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Writer's pictureServet Yildiz Stêrk

Norwegian Employment Law: A Comprehensive Overview

Updated: Oct 16

Norwegian employment law is primarily governed by the Working Environment Act of 2005, which provides a robust framework for employee rights and employer obligations. This act applies universally to all employees, including those in leadership positions and even managing directors. It also extends to employees of foreign companies working in Norway. The act covers crucial aspects such as working hours, employment contracts, dismissal procedures, working environment standards, and employee rights during business transfers.

Norwegian Employment Law: A Comprehensive Overview

Working Hours


Norwegian law stipulates standard working hours not to exceed 9 hours per 24-hour period and 40 hours per week. However, there's flexibility for employers and employees to agree in writing to extended hours, provided they don't exceed an average of 9 hours per 24 hours and 40 hours per week over a 52-week period. This flexibility allows for up to 10 hours per day and 48 hours per week, with the 48-hour limit averaged over 8 weeks, not exceeding 50 hours in any single week.


For businesses bound by collective agreements, there's even more flexibility. With written agreement between employers and employee representatives, working hours can be extended to 12.5 hours per day and 48 hours per week, averaged over 8 weeks, with a maximum of 54 hours in any single week.


The Norwegian Labour Inspection Authority can approve even more extensive arrangements, allowing up to 13 hours per day and 48 hours per week on average over a 26-week period.


Work beyond these limits is considered overtime, which is only permissible for exceptional, time-limited needs. Overtime is capped at 10 hours per week, 25 hours per four weeks, or 200 hours per year. Companies with collective agreements can extend these limits to 20 hours per week, 50 hours per four weeks, and 300 hours per year.


Employment Contracts


All employment relationships in Norway must be formalized in writing. For engagements lasting more than a month, the contract must be provided within the first month of employment. Shorter engagements require immediate written contracts.


These contracts must be comprehensive, including:


  • Identities of both parties

  • Workplace location

  • Job description or title

  • Start date and expected duration for temporary positions

  • Trial period details, if applicable

  • Holiday and pay entitlements

  • Notice periods

  • Salary and payment details

  • Working hours

  • Break durations

  • Any relevant collective agreements


Age Limits


The standard retirement age in Norway is 72, but companies can set lower internal limits, generally not below 70. Lower limits are possible if necessitated by health or safety considerations. These internal limits must be consistently applied, known to employees, and accompanied by adequate occupational pension schemes.


Dismissals and Redundancies


Norwegian law provides strong protections for employees against unfair dismissal. Dismissals must be justified by circumstances related to either the employer or the employee. This requirement is based on individual objectivity, meaning the justification must be specific to the employee in question.


In cases of downsizing or reorganization, dismissals are typically considered justified if the employer has no other suitable work to offer. However, the employer must carefully weigh the company's needs against the impact on the individual employee, considering alternatives like relocation or reduced hours. When selecting employees for redundancy, factors such as length of service, qualifications, and social conditions must be considered.


Dismissals due to employee misconduct may be justified if proper procedures are followed and termination is deemed reasonable after considering both parties' interests.


Before any dismissal decision, the employer must, where practical, discuss the matter with the employee and their representatives. This discussion should explain the reasons for the potential dismissal and allow the employee to present their perspective.


Notice periods vary from one to six months, depending on the employee's age and length of service. The notice period starts from the first day of the month following the notice.


Employees who believe they've been wrongfully dismissed can request negotiations within two weeks of receiving notice. If negotiations fail or don't occur, the employee has eight weeks to file a lawsuit. During legal proceedings, the employee generally has the right to continue working until a final decision is reached.


Trial Periods


Employers and employees can agree to a trial period at the start of employment, which must be specified in the contract. This period cannot exceed six months and allows for a 14-day notice period unless otherwise agreed. Dismissals during the trial period must be based on the employee's lack of suitability, proficiency, or reliability.


Temporary Engagements


While permanent employment is the norm in Norway, temporary engagements are permitted under certain circumstances, such as for work of a temporary nature, as replacements, or for general purposes for up to 12 months. However, there are restrictions on the use of temporary employees:

- They cannot exceed 15% of the workforce (with a minimum of one allowed)

- There's a 12-month "quarantine" period before rehiring for the same type of work

- Temporary employees cannot enter into agreements for average calculation of normal working hours


Temporary employment contracts typically expire at the end of the agreed period or when the specific work is completed. Employees employed for over a year must receive at least one month's notice of the termination date.


Non-Compete Clauses


Non-compete clauses in employment contracts are regulated by the Working Environment Act. These clauses must be in writing and can only be invoked as necessary to protect the employer's particular needs against competition. They cannot extend beyond one year after employment termination.


Employers cannot invoke non-compete clauses if they terminate the employment unless the dismissal is objectively justified by the employee's circumstances. The employer can terminate the non-compete clause at any time during employment but not during the period they're bound by disclosure requirements.


If invoked, the employee is entitled to compensation equivalent to 100% of their regular salary (with some reductions for higher salaries). The total compensation may be capped at 12 times the national insurance scheme base rate.


Holiday and Pension Rights


Norwegian employees are entitled to a minimum of 25 working days of vacation annually. Holiday pay, calculated as a percentage of the previous year's salary (10.2% for 25 days, 12% for 30 days), is paid instead of regular salary during vacation periods.


Employers are required to provide occupational pension schemes for their employees. The minimum contribution is 2% of the employee's salary between one and 12 times the national insurance scheme base rate. Employers can choose between defined contribution, defined benefit, or hybrid pension schemes.


Foreign Employees


Foreign employees generally need a residence permit that includes work rights. EU/EEA citizens have more flexibility, being able to work for up to three months without a permit and having streamlined processes for longer stays.


All employees, including foreign nationals, must be registered in the Register of Employers and Employees, with some exceptions for specific industries.


Business Transfers


In the event of a business transfer (asset deal), employees are automatically transferred to the new owner with their existing rights and obligations intact. This provision is based on EU directives and aims to protect employee rights during ownership changes.


Conclusion


Norwegian employment law provides a comprehensive framework that balances employee protection with employer flexibility. While offering strong safeguards for workers, it also allows for adaptability in working arrangements, particularly through collective agreements. The system emphasizes written contracts, clear communication, and fair procedures in all aspects of the employment relationship. For both domestic and international employers operating in Norway, a thorough understanding of these regulations is crucial to ensure compliance and maintain positive employee relations.

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