What you should know about employing people in...Norway
In Norway the employer does not have the right to terminate an employment contract at will.
1. Employment protection – Not employment at willAccording to the Working Environmental Act, all employees have a minimum protection against dismissal. Dismissal is only justified if the company has a “justifiable basis” due to the company’s needs, or due to conditions related to the employee in question.
If a justifiable basis exists, the company can dismiss an employee within the agreed notice period. Normally the notice period will be 3 months (which increases with seniority and age).
If an employee commits fundamental breach of the employment contract or duties, the employer can terminate the contract immediately.
2. Discrimination lawsThere are a number of laws / articles prohibiting discrimination against employees. Employers must consider these regulations during hiring, promotions and dismissals. The laws prohibit discrimination on the basis of race / origin, gender, sexual preference, political view, age and disability. The employer can face significant compensation claims and also liability for non-economic loss if the court states that a decision was discriminatory towards an employee.
3. Employee benefitsThere is no minimum salary according to Norwegian law. However in many areas (among them the building / construction area and the off-shore business), the tariff agreements / wage agreements between the employers`- and the employees` organisations, are universally applicable by law (this has been the Norwegian answer to the “social dumping”-challenges the European labour market has given us in the last decade or so). This means in practical terms that there will be minimum salary for employees on these areas / for these businesses.
In addition to the salary, the employer has to provide 11,2 – 12% holiday allowance, a pension scheme worth at least 2 – 5% of the salary, 14,2% payroll-tax (can be lower in certain areas / in certain businesses), and cost an insurance for work damage on behalf of the employees. Employees have good coverage according to the public social insurance.
4. Limited possibility of temporary employmentPermanent employment is the principal rule in Norway. This means that the possibility for fixed term employment / temporary employment is strictly limited to situations where this kind of employment is imperative for the employer, for example seasonal work. Project-work is not in itself an adequate reason for temporary employment.
If this rule is breached, the employee can take the position as a permanent position and claim compensation.
5. Easy access to labour market for EU / EEA citizensNorwegian immigration law is harmonized with European Community law, which means that the Norwegian labour market is easily accessible for citizens from EU and EEA countries. The basic rule is that anyone who originates from these countries, has the right to stay provided she / he has a full time job with a Norwegian employer with “ordinary salary”, and applies to / notifies the authorities.
6. Labour unions and tariff agreements / wage agreementsLabour unions have a strong position in Norway. The largest labour union is LO (short for Landsorganisasjonen i Norge), which organizes almost 860,000 members representing a large variety of industries and businesses.
The labour unions influence tariff agreements / wage agreements, and through these they strongly influence salary and working conditions for employees.
7. RedundancyA company can downscale the workforce provided it pays standardized severance.
If a company needs to reduce the workforce, certain procedures need to be followed. Further the dismissals must be “justifiable” according to the company’s business needs. If commercially motivated and conducted correctly, the courts will approve dismissals.
The practical question in these cases is who must leave the company and who stays. The choice between employees must be justifiable / fair in relation to the specific employee in question. The selection criteria must be objective and possible to measure / compare. Seniority must always be considered, but the dismissals can be based on qualification if seniority is not significantly different. In this respect motivation and other similar criteria are difficult to use.
Provided that the dismissal is justifiable, the employer’s obligation is limited to paying salary and other agreed benefits in the notice period.
8. The right to remain in the position after dismissal with noticeIn cases of dismissal with notice, the employee has the right to remain in her / his position during negotiations and hearings before the court (with some important exceptions). The period lasts in practical terms for 6 -8 months. This expands the job protection significantly, and is often the strongest negotiation position for the employee in question.
9. Overtime – extent and paymentThe regular working time in Norway according to the Working Environmental Act is limited to 40 hours per week, but employment contracts commonly provide for a working week of 37.5 hours per week. Extra hours are permitted, and must be paid with the basic salary plus at least 40 %. No employee can legally work more than 9 hours overtime per 24 hours, 10 hours per 7 days, 25 hours per 4 consecutive weeks, or 200 hours per year. On special conditions the Unions and the Norwegian Labour Inspection Authority can give permission to 300 / 400 hours overtime per year.