Norway's labour law generally refers to the rules and regulations concerning individual and collective relationships between employers and employees. Individual labour law is principally regulated in the Working Environment Act of 2005 and collective labour law by collective agreements. In the past two years, several amendments were made by the conservative government to move the Working Environment Act in the direction of more employer-friendly legislation. New amendments include a general right to appoint workers on a temporary basis, and an increase in the amount of overtime that can be imposed on a worker. On the other hand, employees' rights were strengthened by the new provisions in the Working Environment Act that restrict the rights of employers to enforce competition clauses in employment contracts. There have been no significant new amendments for 2017.

Issues arising on hiring individuals

Immigration

Foreign employees from outside the EU/EEA/EFTA area, including self-employed individuals, must hold a residence permit with the right to work in Norway. There are different types of permits, depending on whether the individual is a skilled worker, an unskilled worker (such as seasonal workers and seafarers on board foreign ships), a specialist, a student, a researcher, etc.

A residence permit can be obtained from the Foreign Service Mission or the Norwegian Directorate of Immigration.

Employment structuring and documentation

The Working Environment Act requires employment contracts to be in writing. The contract must (at a minimum) contain the following elements: (1) names of the parties; (2) place where the services will be performed; (3) professional group or sector; (4) date of commencement; (5) estimate of the duration of employment for temporary contracts; (6) trial period; (7) number of days' annual leave and holiday pay; (8) notice periods; (9) wage and wage payment procedures and additional remuneration and benefits, if any; (10) the agreed daily and weekly working hours; (11) length of breaks; (12) working time arrangements; and (13) applicable collective agreement.

The primary rule is that employees should be hired on a permanent basis. However, temporary employment may be agreed in certain situations stipulated by law. For example, if the work is: of a temporary nature; as a temporary replacement for another person or persons; as a trainee; or with athletes, trainers, referees and other leaders within organised sports. Since 2015, employers may also hire an employee on a fixed-term contract for up to 12 months. Certain restrictions apply to this including that the number of employees on fixed-term contracts may not exceed 15% of the total workforce within an undertaking. Furthermore, a quarantine period of 12 months applies after the fixedterm contract expires. This means that the undertaking cannot hire any other employee on a fixed-term contract to do the same type of work before 12 months after the fixedterm contract has expired. The undertaking may however, hire an employee on a permanent basis to do the same work, or hire an employee on a fixed-term contract on other grounds (i.e. as a substitute for another employee doing different work).

If the requirements for temporary employment are not met, the employee will be considered a permanent employee.

Issues arising during the employment relationship

Wages, annual leave and working time

There are no statutory regulations concerning minimum wages. However, wage levels and minimum wages are usually laid down in collective bargaining agreements. If the employment contract is subject to a collective bargaining agreement (CBA), the provisions of the CBA apply to salary as well as to work and recruitment conditions.

Changes have been made to the regulations on the average calculation of working hours, overtime work and Sunday work. The amendments make it possible for employers and employees to reach agreements regarding the average calculation of working hours without the involvement of unions or the Labour Inspection Authority

Normal working hours should not exceed nine hours in a 24 hour period, and 40 hours over seven days. However, for certain groups, such as shift workers, the normal working hours are less. Employers and employees can agree the maximum normal working hours calculated as an average over a maximum period of 52 weeks, but with a limit of ten ordinary hours in 24 hours, and 48 hours work in seven days. Other arrangements can also be reached through agreement between the employer and the employees' elected representatives, in undertakings bound by a collective pay agreement or with the consent of the Labour Inspection Authority.

Overtime is only permitted when there is an exceptional and time-limited need for it. Overtime must not exceed 12 hours over seven days, 30 hours over four consecutive weeks, and 200 hours during a period of 52 weeks. However, overtime hours can be extended by the same mechanisms as normal working hours.

Employees must receive extra pay for overtime, at least 40% more than what they earn during regular working hours.

Minimum holiday rights for employees are outlined in the Holiday Act, which grants employees a minimum of 25 working days' annual leave per year. The term "working days" includes Saturdays. Employees over 60 years of age are entitled to an additional six working days' annual leave.

Trade unions

Under the Labour Disputes Act, a union is defined as "any association of workers or workers' associations when the association has the purpose and interests of promoting workers' interests to their employers." There is no requirement that the union has its own statutes, or board etc. A union is, however, often a member of a larger association or confederation.

Trade unions' rights are regulated by the Labour Disputes Act. Generally, trade unions have the right to enter into collective agreements. Collective bargaining agreements between employees' and employers' organisations are usually negotiated every two years.

Social insurance

Individuals who work or are resident, in Norway are obliged to be members of and to pay contributions to the Social Security Scheme. Employers have to pay social security contributions on wages and other remuneration. The obligation to pay employer's social security contributions can apply even if the employer is not engaged in activity in Norway and even if the employee is not liable to pay tax in Norway.

Issues arising on termination of the employment relationship

Business transfers

The Working Environment Act protects employees' rights in the event of a transfer of an undertaking. It applies if the undertaking is an "autonomous entity which retains its identity after the transfer".

The rights and obligations of the transferor, arising out of the contract of employment or employment relationships in force on the date of the transfer, transfer to the transferee.

The transferee is also bound by any collective pay agreement that was binding on the transferor. This does not apply if, within three weeks of the date of the transfer, the transferee notifies the trade union in writing that it does not wish to be bound. However, the transferred employees have the right to retain their individual working conditions that follow from a collective pay agreement that was binding on the transferor. This applies until the collective pay agreement expires or until a new one is concluded that is binding on the transferee and the transferred employees.

Terminating employment

The Working Environment Act provides that a dismissal must be objectively justified on the basis of circumstances relating to the operation of the business, the employer or the employee.

Norwegian employment legislation does not specify or indicate by way of example what kind of conduct on the part of the employee is sufficient to justify dismissal. This must be determined on the basis of a consideration of all of the circumstances of the case. An employer can assert different reasons for dismissals based on the employee's breach of contractual terms and conditions, such as poor performance, misconduct, absence, etc.

In individual dismissals based on the employee's conduct, there is no statutory obligation to give a written warning or to consider other suitable available work for the employee, but these are circumstances that are often taken into account in considering whether the dismissal was justified.

There is no statutory right to severance pay in Norway. The only payment that the employee is entitled to is payment during the notice period in accordance with the terms of employment.

Since 1 January 2016, competition clauses, which protect an employer's business after the termination of employment, are regulated by a new provision in the Working Environment Act (section 14A). The effect of the new provision is that competition clauses are only valid if they are in writing and can only be enforced to the extent necessary to protect the employer's trade secrets and know how. Furthermore, a competition clause is only valid for a period of up to one year after the employment contract is terminated. However, the competition clause cannot be enforced if the employment contract was terminated by the employer for reasons not related to the employee. Should the employer decide to enforce the competition clause, the employee is entitled to financial compensation which is equivalent to regular salary, with a cap of NOK 740 608. Therefore, employees who earn up to NOK 740 608 will receive full compensation. For income earned in excess of NOK 740 608, the employee should be paid a minimum of 70% compensation.

The current limit on termination of employment on account of age is 72 years. This means that an employment contract can be terminated when the employee turns 72 years old, without any further reason. However, undertakings may set a company-specific age limit of 70 years which will be valid if the limit is made known to employees, is practiced consistently by the employer and employees are entitled to a satisfactory pension scheme.

Published in collaboration with L&E Global an alliance of employers’ counsel worldwide

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