Definitive Guide to Hiring in Norway

Hiring Employees in Norway

For companies that want to hire employees and run payroll in Norway without first establishing a business entity or subsidiary, Global Expansion provides Employer of Record services (EOR Norway).

Our EOR services streamline and simplify the global hiring process. We handle the core global HR tasks - compliance, contracts, payroll, global benefits, and more - so that you forgo hours of ongoing admin, human error, and risky compliance.

In Norway, companies would historically establish a subsidiary or branch office to legally hire in that country. With Global Expansion this step is no longer necessary. We have subsidiaries all over the world and therefore can legally hire on your behalf. The employees are ours only on paper and report directly to managers within your company.

Labor Laws in Norway

Employment laws in Norway are uniquely suited to the country’s way of life, and crucial to understand if you want to employ local talent in this country. Get the details Norway’s work policies here.

Employment Contracts

According to Norwegian employment laws, all employees must have a written employment contract before the official start date or no later than 1 month after the official start date. Employers must always create a written employment contract before starting work if the employment period is less than 1 month. Written employment contracts are required for all types of employee contracts.

The inclusion of the essential conditions stated by the Norwegian Labor Inspection Authority regarding employment relationships is required by Norway's employment scope. Non-compete clauses in Norwegian employment contracts are governed by the Working Environment Act.

There are three (3) types of employment contracts in Norway.

1. Fixed-term employment

   This type of contract requires employers to meet the requirements of Norway's Working Environment Act.

2. Permanent employment contracts

   This type of contract becomes effective when the requirements of Norway's Working Environment Act are not met.

3. Temporary employment

   This is only possible under certain circumstances. Specifically, employers may categorize employee contracts as temporary if their hiring doesn't require justification.

Employee Probation Period

The trial period may last for up to six months. Absences within this period can be added onto the overall probation period length.

Annual Leave in Norway

The Annual Holidays Act of 1988 governs annual holidays and vacation days. Accordingly, employers must provide their employees with 25 days of paid leave each year following the qualifying year.

Holidays in Norway

Here is the full list of public holidays in Norway:

Maternity Leave Norway

The parental benefit is a benefit payable to parents of newborn children, who have worked for at least six months and have paid contributions to the Social Insurance Fund. The benefit is paid for 1 year after the birth of the child, as long as both parents were insured at the same time and stay insured until the end of the benefit period.

Maternity benefit is calculated in the same manner as sickness benefit. The total period of maternity benefit may not exceed 49 weeks (15 weeks per parent), with full coverage or 59 weeks (19 weeks per parent), with 80% coverage.

Paternity Leave Norway

The parental benefit period is the same as the maternity leave benefit period. The benefit is also paid for a 12 month period.

In addition to the first 12 months, each parent is entitled to 1 year of parental leave for each child born. This leave must be taken immediately following the first year. If a parent is caring for their child on their own, they are entitled to both years.

The parental benefit period begins on the day the child is born, or, if the child is born prematurely, on the date he or she has been in custody for at least two days following birth.

Sick Leave in Norway

Employers typically cover the first 16 calendar days of sick leave. Unless otherwise specified in the employee's contract or CBA, the Norwegian Labor and Welfare Service (NAV) pays from the 17th day forward.

If an employee is absent due to illness, they must notify their employer. Sickness benefits are limited to 6 times the National Insurance basic amount per year unless otherwise agreed upon with the employer.

Working Hours in Norway

According to the Norwegian Labor Law, workers are subject to strict and detailed rules stipulated in the Working Environment Act. The working hours of employees are determined by the normal working hours, which are 9 hours a day and 40 hours per week (including breaks).

For workers who work in semi-continuous shift, nights or Sundays, it’s 38 hours per week. The normal working hours are further reduced to 36 hours per week for continuous shift work and work in underground mines, tunneling and blasting of rock chambers.

Overtime in Norway

Companies in Norway are required to provide overtime pay for any hours worked in excess of 9 hours per day and 40 hours per week. Employees must be paid at a premium rate of at least 40% over the normal rate, or provided time off in lieu.

Work hours should not exceed more than 10 hours of overtime per week, 25 hours of overtime per every 4 weeks, and 200 hours of overtime per every 1 year.

Termination of Employment in Norway

According to the Norwegian Working Environment Act (Arbeidsmiljloven), employees must be given advance notice before being fired. Such dismissal must be objectively justified based on the circumstances of the undertaking, the employer, or the employee.

If the termination is related to the enterprise's downsizing or rationalization, the termination is not objectively justifiable if the employer can offer the employee other suitable work within the enterprise. Moreover, when determining whether a dismissal is objectively justified by reduced operations or rationalization measures, the needs of the business must be weighed against the disadvantage caused to the individual employee by the dismissal.

Furthermore, where employees are dismissed due to business or organizational circumstances, the criteria for selecting employees for dismissal must be objectively justified. An employee who was terminated due to circumstances related to the business has the right to be rehired by the same business, unless there are no positions available that match their qualifications and level of experience. There are no legal requirements regarding separation or layoff pay.

Notice Period in Norway

The mandatory notice period for an employer when dismissing an employee varies between 1 and 6 months, depending on the term of employment, age and length of service with the company. However, it is most common to agree to 3 months’ notice.

Employees giving notice normally have to observe notice periods as agreed to in the employment contract, but these cannot be longer than 3 months.

The Working Environment Act provides the following notice periods:

Severance in Norway

There are no legal provisions regarding severance or redundancy pay. These can be included in collective agreements.

Norway Salary and Wages

Minimum Wage in Norway

Norway does not have a national minimum wage. The minimum wage rates depend on specific economic sectors and terms agreed upon by employers, authorities, and trade unions during labor collective bargaining negotiations.

Salary Comparison in Norway by Sector

• Agriculture and horticulture
  • Permanent workers' salary range NOK 149.3 ($16.9) – NOK 196.04 ($22.1)
  • Temporary workers' salary range: NOK 109.4 ($12.4) – NOK 149.3 ($16.9)
• Construction
  • Salary range: NOK 132.9 ($15) – NOK 220 ($25)
• Electricians (excluding the oil industry)
  • Salary range: NOK 196.47 ($22.2) – NOK 215.15 ($25.4)
• Fish processing industry
  • Salary range: NOK 193.55 ($21.9) – NOK 205.2 ($23.2)
• Maritime construction
  • Salary range: NOK 172.44 ($19.5) – NOK 189.39 ($21.4)

Norway Salary Ranges

Lowest Average Salary

The lowest average salary in Norway is NOK 155,000 ($14,588.60) annually.

Median Wage

The median wage in Norway is NOK 661,000 ($62,213.32) per year.

Highest Average Salary

The highest average wage in Norway is NOK 2,730,000 ($256,947.60) per year.

13th Month Salary in Norway

There is no mandatory requirement to pay the 13th or the 14th month salary.

However, employees are not paid their regular wages in June, but instead they are paid 10% of the previous year's total wage as holiday pay.

All employees and self-employed individuals are required by law to make social security contributions. Contributions are payable on all taxable salaries, wages, and allowances, as well as self-employment income. Employers deduct contributions from employees' paychecks and pay them to the IRS on a bimonthly basis.

Contributions made by employers are deducted from their income tax bill, but contributions made by employees and self-employed individuals are not. Individual contributions are levied at a higher rate for self-employed individuals (11.2%) than for employees (8%).

With regard to salaries, etc., the employer's contribution (14.1%) must be paid. The rates for contributions to the National Insurance Scheme are set by Parliament in annual decrees. Employers pay a lower rate in some municipalities.

If an exemption (or reduction) is not available under a social security convention between Norway and the country where the expatriate or employer is domiciled, expatriates and foreign employers of employees working in Norway are subject to these contributions.

Deductible Expenses in Norway

Personal Deductions

For municipal taxation purposes, an individual is entitled to a personal deduction. The allowance is worth NOK 58,250. As of 2018, spouses who are assessed jointly on their total income and capital are not eligible for a special deduction. The minimum deduction is 46% of the basis, with a maximum deduction of NOK 109,850 and a minimum deduction of NOK 4,000.

The minimum deduction covers all expenses normally associated with employment (including additional expenses incurred due to living away from home), interest payments, work-related travel expenses, and union dues. As a general rule, interest expenses are deductible regardless of whether the debt is used in connection with income or not.

The following are some of the deductions that may be claimed for contributions to certain non-profit organizations:

• Deduction for membership fees in political parties (capped at NOK 2,300)
• Deduction for membership fees in non-political organizations (capped at NOK 1,800)

Deductibility is contingent upon an annual limit of NOK 25,000 per person and the fulfillment of a number of criteria.

Business Deductions

It's important to know which expenses are legitimate deductions. To be deductible for tax purposes, items must be included in the mandatory financial statements. If they're not included on these documents then they can't be claimed on a business return.

In principle, all expenses for earning, securing or maintaining income, with the exception of gifts and entertainment expenses (more on these later), are deductible.

Immigration Norway

Learn about immigration laws in Norway, work visa requirements, work permits, and more.

Temporary work permits and process

Foreign nationals who do not need a visa and plan to stay in Norway for more than three months or work must apply for a residence permit. Only if there is a specific reason for living or working in Norway, such as an employment assignment, a trainee assignment, cultural exchange, or family immigration, are residence permits granted.

Anyone applying for a work permit must first receive a concrete offer of employment. The applicant must also have a sufficient income.

Residency visa / residence permit

Nordic citizens do not require a residence permit to live or work in Norway. EU/EEA nationals do not need to apply for a residence permit in Norway. They can pre-register online and then meet with the authorities in person when they arrive in Norway. EU/EEA nationals need to register in Norway only if they intend to work and stay in Norway for more than three months.

A non-EEA national may have the right to work in Norway without a work permit if he or she is employed by an EEA employer and if the following additional conditions are met:

• The assignment is of temporary nature
• The assignee holds a work permit in the EEA country and has the right to return to that country

For stays in Norway above three months, the assignee must apply for a residence card.

Visa requirements Norway overview

Learn about the visa policy in Norway and all the ways to obtain a regular or a work visa for Norway.

Value Added Tax (VAT) in Norway

The standard VAT rate in Norway is 25%.

Reduced rates are applicable on the following:

• 15% applies to food-related products.
• 12% for passenger transportation, lodging, public broadcasting, and admission to cinemas, sporting events, amusement parks, and activity centers.

Certain goods and services are exempt from VAT, thus, the VAT rate is equivalent to 0%

Withholding Tax in Norway

Dividends

Dividends paid by a Norwegian limited company to an EEA resident corporate shareholder are exempt from withholding tax if the shareholder engages in a real business activity and has a "actual establishment" in the relevant jurisdiction. Otherwise, the tax treaty rate will be applied. Distributions to corporate shareholders outside the EEA or individual shareholders are subject to a 25% withholding tax, unless the rate is reduced by a tax treaty.

Interest

Unless the rate is reduced under a tax treaty, Norway imposes a 15% withholding tax on interest payments made to certain related companies domiciled in low-tax jurisdictions (i.e., jurisdictions where these companies are subject to an effective corporate income tax rate that is less than two-thirds of the rate that would apply to comparable Norwegian resident companies). Other interest payments are not subject to withholding tax.

Royalties

Unless the rate is reduced under a tax treaty, Norway imposes a 15% withholding tax on royalty payments made to certain related companies domiciled in low-tax jurisdictions (i.e., jurisdictions where these companies are subject to an effective corporate income tax rate that is less than two-thirds of the rate that would apply to comparable Norwegian resident companies). Other royalty payments are not subject to withholding tax.

Mandatory Benefits in Norway

It’s important to understand the legal requirements of hiring employees in Norway (whether it’s remote or in-office) so that your business remains compliant.

As part of Global Expansion’s International PEO and Employer of Record (EOR) solution, we guarantee employees are registered with the appropriate government agency, and that they receive mandatory benefits such as minimum wage, workers’ compensation and paid time off (PTO).

Additionally, all tax deductions associated with the employee are processed at the source, meaning our in-country entity will be responsible for paying all taxes to the authorities on behalf of the new hire.

These are legal mandated benefits. Probationary period, annual leave, public holidays, sick leave, maternity leave, paternity leave, overtime pay, notice period, severance pay, and 13th month pay are examples of these. Social security benefits are also considered mandatory benefits.

Payroll In Norway

Here’s what you need to know to run payroll in Norway.

Payroll Administration

Norway has a Pay As You Earn (PAYE) tax system in place, which requires employers to pay employees after deducting payroll taxes. Employers must electronically obtain an employee's tax deduction card from the tax administration. Most Norwegian residents who do not have trading income must file annual tax returns by April 30th.

Employee Benefits Management

Employers are responsible for developing an annual leave policy that complies with the statutory annual leave mandated by law. They are also responsible for approving or canceling requests for non-annual leave (e.g. sick leave). Employers frequently provide additional benefits (i.e. fringe benefits) to employees in addition to their standard salary.

Payroll Compliance

According to the Norwegian Working Environment Act (2005), all employees are entitled to a written employment contract outlining their working hours, responsibilities, salary, and working conditions.

Our Role

Global Expansion’s International EOR and Global PEO solution can help you run payroll in Norway with ease. We will not only ensure accurate payroll administration but also ensure regulatory compliance. Hence, this will save you the time and money needed to understand income tax and employment laws and regulations.

In just a few clicks, your employees will be onboarded and enrolled into our payroll system in a seamless manner. Additionally, we can invoice for clients locally, i.e. we can enroll any new employee quickly and efficiently, regardless of whether they are an expatriate or a Norwegian resident.

Payroll Accrual in Norway

Country Accruals Additional Information

Description

Social security agreements may exempt the employer from this tax (see the Foreign tax relief and tax treaties section for a list of countries with which social security agreements exist). If a similar social security contribution is paid to another state based on the same salaries, etc., then a credit may be applied for against the employer's Norwegian social security costs.

The employer's contribution is deductible for tax purposes of the employer insofar as the wages to which it relates are deductible.

Payroll Accruals Additional Information

Accrued Benefits in Norway

Why use Global Expansion to hire in Norway

Establishing a branch office or subsidiary in Norway can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Norwegian labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Norwegian law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Norway. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our International Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.