By Globalization PartnersFebruary 2021
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Norway, the westernmost Scandinavian country, boasts a strong, stable economy, with a GDP of $403,336.36 million and a GDP per capita higher than that of the United States and many other economic superpowers. Norway’s workforce is impressive as well. This guide to hiring employees in Norway should help you navigate some of the complexities of international hiring.
What to Know Before Hiring in Norway
Before you start recruiting in Norway, you should understand some important aspects of the country’s labor market and laws. Having hired employees in your home country won’t prepare you for international hiring in Norway. Before hiring someone in Norway, you should understand the following.
1. The Norwegian labor market
Norway has a thriving economy and an impressive labor participation rate of nearly 78 percent. As a point of reference, the United States’ labor participation rate in January 2020 hovered around 63 percent. Norwegians also enjoy high levels of job satisfaction — a report from the National Institute of Occupational Health (STAMI) revealed that 94 percent of Norwegian workers were happy with their work conditions. That’s notably higher than the average of 86 percent for workers in the EU.
This could mean you will have to provide especially attractive incentives to workers so they will agree to sign on with your company — especially if you’re attempting to recruit top performers in your field who already have jobs they’re satisfied in.
The Norwegian workforce is also exceptionally well educated, which is likely due in part to Norway’s tuition-free public universities. Norway is among the world’s 10 most educated countries, with 44 percent of the Norwegian population from the ages of 25-64 having obtained a tertiary education. The average for countries in the Organisation for Economic Co-operation and Development (OECD) is 39 percent. Overall, the Norwegian labor force is small in numbers but consists of a talented pool that should attract international companies looking to expand.
2. Common languages
Norway has two official languages: Norwegian and Sami. Sami is an indigenous language mostly spoken by the Sami people in certain regions of Northern Norway. Norwegian is far more common. There are two written forms of Norwegian you can encounter in the country: Bokmål, the more common form that is based on written Danish, and Nynorsk, which is mainly based on regional dialects in Western Norway.
Norwegian is similar to the neighboring Nordic languages of Swedish and Danish, so if you can speak either of these languages, Norwegians will likely understand you. Norwegians also speak English at extremely high rates. Of the 100 countries included in the Education First English Proficiency Index, Norway ranked third and fifth in English proficiency in 2019 and 2020, respectively. Companies that operate in English may not have an issue recruiting Norwegian workers without a translator’s help.
3. Employment regulation
Norway has national employment laws mandated mainly by the Working Environment Act (WEA) and the Holidays Act. In addition to these legislations, collective agreements are also common sources of employment regulation in Norway. Two of the most significant collective organizations in Norway are the Confederation of Norwegian Enterprise and the Norwegian Confederation of Trade Unions.
Employers and employees should understand the rights that apply to them. Employers are also required to create written employment contracts for their employees within the first month of their employment. These contracts must include specific information, which we’ll discuss in the Steps to Hiring in Norway section at this guide’s conclusion.
International employers should note that the termination process in Norway is one of the most complex in Europe, as the employee is very protected, even in probation. This increases the importance of making the right hiring decisions and of carefully following all the local employment laws.
4. Working hours and pay requirements
The WEA sets the limit on working hours to nine hours within any 24-hour period and a total of 40 hours per week. The average workweek in Norway is 38 hours. Employees are also entitled to a lunch break if they work more than 5.5 hours in one day. Employees can work more than 40 hours in a week, but this extra time is considered overtime and comes with a higher pay rate.
For regular hourly pay, there is no national minimum wage employers must follow. However, some collective bargaining agreements may specify a minimum wage. Norway’s national currency is the Norwegian Kroner (NOK). When specifying an employee’s salary in their employment contract, be sure to give the total in NOK.
5. Taxes on income
Employers are responsible for deducting employees’ income tax from their paychecks. Norway uses a progressive tax system, but it is divided into a base tax, which is the same rate for all employees, and an additional top or step tax based on their income level.
Employees and employers also pay social security contributions. Employers’ rates of contribution are significantly higher than employees’. These contributions, along with taxes, fund Norway’s National Insurance Scheme, which provides Norwegians with benefits for retirement, disability, unemployment, sick leave, and more. Employers must also provide their employees with a supplementary pension scheme.
6. Holiday entitlement
In addition to public holidays, full-time Norwegian employees are entitled to a minimum of 25 workdays off each year. This total includes Saturdays, so it equates to just over four weeks of leave. Most collective agreements and employment contracts, however, set the vacation leave allowance higher at five weeks. This vacation time is paid, but not in the way you may be used to in your home country. Norway’s system for holiday pay is notoriously complex.
Rather than continuing to issue employees paychecks while they’re away on vacation, employers in Norway do not pay their employees when they’re not working. Instead, employees receive holiday pay at a specified time of the year or just before they take their vacation. This pay is 10.2 percent of the previous year’s annual remuneration in the case of a 25-day vacation or 12 percent in the case of a five-week vacation.
Norway also has policies granting employees rights to other types of leave, including sick leave and parental leave. In the case of sick leave, employers are responsible for the initial 16 days following the employee’s first day off from illness or injury. After that, the National Insurance Scheme takes over paying out the employee’s benefits.
The Cost of Hiring an Employee in Norway
Recruiting employees across international lines can be costly. You may have to factor in expenses for travel, translators, new HR staff, and legal consultants, in addition to other hiring costs you’re already used to, like posting job ads or conducting background checks. If you use a hiring agency to help you find top talent, you’ll need to consider this cost as well. One expense that isn’t directly tied to the recruitment process, but is necessary, is establishing your company entity in Norway. This step can be expensive and time-consuming.
You also need to consider the cost of labor when hiring in a new country. Norway’s labor costs come in at 127 points, a figure that lies between the point value for the U.S. and the UK. In terms of NOK, the total labor costs in Norway totaled 811,765 NOK in 2019. Of course, your industry and the type of position you’re filling will have a major impact on actual labor costs.
What Does a Company Need to Hire Employees in Norway?
Before hiring new employees in Norway, you must first qualify your company as a Norwegian employer. You cannot directly hire employees in Norway without a legal entity there unless you work with an Employer of Record (EOR). Some companies choose to establish a branch office, which is closely tied to the parent company. If you want to establish a more independent company location, you’ll need to form a subsidiary in Norway.
The most common subsidiary structure companies choose in Norway is an Aksjeselskap (AS), a private limited liability company. To set up an AS and prepare to hire employees, you’ll have to:
- Open a bank account in Norway, deposit the required capital, and gain approval from an auditor
- Register with the Central Coordinating Register for Legal Entities and receive an organization number
- Register your company name with the Register of Business Enterprises
- Register with the national VAT register
- Enroll in mandatory workers’ injury insurance
- Arrange a pension scheme for your employees
After you’ve completed these steps and your company is formally recognized within Norway’s borders, you can begin recruiting. This process and the research that goes into understanding employment, tax, and business laws are a major investment of time and finances. Some companies find that partnering with an EOR is a better option for hiring employees in Norway.
An EOR already has everything needed to become the legal employer for your Norwegian employees in place. EORs have an entity in Norway, take full responsibility for complying with the local employment laws, and handle HR functions. These include managing onboarding, payroll, and benefits. When you partner with an EOR, you still get to choose your own employees, but instead of hiring them directly, you hire them through the EOR.
This is an excellent solution that greatly simplifies the international hiring and employment process. With an EOR in Norway, you can start hiring in the country immediately — no need to establish an entity, consult legal and tax experts, or hire new HR staff.
Steps to Hiring in Norway
Understanding how to hire in Norway may be more intuitive than understanding the legalities you must contend with during employment. However, hiring practices in Norway may still look a bit different than what you’re used to.
1. Notify the NAV of vacancies and post job ads
Employers in Norway must notify the Labor and Welfare Administration (NAV) of vacant positions in their company. If you have any existing employees, you must notify them as well. To get the word out to potential candidates, you need to create a job ad in either Norwegian, English, or both and post it in high-visibility locations.
This could include a local newspaper, but Norwegians primarily look for jobs online. Some of the most popular job sites in Norway include Arbeidsplassen, EURES, Gule Sider, and FINN. LinkedIn is also popular in the country, especially among certain age and gender groups.
2. Screen applicants
Norwegians’ curricula vitae (CVs) will look similar to other European CVs. If you want applicants to submit their CV or other materials in a certain language, specify that in your job ad. As applications come in, your hiring manager, agency, or applicant tracking system will find the most qualified candidates.
Another part of screening applicants may include conducting background checks, but you’ll likely want to wait until later in the hiring process for these checks. Background checks are allowed in Norway, as long as you’re not looking into aspects of applicants’ personal lives that are not relevant to the job, such as their religion, ethnicity, sexual orientation, or the details of a functional disability. Credit checks are only allowed in certain circumstances if they’re important for the job.
3. Interview the best candidates
You can host interviews inperson if you’re in Norway temporarily or are setting up your company office there. If you’re hiring remote employees in Norway, you may prefer to hold interviews over the phone or through a video call. When scheduling virtual interviews, make sure you consider the time difference if your time zone differs from Central European Time (CET).
During interviews, avoid questions that may be considered discriminatory. This includes questions about a candidate’s health, for example. You may only ask questions that are relevant to the job.
4. Send offer letters
Once you’ve identified the stand-out candidates you want to hire, it’s time to send offer letters. These letters can cover the highlights of what will be included in the employment contract, or you can provide a full copy of the contract at this time. Prospective hires may negotiate their salary or other aspects of their employment arrangement before agreeing to work for your company.
5. Onboard your new hires
To onboard new employees, you’ll need to have them complete paperwork to set up payroll and other necessities. This is also an important time to familiarize new employees with your company culture and their job duties. On your employees’ first day, consider focusing on walking them through their contracts. The WEA specifies that written employment contracts should, at the least, include:
- Employer’s and employee’s identity
- Work location
- Job title or description
- Employee’s start date
- Trial period information, if applicable
- Expected duration in the case of temporary positions
- Holidays and holiday pay information
- Notice period
- Salary and other remuneration information
- General work schedule and break allowances
- Special working-hour arrangements, if applicable
- Collective agreements, if applicable
Hire in Norway With Globalization Partners
Of all the tips for hiring in Norway we can offer, one can simplify the process more than any other: partnering with an EOR. Globalization Partners is an EOR with an entity in Norway and more than 185 other countries across the globe. Our team is prepared to help you hire top talent in Norway and save you from having to establish a subsidiary or deal with complicated HR tasks, like payroll, onboarding, employee benefits, and compliance with local labor laws.
Learn more about our EOR solution in Norway and consider taking advantage of this option to help you streamline your global expansion strategy.