Norwegian employment law in a nutshell - Simonsen

Hiring personnel

Written employment contracts are mandatory under Norwegian law, and the contracts shall fulfill certain minimum requirements. As a main rule, an employee shall be hired on a permanent basis. Fixed term contracts are only allowed when certain requirements are met, for instance because the employee shall work as a temp for someone that is temporary absent. If the requirements are not met, the consequence is that the employee is considered to be a permanent employee from day one.

Trial periods are commonly used to test the employee’s skills and suitability for the position. A trial period may be agreed for a maximum of 6 months, and may only be extended if the employee has been absent during (parts of) the trial period.

Unless the employer is bound by a collective bargaining agreement or unless the employer operates on an area where a collective bargaining agreement has been made public by law (for instance for some petroleum installations on shore and on all construction sites), there are no minimum wage requirements.

Working hours

Working hours shall as a main rule not exceed 9 hours per 24 hours and 40 hours per 7 days. For certain groups the working hours shall be less (for instance for shift work). If an employee works longer than the ordinary working hours, the time in excess shall be calculated as overtime. For overtime work the employee shall receive extra pay in addition to what he receives for corresponding work during ordinary working hours. The extra pay shall be at least 40 %. Employees in leading positions and employees holding particularly independent positions are exempt from the working time provisions described above.

Absence from work

Norwegian employees are by law entitled to a minimum of four weeks and one day of annual holiday. It is however common – and for employers bound by collective bargaining agreements often mandatory – to offer a total of five weeks of annual holiday. The statutory holiday allowance is 10.2% of last year income (or 12.0% if the employer is bounded by the wage agreement).

An employee cannot be terminated because of absence due to sickness during the first 12 months of the sickness period. During this period, the employee is by law entitled to 100% of his salary up to NOK 420,000. The employer pays the sickness benefits for the first 16 days, whereas the National Insurance pays for the rest of the period. It is not uncommon that the employer covers the difference between the employee’s actual salary level and the 420,000 that the National Insurance covers.

Employees are entitled to a maternity/paternity leave of up to 44 weeks with 100% salary up to NOK 420,000, or 54 weeks with 80% salary up to NOK 420,000. The first 6 weeks of the leave must be taken by the mother, and 6 of the weeks must be taken by the father. If the 6 weeks are not taken by the father, it will lapse. Otherwise, the leave may be split between the mother and the father at the parents’ full discretion.

Participation rights

By law, companies that employ more than 50 employees shall inform and consult with employee representatives in questions of importance to the employees’ employments. Employers that are bound by collective bargaining agreements will be obligated to inform and consult with elected representatives on a number of issues concerning the management of the company regardless of the number of employees employed.

Working environment committees are required in companies which employ at least 50 employees. Both the employer and the employees shall be represented in the committee. The committee has as its main duty to follow up questions relating to safety, health and welfare of the employees. The health aspect relates to both physical and psychological issues.

Company law contain provisions on employees' rights to elect members of the Board of Directors of a company.  The level of participation depends on the size of the work force.  The right to be represented in the Board of Directors must be demanded by the employees if the company has less than 200 employees. The employees’ representatives have the same loyalty and duty in their function to attend to the interests of the company as the other members of the Board of Directors.

Termination of employment

At will employment does not exist in Norway. The employer may enter into an agreement with the CEO of the company in which the CEO waives his employment protection rights in advance in return of a severance payment. Other than in a situation where an agreement is signed with the CEO, it is not possible to terminate employees unilaterally by paying a certain severance payment.

In fact, all terminations must be for cause/warranted, even during trial period (although in this period, the threshold for terminating is somewhat lower). This applies regardless of whether the reasons are redundancies, reorganizations, or poor performance or misconduct. The requirements for what constitutes a warranted termination are very strict. It is for instance not in itself enough that the employee performs below expectations or below average.

Prior to terminating an employee, the employer needs to arrange a consultation meeting with the employee to discuss the possible notice of termination. The notice of termination itself needs to be in writing and shall fulfill certain minimum requirements.

If the employee challenges the notice of termination, the employee will be entitled to remain in his position until a court has settled the case, provided that he has finished his trial period. This may in a worst case scenario take 2-3 years. During this period, the employee has a right to keep on working as usual, and to keep on receiving salary as usual.

Due to the risk of costly and lengthy legal proceedings many employers chose to offer termination agreements as an alternative to a notice of termination. A termination agreement will usually give the employee a payment on top of his salary during notice period (which is by law minimum 1 month and by contract often 3 months).