Guide to hiring employees in Norway

Employee Benefits in Norway

Under labour law in Norway, workers are split into two main categories: employees and independent contractors.

Most Norwegian benefits regulations only apply to full-time employees, with independent contractors qualifying for the entitlements stipulated in their contracts of employment alone.

Mandatory benefits

Social security

The mandatory social security scheme in Norway offers universal insurance benefits such as health insurance, disability insurance and unemployment benefits.

Employers are expected to pay up to 14% of their employees’ gross pay into a mandatory social security fund. This also covers pensions, sick pay, disability pensions, occupational injury benefits, and other necessary provisions.

Pensions

Retirement pensions in Norway are split into three levels:

Level 1 - Retirement pensions from the National Insurance Scheme ensure an income when an employee reaches old age. Employees can draw from a retirement pension once they turn 62 if sufficient pension rights have been accumulated throughout their employment.

Retirees can work as much as they want without reducing their pension. They accumulate rights to a pension when they work or have a pensionable income before they turn 75. Pension rights are adjusted according to the population’s general life expectancy.

Level 2 - Employers need to provide mandatory occupational pensions alongside retirement pensions. This is a minimum of 2% of the employee’s gross income paid into pension funds.

Level 3 - This level refers to private savings, irrespective of employment and the Norwegian pension scheme.

Supplementary benefits

With the world’s second-happiest workforce, the tenth-highest employment rate and high-ranking performance on the human development index, Norwegian employees are used to high standards regarding worker protection and career benefits.

Under the Norwegian Equality and Anti-Discrimination Act and the Working Environment Act, for example, any direct or indirect discrimination against characteristics relating to gender, sexual orientation, part-time or temporary employment, ethnicity, beliefs, age, union membership and more is strictly prohibited.

If you’re looking to attract talent in Norway, it is a good idea to provide attractive benefits that appeal to your target employees.

These could include:

• Private health insurance
• Additional paid leave
• Flexible working hours
• Personal and professional training
• Travel and parking allowance

When considering optional benefits to offer your staff, think about them from your employees’ perspective. What would be most meaningful to their needs? How can you help them at every point of their professional growth? Answering these questions will help you to understand what your staff need from you as an employer.

Not only will this result in happier, more loyal and more productive employees, but it will also help you retain your staff and positively impact your bottom line.

Working hours in Norway

Working hours in Norway are typically nine hours per day within a 24-hour period, or 40 hours per week within a seven-day work week.

Employees who work overtime are entitled to at least 40% of their agreed hourly wage. Alternatively, they may receive time off in lieu of overtime; this should be agreed upon on an hour-for-hour basis. Norwegian employment law currently permits up to 10 hours of overtime per week, 25 hours of overtime per every four weeks, and 200 hours per year.

For part-time employees, their working hours must be declared in the employment agreement or work schedule. Employees with part-time positions that regularly work beyond their agreed-upon working hours for more than 12 months are entitled to a permanent role unless the employer can prove that any additional work performed is not needed.

Types of leave available

Annual leave

The Holiday Act of 1988 provides the general framework for annual leave allowance in Norway. The Act is ineluctable, which means that employees cannot be subject to rights inferior to those provided by the law.

The Holiday Act entitles staff to a minimum of four weeks and one day of vacation leave, which is equivalent to 7.96% of their annual income. However, the normal holiday entitlement in this Nordic country is five weeks. Employees do not receive any salary during their holiday period; instead, they are entitled to holiday pay. This is earned based on their salary for the previous year. Employees over 60 are entitled to one additional week of annual leave and an additional 2.3% increase in holiday pay rates.

During the first year of employment, an employee is not entitled to any holiday payments. In their second year, the holiday pay is pro-rata for the period the employee worked in the first year. Pay amounts to 10.2% of the previous year’s salary in cases where the holiday is four weeks and one day and 12% where the holiday allowance is five weeks.

Employees can postpone and transfer vacation days in the event of sickness during their agreed holiday period. In this instance, the employer and employee can also agree to transfer up to 12 days of holiday to the following year.

Public holidays in Norway

Norway observes the following public holidays:

• New Year’s Day
• Maundy Thursday
• Good Friday
• Easter Sunday
• Easter Monday
• Labour Day
• Ascension Day
• 17 May Constitution Day (1814)
• Whit Sunday
• Whit Monday
• Christmas Eve
• Christmas Day
• Boxing Day

Sick Leave

In terms of statutory sick leave, the employer pays the first 16 days of sickness. After this, the authorities must refund the employee. The amount refunded is limited to approximately an annual salary of 510,000kr. If the employee earns more than this, it is voluntary for the employer to pay the difference.

Employees on sick leave can not receive their holiday pay until they either take their holiday or terminate their employment. If an employee on sick leave takes their holiday, they will need to submit a notification to the Norwegian Labour and Welfare Administration, who can then temporarily suspend the sickness benefit payments while holiday pay is being received.

Maternity and Paternity Leave

The parental benefit period includes maternity leave lasts for up to 59 weeks, with the three weeks before and the first six weeks after the birth being compulsory. This time is reserved for the mother. 15 weeks are reserved for the father.

Employees are entitled to compensation during maternity and paternity leave. This is either 80% compensation rate of the average salary for 59 weeks or 100% of the average salary for 49 weeks. Parents also have the option to take a leave of absence for an additional year without compensation.

Leave allowance for family care

Employees who need to care for a close relative with a terminal illness are entitled to 20 days' leave to take care of their family member.

Religious leave

Workers who are not members of the Church of Norway may take a maximum of two days of unpaid leave each year to celebrate religious holidays. Employers may ask employees to work additional hours, without overtime pay, to compensate for this leave.

Employees wishing to take religious leave need to provide 14 days' notice to their employer.

Military service leave

Employees are entitled to military service leave but are required to notify their employer before the service commences if they would like to return to their place of employment once the service is complete.

Employers are not required to permit the employee to resume their duties until one month after the notification date.

Are background checks mandatory in Norway?

There is no legal requirement for employers to conduct background checks on job seekers or employees, but they may do so if desired. However, the Personal Data Act prohibits employers from obtaining any sensitive personal information that is irrelevant to the job. This includes information relating to religion, disabilities, ethnicity and sexual orientation.

Attracting talent in Norway

Competition for top talent in Norway is very high, meaning that attraction and retention of talent is a key challenge for businesses looking to develop and grow in the country.

The way in which companies attract potential employees is changing, thanks to individual business growth goals and the challenging global economy. According to a recent study, 71% of CEOs say that the ability to retain talent coupled with the pressures of a rising cost of living is at the front of their minds, alongside the long-term impacts of geopolitical tensions and the COVID-19 pandemic.

Here are some ways in which companies can attract and retain top talent in Norway:

Offer flexibility and remote working conditions

Since the outbreak of COVID-19 in March 2020, the number of workers performing their jobs wholly or partially at home in Norway has increased. As a result, the Norwegian government has put in place a number of amendments to help businesses adjust to modern working life.

The Working Environment Act is now also applied to work performed from home, and the scope of regulations only excludes sporadic, brief periods of remote work.

The previous home office regulations included significant exemptions for home working hours. These have now been removed as the government recognised home workers’ needs for the same legal protection as employees who work on-site.

The updated regulations also include the employer’s responsibility to make sure that psychosocial working environment conditions are extended to the employee’s home, should they want to work remotely.

Since the pandemic, remote and hybrid working have had a positive effect on hiring and productivity. Employee expectations are evolving when it comes to remote and flexible work, so it is essential for hiring managers to develop a working structure that suits their prospective employees in this still-emerging area.

Explore growth and development opportunities

Among European countries, Norway has the second highest participation rate in job-related continued education and training, so it’s important to honour this aspiration for career development among your employees.

Around 85% of training in Norway is paid for by employers, with an emphasis on continued vocational training. The amount of time spent participating in these courses is much higher in Norway than in other OECD countries, with an average of 78 hours per year per employee spent on training.

This approach to progression is a great opportunity for businesses to provide training programs designed to improve their employees’ skills and boost their career prospects.

Provide them with thorough onboarding experiences

90% of employees decide whether or not to continue on with a company during their first six months of starting a new job. First impressions count, and getting new employees settled in and up to speed on what they need to thrive in their role comes down to good onboarding.

A structured and well-implemented onboarding process will not only make it easier for companies to integrate their new hires, it also ensures that their new employees have the best possible experience during the start of their tenure.

Some of the best practices employers should cover during the onboarding process include:

• Covering all essential information in the employment contract to help them clearly understand their role and responsibilities
• Familiarising new employees with the rules and policies of the organisation as well as completing all necessary paperwork
• Explaining the company culture to the new employee so that they can understand how things work, , and how they can contribute to the goals of the business
• Providing them with opportunities to connect with their co-workers by scheduling introductory meetings, assigning a new employee a work buddy, or hosting an informal team meeting or event
• Ensuring they are aware of all the resources and work tools they have and know how to access them

Termination of employment in Norway

Workers must notify their employer of employment contract termination by the end of the week after their last day of work. The employer will need to report the employee to the register of employees, which has an office in Oslo.

An employer cannot dismiss an employee unless the dismissal is justified by circumstances such as cuts in production, reorganisation or similar factors. This is subject to the employer not having any other suitable work to provide to the employee.

Notice of dismissal should be delivered in writing, and employers should give notice to the employee personally or send it by mail. This must then be signed by the employee.

When an employee leaves a company, any holiday pay they have earned until the date of their termination should be provided on the last day before they leave.

Notice Period

The statutory minimum notice period in Norway depends on the age and seniority of the employee and varies between one and six months. The statutory notice period starts from the first day of the month following the month in which the notice was given.

Regardless of their tenure, all employees are entitled to at least one month of notice followed by:

• Two months notice period for more than five years of employment
• Three months notice period for more than 10 years of employment
• Four months notice period for employees over 50
• Five months notice period for employees over 55
• Six months notice period for employees over 60

During the notice period, employers are obliged to offer work to the employee, and the employee is obliged to work unless both parties agree otherwise.

There is no notice period in the event of summary dismissal. As a rule, employees, in this instance, are not entitled to salary or work after receiving the dismissal. Termination without notice is only permitted when an employee is found to be guilty of a severe breach of contract.

Probationary period

In Norway, the employer and employee can agree on a probation period of up to six months from the date the employment relationship begins. This can be extended in the event of employee absence.

Severance pay

There is no statutory entitlement to severance pay in Norway.

Minimum retirement age in Norway

Employees can withdraw from their pensions from the month after they turn 62. However, they must have sufficient earnings to draw a retirement pension before the age of 67.