, US$66,683) and calculated on the previous three months’ earnings, which can be re-assessed if the amount is untypically low. Benefit can be paid by either the employer or the Labor and Welfare Administration (NAV). Benefits begin from when work stops, up to three weeks prior to the birth. Extra pregnancy benefits can apply if work is deemed to jeopardize the pregnancy.
Parental Leave and Benefits: There is no separate maternal leave. Parental leave is 49 weeks (15 weeks reserved for each parent) on 100% salary or 59 weeks (19 weeks for each parent) at 80% salary capped at NOK 608,106 (€59,051, US$66,683). Three weeks prior to the birth and the six weeks post-natal are reserved exclusively for the mother. Generally, just one parent can receive the full parental benefit at any one time.
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