Norway Employment Contracts
Foreign companies hiring employees in Norway must operate within a strict framework of legislation that is based on acts and statutes as well as collective agreements that combine to provide safeguards and entitlements for the workforce.
Legislation includes the Working Environment Act, the National Insurance Act, the Holidays Act, the Data Privacy Act and the Limited Liability Companies Act, among others. Although Norway is not a member of the European Union (EU), as a member of the European Economic Area (EEA) it must follow EU directives on employment.
These considerations come into play during the first stages of hiring and onboarding – drawing up a contract with your new employee. Once Bradford Jacobs’ Professional Employer Organization (PEO) recruitment networks have located the best talent for your company, we step in with advice on this crucial element of recruitment.
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
Other decisions must be taken before companies move into the ‘contract phase’, and if they intend running their own payroll. These involve:
- Begin registration process of a private limited liability company, ‘aksjeselskap’ (AS) through the Brønnøysund Register Center
- Open a bank account and deposit share capital – a minimum of NOK 30,000 (€2,887, US$3,266)
- Obtain bank’s ‘deed of deposit’ after independent auditor confirms the balance in the account
- Employers must be registered on the Central Coordinating Register for Legal Entities, to receive a unique organization number
- Log necessary documents with the Norwegian Register of Business Enterprises online (fee NOK 5,570, €536, US$606) or via post (fee NOK 6,797, €654, US$740)
- Register for mandatory workers’ injury insurance and occupational pension plan
- Register with the Tax Administration and the Labor and Welfare Administration (NAV) to remit deductions for tax and social insurance
- The Register for Business Enterprises must be notified no later than three months after the company is founded
Employment Contracts in Norway
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. The main types of contracts are:
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.