Officially known as the Kingdom of Norway, the country of roughly 5.4 million inhabitants offers a strong, stable economy. While not a member of the European Union, Norway is a part of the European Economic Area (EEA), which means people from other EEA countries can live and work in Norway without applying for a visa or a residence permit. Norway is largely seen as an attractive country to live and work in, owing to its high quality of life, competitive salaries and strong social safety net. The country’s work culture is also known for its high regard for work-life balance.
Why Norway?
- According to the OECD Better Life Index, Norway performs strongly in indicators for wellbeing, including people’s satisfaction in their jobs, work-life balance, education, health, environmental quality, social connections, civic engagement and safety.
- Norway boasts a very high labor force participation rate and a low unemployment rate. Ranked among the world’s top 10 educated countries, the country also offers companies one of the most highly skilled workforces globally.
- Norway scores among the world’s top 10 countries for technology adoption, flexible work arrangements, digital skills and digital legal framework, according to the World Economic Forum Global Competitiveness Report.
- Norway came in second place in the 2021 FM Global Resilience Index, which weighs factors like productivity, economic risks, supply chain visibility, corruption, corporate governance, cybersecurity and more.
What do multinational companies (MNCs) need to be aware of when hiring in Norway for the first time?
Employment law in Norway is derived from the country’s Working Environment Act (WEA). Employers must be aware that they are not allowed, even with the agreement of the employee, to waive any provisions of the WEA to the detriment of the employee.
A written employment contract is required for all employment engagements. Writing up the contract is the responsibility of the employer, and it should be presented to the employee no later than one month after they start working. An employment contract is, as a rule, established for an indefinite period of time. Thus, the employees have a right to continue working for the employer until the employment contract is terminated by one of the parties. Temporary and fixed-term employment may only be used in specifically defined situations, such as when the work at hand is of an inherently temporary nature.
Overtime is only permitted when there is an exceptional and time-limited need for it. Overtime cannot exceed 10 hours in seven days, 25 hours in four consecutive weeks and 200 hours during a period of 52 weeks. An employee’s total working hours shall not exceed 13 hours in 24 hours and 48 hours in seven days. Only upon agreement between the employer and the employees’ elected representatives in undertakings bound by a collective pay agreement may this limit be extended. The aforementioned rules shall not apply to employees in leading positions or employees in particular independent positions.
Employers should also note labor unions are actively involved in political and judicial issues, serving as influential entities in Norwegian community and social life. The two main unions in Norway are the LO (Norwegian Federation of Trade Unions), representing employees, and the NHO (Confederation of Norwegian Business and Industry), which represents employers. Both unions are actually umbrella organizations that are made up of a number of smaller unions. The LO affiliated unions cover blue and white-collar workers in both the private and public sectors.
Norway’s tax system has two bases for employee’s income. An employee’s general income tax is calculated at a flat rate of 22%, spanning all categories of taxable income including income generated from employment, business and capital. The bracket tax, which operates as a progressive tax on gross salary and other personal income, is calculated based on the individual’s salary income as well as other corresponding incomes which replace salary income. This includes sick pay, work assessment allowance, disability benefit and pension.
Why is demand growing in Norway for Employer of Record (EOR) services?
Norway’s small population size may have previously deterred investors and global businesses. But now, MNCs view Norway as a unique gateway to tech-savvy consumers. Companies are increasingly turning to Norway to test their latest products on a pool of early adopters. For example, Tesla made early headway by testing in the country. Owing to the country’s supportive test market, incentives and regulations, more than half of Norway’s car sales are now electric vehicles. In addition to its attractive consumer market, businesses are now eyeing Norway for a chance to tap into its talented and innovative workforce.
While MNCs want to take advantage of the many opportunities emerging in Norway, there are risks and requirements they need to take note of before making the leap. Compared to many other European countries and the United States, Norwegian labor law leans toward being more employee-friendly. This could create challenges in hiring and managing a workforce in Norway, particularly for global companies unfamiliar with the landscape. Notably, the country also just signed new provisions to regulate remote work, which will go into effect beginning July 1, 2022.
As the ‘law of the land’ when it comes to labor laws, the WEA could present some onerous administrative responsibilities to administering payroll or working through the process of hiring or terminating an employee. There is also a long list of statutory benefits that workers are entitled to in Norway, placing even more burdens on the HR department as they administer payroll.
For these reasons, MNCs are increasingly seeing the EOR model as a suitable alternative to setting up a legal entity in Norway and hiring locally. Effectively, by partnering with an EOR like GoGlobal, MNCs can circumvent the burdensome tasks, risks, requirements and restrictions that usually come along with hiring in the country – while still having Norway’s innovative talent pool at their service.
How can GoGlobal help MNCs grow their team in Norway?
While Norway’s economy and labor market have shown resiliency throughout the COVID-19 pandemic, the strict labor laws and administrative requirements can make managing HR and global payroll particularly challenging. When an MNC works with GoGlobal, we assume all the legal risks and take on the burdensome administrative tasks. For example, terminating an employee requires meetings between the labor representatives and the employee. In a case where termination must happen, GoGlobal would be handling this process on behalf of our client.
Our innovative EOR solutions ensure our clients can focus on the core business development activities that help them scale and reach new heights – without being hampered by the red tape and paperwork of HR processes. All around the globe, we have a track record of success in building fully compliant workforces. Notably, with Norway being a member of the EEA, we offer specialized expertise on and adherence to the zone’s complex regulatory compliance frameworks. This includes the EU General Data Protection Regulation (GDPR), which Norway is bound to.
If your company offers an outstanding employee experience in your home country, GoGlobal will help you bring it to Norway. Before we onboard the worker, our local team will work hands-on with each newly hired team member to thoroughly explain how the EOR arrangement operates. Throughout the arrangement, that same dedicated team remains the point of contact for both the client and client-employee. We are always available to address questions that arise in the areas of payroll, taxation, benefits or engagement. When we serve our clients and client-employees, our goal is to infuse agility, efficiency and peace of mind into the end-to-end global hiring experience.
Find additional details on benefits and hiring in Norway, or contact us to talk with an international HR expert.