Norway Employee Benefits
Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in Norway might not all be familiar to you yet. By using our PEO and EOR service we can provide compliant labour contracts for employees in Norway including local benefits.
When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few. In Norway, benefits are guaranteed by national legislation as well as collective agreements with trade unions or workers’ councils.
What are the Employee Benefits in Norway?
Benefits and entitlements for Norwegian employees are based on a framework of acts, statutory regulations, and collective and trade union agreements. Although Norway is not a member of the European Union, the EU’s employment directives apply to Norway through its membership of the European Economic Area (EEA).
International companies hiring and onboarding employees in Norway must comply with all aspects of this legislative framework that provides safeguards and guarantees for their workforce.
Most aspects of employment law are covered by the Working Environment Act, with supplementary regulations from the Holidays Act, Employment Protection Act, Gender Equality Act, Anti-Discrimination Act, and the General Application of Collective Agreements Act.
Minimum guaranteed benefits, either from legislation or agreements, include:
- Minimum wages
- Paid vacations
- Working hours
- Termination, notice periods and severance
- Sick leave
- Maternity allowances and benefits
The responsibilities of foreign companies reach further than simply complying with tax, social security, and payroll regulations, however. Failure to comply with specific regulations applying to benefits and entitlements runs the risk of fines and sanctions, or in Norway even prison sentences. It is vital that employers have a firm grasp of what is guaranteed for their employees, as this will affect the employer-employee relationship.
What Compensation Laws exist in Norway?
The employer-employee relationship in Norway is based on a mix of contractual arrangements, collective agreements (CBAs) and statutes setting out minimum entitlements and compensation. Most employment areas are governed by the Working Environment Act, with specific guarantees covered by supplementary legislation. These include:
- The Holidays Act (Ferieloven) allows for a minimum of four weeks plus one day and five weeks where companies come under a CBA. Over-60s are entitled to an extra week. Holiday pay is based on the previous calendar year’s income
- The Employment Protection Act stipulates that all employees enjoy the same rights, although senior management and executives are generally precluded from benefits such as overtime
- The Gender Equality Act and the Anti-Discrimination Act protect employees against discrimination on various grounds
- The General Application of Collective Agreements Act lays down regulations relating to such arrangements
You can see more about Norway’s labor laws here: https://www.nho.no/en/english/articles/basic-labour-law/
The requirement for employers to respect employees’ rights stretches further than simply complying with tax and payroll procedures. Statutes and collective agreements apply to such as maternity allowances and benefits, holidays, sick pay and severance payments, minimum wages and working hours, for example.
Drawing up contracts is tricky enough, but in Norway it is vital for employers to be up to speed with responsibilities to their staff over benefits, compensation, and minimum requirements. Do not take the risk of paying penalties for ignoring these responsibilities.
Compensation, entitlements, and benefits include:
- Minimum Wages: Norway does not have a ‘national minimum wage’ as these are set at varying levels in nine industrial / commercial sectors. Categories are grouped as construction workers, electricians, hotel and catering staff, and other workers in transport and freight, maritime, agriculture, fisheries, and maintenance roles. Rates also depend on whether employees are skilled or unskilled and on their ages. Rates set in July 2021 include:
– Skilled general construction workers per hour, NOK 220 (€21, US$24);
– Skilled electricians per hour, NOK 221.15 (€21, US$24);
– Hotel and catering workers over 20 years old, per hour NOK 175.47 (€17, US$19).
Employers must ensure regulations are rigidly followed at the risk of fines or even imprisonment if the Labor Inspection Authority reports infringements to the police. Where employees are covered by Collective Bargaining Agreements (tariffavtaler) that exceed statutory minimums, these will apply.
- Sick Leave: Sickness benefit (sykepenger) is paid partly by employers and the Norwegian Labor and Welfare Administration (NAV). Individuals must be members of the National Insurance Scheme (Folketrygden) and be under 70 years of age. Leave begins from the day the employer receives the employee’s 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.
- Working Hours and Breaks: The Working Environment Act states working hours should not generally exceed nine over 24 hours or 40 hours over seven days. Shift workers and those who work at weekends should not exceed 36 or 38 hours over seven days depending on the category of employment. Other more beneficial arrangements can exist contractually or by collective agreements, which generally restrict hours to 37.5 per week where they apply. Such agreements must be verified by the Labor Inspection Authority. Employers must keep a record of hours worked. There must be at least one break after working for five-and-a-half hours and a total of 30 minutes’ break in eight hours work. There must be at least 11 hours continuous rest over 24 hours and 35 hours continuous rest over seven days.
- Overtime: The Working Environment Act permits restricted overtime when there is an exceptional need. The limits are no more than: 10 hours over seven days; 25 hours over four consecutive weeks; 200 hours over 52 weeks. Total working hours including overtime are 13 over 24 hours or 48 over seven days, although the 48-hours limit can be averaged over eight weeks. Statutory minimum overtime pay is 40% above the normal hourly rate with time off in lieu an option. Other more beneficial arrangements can exist contractually or by collective agreements but must be verified by the Labor Inspection Authority. The Working Environment Act stipulates that managerial staff and those working with high levels of independence are precluded from overtime.
- Paid Vacations: Norway’s Holidays Act guarantees a minimum of 21 days of leave annually, though most employers allow five weeks, which also applies where employees are covered by a Collective Bargaining Agreement. Holiday pay entitlement is a percentage of salary, bonuses, and other remuneration from the preceding year. It must equal at least 10.2% of the previous year’s salary, or 12% where five weeks’ vacation applies. Over-60s are entitled to an extra week’s vacation and receive a minimum of 12.5% or 14.3% of the previous year’s total remuneration. Holiday pay is usually paid in June, before the traditional July vacation and is taxed as income. Employees taking leave in their first year of employment do not receive the holiday pay but accrue it for the following year.
- Maternity and Parental Benefit and Leave: Maternity, based on annual income, is capped at NOK 608,106 (€59,051, US$66,683) and calculated on the previous three months’ earnings. Benefit can be paid by either the employer or the Labor and Welfare Administration (NAV) and begins from when work stops, up to three weeks prior to the birth. 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 pre-natal and the six weeks post-natal are reserved exclusively for the mother and just one parent can receive the full parental benefit at any one time.
- Termination, Severance, and Redundancy: All employees and employers are subject to termination and severance legislation under the requirements of the Working Environment Act. Termination is permitted by mutual consent; at the end of a contract; dismissal by the employer without notice (if justified on specific grounds) or with notice; by the employee after giving notice. Termination is prohibited if related to trade union membership or activities, as well as maternity or parental leave or any grounds prohibited under Norway’s Equality and Anti-Discrimination Act and the Gender Equality Act. In the case of redundancies, The Labor Inspection Authority must be notified if 10 or more employees are to be dismissed within a period of 30 days. There is no statutory right to severance pay. Employees are entitled only to be paid their salary and any other contracted benefits during the notice period.
- Notice Periods: Notice increases to two months after five years’ continuous employment up to 10 years’ service. After 10 years, the notice period increases according to age of the employee: 50 years-plus, four months; 55 years-plus, five months; 60 years-plus six months. Probationary periods require 14 days’ notice. After this the minimum notice period is one month, as laid down by the Working Environment Act and unless the contract or a collective agreement provides for more beneficial terms.
Employer Statutory Costs in Norway
- Social Insurance: All Norwegian employers must contribute an equivalent percentage of their employees’ salaries into the National Insurance Scheme (NIS) which provides universal health and social care in programs regulated by the Patient Rights Act and the National Insurance Act. The NIS provides access to services run by the Labor and Welfare Administration. Employers generally contribute 14.1%, although rates may apply in areas with smaller populations.
- Minimum Wages: Although minimum wages in Norway are not set at a ‘national’ level, employers’ statutory costs include complying with minimums at industry level. Nine sectors were covered by minimums set in July 2021. These cover construction workers, electricians, hotel and catering staff, transport and freight workers, maritime construction, agriculture, fishing enterprises and maintenance workers. Within these sectors other rates apply depending on whether the workers are skilled, unskilled and on their ages. Where employees are covered by collective agreements (tariffavtaler) that exceed statutory minimums, these higher levels apply. Employers have the responsibility of ensuring rules are rigidly followed at the risk of fines or even imprisonment if the Labor Inspection Authority reports infringements to the police.
- Corporate Taxes: Employers are responsible for paying corporate income tax. Resident companies pay tax on their worldwide profits at 22%, with some companies in the financial sector liable for taxes at 25%.