Norway – Employer of RecordReading Time: 7 minutes
Globalization Partners provides employer of record services for clients that want to hire employees and run payroll without first establishing a branch office or subsidiary in Norway. Your candidate is hired via Globalization Partners’ Norway PEO in accordance with local labor laws and can be onboarded in days instead of the months it typically takes. The individual is assigned to work on your team, working on your company’s behalf exactly as if he or she were your employee to fulfill your in-country requirements.
Table of Contents
- Norway Labor Laws
- Employment Contracts in Norway
- Working Hours in Norway
- Vacation Leave in Norway
- Holidays in Norway
- Sick Leave in Norway
- Maternity/Paternity Leave in Norway
- Termination/Severance in Norway
- Tax Rate in Norway
- Health Insurance Benefits in Norway
- Additional Benefits in Norway
- Why Globalization Partners
Our Global Employer of Record Platform™ and Global PEO service enables clients to run payroll in Norway while HR services, tax, and compliance management matters are lifted from their shoulders onto ours. As a Global PEO expert, we manage employment contract best practices, statutory and market norm benefits, and employee expenses, as well as severance and termination if required. We also keep you apprised of changes to local employment laws in Norway.
Your new employee is productive sooner, has a better hiring experience and is 100% dedicated to your team. You’ll have peace of mind knowing you have a team of dedicated employment experts assisting with every hire. Globalization Partners allows you to harness the talent of the brightest people in 170 countries around the world, quickly and painlessly.
Norway is located on the western edge of the Scandinavian peninsula and includes the archipelago of Svalbard in the Arctic Ocean, which has a population of about 2,600 and is the northernmost settlement in the world. Norway as a whole has a population of over 5 million and is a constitutional monarchy, headed by King Harald V.
Norway Labor Laws
Norway’s labor laws are considered among the most generous in the world, and it is consistently recognized as one of the best countries in the world in which to work. Norway’s work culture is generally very supportive of employees, and puts a strong emphasis on balancing the demands of employee work and home life.
Norwegians are known for being humble and highly egalitarian. It is considered rude to draw attention to one’s self. The communication style tends to be direct and honest, and exaggeration is not received well. Bring lots of facts and data to meetings to support your proposal, and be sure to arrive on time. The management style in Norway is similar to the U.S., and while consensus is sought, the decision rests with the boss. Pro tip: don’t talk about Norwegians as being like Swedes and Danes; they won’t appreciate it.
When negotiating terms of an employment contract and offer letter with an employee in Norway, it may be useful to keep the following standard benefits in Norway in mind:
Employment Contracts in Norway
A written employment contract is legally required and should be entered into within one month following the commencement of employment. It’s also very common for an employment relationship to be governed by a Collective Bargaining Agreement (CBA). The major collective organizations in Norway are the Confederation of Norwegian Enterprise and the Norwegian Confederation of Trade Unions.
Employment contracts should spell out the terms of the employee’s compensation, benefits, and termination requirements. An employment contract should always state the salary and any compensation amounts in Norwegian Krone rather than a foreign currency. The employment contract template is part of the service with Globalization Partners; no need to draft a separate template if you use our employer of record and PEO service in Norway.
Working Hours in Norway
The standard workday is 9 hours per day, with one hour included for lunch. Exceptions are often made for parents with small children, personal appointments, and sickness.
Any hours worked in excess of 9 hours per day and 40 hours per week are considered overtime and employees must be paid at a premium rate of at least 40% over the normal rate, or provided time off in lieu.
Work hours should not exceed more than 10 hours of overtime per week, 25 hours of overtime per ever 4 weeks, and 200 hours of overtime per every 1 year. If employers request extra hours, they must pay 1.25% of the employee’s regular wages.
Vacation Leave in Norway
The Norwegian Holidays Act provides for a 4 week and one day annual holiday entitlement. However, most Norwegian companies provide 5 weeks of vacation either based on the CBA, employment contract, or as part of the employer’s policy.
Holiday pay must be 10.2% of the annual remuneration if the employee is entitled to the statutory minimum annual holiday; 12% if entitled to 5 weeks; and 12.5% for employees over 60 years old. These are typically paid out every June.
Holidays in Norway
Norway celebrates 10 national public holidays for which employees are given the day off, including:
- New Year’s Day
- Maundy Thursday
- Good Friday
- Easter Monday
- Labor Day
- Constitution Day
- Ascension Day
- Whit Monday
- Christmas Day
- Boxing Day
Sick Leave in Norway
In general, employers pay for the first 16 calendar days of sick leave. The Norwegian Labor and Welfare Service (NAV) pays from the 17th day forward, unless different terms are stated in the employee’s contract or CBA.
Employees must notify their employer if they are absent due to illness.
Unless otherwise negotiated with the employer, sickness benefits are limited to six times the National Insurance basic amount per year.
Maternity/Paternity Leave in Norway
Female employees are entitled to paid maternity leave for 3 weeks prior to giving birth and must take a leave of absence for the first 6 weeks after birth unless able to provide a medical certificate indicating it is better to resume work.
Male employees are entitled to 2 weeks’ unpaid paternity leave.
Parents are entitled to a leave of absence for a total of 47 weeks, or up to 57 weeks with reduced benefits, before the child’s third birthday. This leave includes maternity leave.
Unless stated in the employment contract, employers are not obliged to pay parental leave to employees while on leave; parental benefits are paid by National Security.
- Where 57 weeks of parental leave is taken, the parental benefit will be limited to 80% of the salary at the time of birth.
- Where 47 weeks are taken, parental leave will be paid at 100% of the salary at the time of birth.
- The National Security does not pay parental benefits for salaries above NOK 480,000.
- Employment contracts will usually state the employee’s entitlement to parental benefit payments from the employer if the employee’s salary is higher than this limitation.
- Employers typically pay ordinary or agreed salary, and they get reimbursed from the National Security up to the NOK 480,000 limit.
Termination/Severance in Norway
Probationary periods in Norway are typically between 3 and 6 months. It is common to agree to 14 days’ notice of termination for employees during the probationary period.
The statutory notice period for an employer when dismissing an employee varies between 1 and 6 months, depending on the term of employment, age and length of service with the company. It is most common to agree to 3 months’ notice.
Employees giving notice normally have to observe notice periods as agreed to in the employment contract, but these cannot be longer than 3 months.
Before an employee is dismissed, an employer must call for a meeting with the employee to discuss the possible termination of employment. The employee can bring an adviser to the meeting.
- Notice of termination should be made in writing and contain specific information as required by law, and must be presented to the employee in person or sent by registered post to the employee’s home address.
- If demanded by the employee, the employer must also arrange a consultation meeting with the employee, after the notice of termination is provided.
- Employees have strong protection against dismissal in Norway. Employers must have just cause for terminating the employment contract.
Tax Rate in Norway
The National Insurance Scheme system is partly financed by social security contributions from employers and employees, and partly by taxes. The scheme consists of:
- retirement pension
- disability pension
- unemployment benefits
- sick leave benefits
- other social benefits
Every employee in Norway must pay a national insurance contribution of 8% of gross wage income. The contribution rate for other kinds of personal income (pensions, etc.) is 4.7%. Employer contributions are assessed as a percentage of wages paid, but as a general rule, the employer’s contribution rate is approximately between 16 and 29%.
It is compulsory for all employers that are taxed in Norway and who have a minimum of one employee to provide for a supplementary pension scheme. The pension scheme can be one of the following:
- a defined contribution scheme (where the actual payable pension is the pension contribution plus a return on the contribution)
- a company pension scheme (where the actual pension is similar to a certain level of the employees’ terminal payment).
Both types of pension schemes can be funded or insured in a life insurance company.
Norway has adopted a dual income tax. Under the dual income tax, income from labour and pensions is taxed at progressive rates, while capital income is taxed at a flat rate. The ordinary income tax rate in Norway is 24% in Norway as of 2017.
Health Insurance Benefits in Norway
All residents of Norway are entitled to healthcare at public hospitals at no cost. For treatment in a private clinic which does not have an arrangement with the public health system, the full cost falls on the patient. EU members are entitled to the same level of care as Norwegian citizens. Private health insurance is growing, but only covers about 5% of the healthcare services, and the vast majority of those are elective services. The care level is excellent, but there can be long wait lines that sometimes lead to residents seeking out of pocket care in other countries.
Additional Benefits in Norway
It is common for salaried employees in higher positions, consultants, and those in management to receive stock options. Generally, we recommend budgeting 20% for benefits on top of the gross salary to allocate the total employer’s cost including benefits in Norway.
Why Globalization Partners
Establishing a branch office or subsidiary in Norway to engage a small team is time-consuming, expensive and complex. Norwegian labor law has strong worker protections, requiring great attention to detail and an understanding of local best practices. Globalization Partners makes it painless and easy to expand into Norway. We can help you hire your candidate of choice, handle HR matters and payroll, and ensure that you’re in compliance with local laws, without the burden of setting up a foreign branch office or subsidiary. Our Norway PEO and Global Employer of Record Platform provides you peace of mind so that you can focus on running your business.
If you would like to discuss how Globalization Partners can provide a seamless employee leasing or PEO solution for hiring employees in Norway, please contact us.