Minimum Wage
There is no official national minimum wage in Norway. Minimum wages are regulated depending on the specific industry of operation and employment contract.
Income Tax
The base income tax in Norway is 22%. However, there is a progressive income tax for individuals who earn more than NOK 198,349 as follows:
| Income Range (NOK) | Tax Rate |
|---|---|
| 198,350 – 279,149 | 1.7% |
| 279,150 – 642,949 | 4% |
| 642,950 – 926,799 | 13.5% |
| 926,800 – 1,499,999 | 16.5% |
| 1,500,000 and above | 17.5% |
Payroll Cost
The employer’s contribution in Norway is 14.1%. This is calculated on the sum of the employee’s pension plan and total monthly remuneration, including salary, bonuses, commissions, allowances, etc.
Additional costs include:
- Public Pension Fund – 4%
- Vacation bonus – 12% for employees under 60, 14.3% for employees 60 and over
- Employer Social Security on vacation bonus – 14.1%
Overtime Pay
Employees are entitled to receive an additional 40% of their normal wages for overtime during weekdays, with the rate doubling to 200% for overtime on weekends and nights.
Overtime is capped at 10 hours per week and 25 hours over a four-week period. Employees may not work more than 13 hours per day and 48 hours per week on average (average over an eight-week period).
Regular & Maximum Working Hours
In Norway, normal working hours cannot exceed nine hours per 24 hours, or 40 hours per seven days. Most companies have a collective agreement with employees, which restricts their weekly working hours to 37.5 hours.
Work, including overtime, cannot exceed:
- 13 hours of work within a 24-hour period
- 10 hours in seven days
- 25 hours during four consecutive weeks
- 200 hours in 52 weeks
Overtime pay is generally 140% the employee’s hourly wage, with the rate doubling for overtime on weekends.
Leave
Norway offers a variety of leave options for employees:
Annual Leave
Employees are entitled to 25 annual leave days, including Saturdays. If the employee is over 60 years old, the annual leave is extended by six working days or one working week.
Sick Leave
Norwegian employees are entitled to 16 days of 100% paid sick leave. The sick leave can be up to 6 months and is paid by the Norwegian Labour and Welfare Administration (NAV).
Parental Leave
Mothers and fathers have equal rights to take parental leave. The length of parental leave depends on the chosen remuneration level and can either be 49 weeks at 100% pay or 59 weeks at 80% pay. Each parent is entitled to 15 weeks of exclusive leave, and mothers are granted an additional three weeks to be taken before birth.
Maternity Leave
Mothers can start their maternity leave up to 12 weeks before the birth of their child. The first six weeks after birth are reserved exclusively for the mother, after which they can take further parental leave according to statutory regulations.
Holidays
Norway celebrates the following national holidays:
| Holiday | Date |
|---|---|
| New Year’s Day | January 1 |
| Maundy Thursday | Varies |
| Good Friday | Varies |
| Easter Monday | Varies |
| Labor Day | May 1 |
| Constitution Day | May 17 |
| Ascension Day | Varies |
| Pentecost | Varies |
| Whit Monday | Varies |
| Christmas Day | December 25 |
| St Stephens’ Day | December 26 |
Whit Sunday and Easter Sunday are also part of the 11 national holidays employees in Norway get.
Termination Requirements
In Norway, employers must have a valid reason to terminate an employee’s contract. Termination must be objectively justified and the employer must prove the grounds for dismissal. The reasons for termination can be related to the enterprise’s circumstances (e.g. redundancy) or the employee’s conduct (e.g. breach of contract, poor performance).
Before deciding to terminate an employee, the employer must discuss the situation with the employee, unless the employee does not want the discussion. Lack of a discussion meeting is an important factor in assessing whether dismissal is objectively justified.
The termination notice must be in writing and meet the formal requirements. Following the discussion meeting, the employer can decide to proceed with or drop the intention to terminate the employee. If the employer decides to proceed, they must explain each reason behind the decision.
Notice Period
The notice period in Norway depends on the employee’s age and length of service:
| Length of Service | Notice Period |
|---|---|
| Below 5 years | 1 month |
| 5-10 years | 2 months |
| Above 10 years | – Aged 50+: 4 months – Aged 55+: 5 months – Aged 60+: 6 months |
| During probation | 14 days |
Employees intending to resign must provide notice in writing, respecting the notice period in their employment contract or applicable collective agreement. No notice period is required if the employee is dismissed for gross misconduct or contract violation.
The notice period begins on the first day of the month following the month in which the notice is given.
Severance Pay
Norwegian law does not mandate severance pay for terminated employees. However, employers often offer severance as part of a dismissal agreement to avoid unilateral termination. This is because employees are automatically entitled to remain in their position until a court decision is made, and the employer must continue paying the employee in the meantime, regardless of the dismissal’s legality.
Probation Periods
When hiring in Norway, a probation period of up to six months can be agreed upon. During this time, the employer must provide necessary training and guidance, as well as regular performance evaluations.
Contractor Misclassification
In Norway, the distinction between employees and independent contractors is crucial for compliance with labor laws. Misclassification occurs when a worker is incorrectly classified as an independent contractor instead of an employee, or vice versa. This can lead to significant legal and financial consequences for both the employer and the worker.
Factors Determining Misclassification
The classification of a worker depends on several key factors, including:
| Factor | Employee | Independent Contractor |
|---|---|---|
| Control | Subject to employer’s instructions and control | Operates independently, decides how to complete tasks |
| Risk | Employer bears the risk of the work outcome | Contractor bears the risk of delivering results |
| Tools | Uses employer-provided tools and equipment | Provides own tools and equipment |
| Integration | Highly integrated into the employer’s operations | Less integrated, often works remotely |
| Benefits | Entitled to benefits (e.g., sick leave, holiday pay) | No entitlement to employee benefits |
| Engagement | Typically indefinite engagement | Usually engaged for specific projects or time periods |
Legal Implications of Misclassification
Misclassifying a worker can lead to various legal implications, including:
- Penalties and Fines: Employers may face significant penalties and fines if they are found to have misclassified an employee. This includes back taxes and unpaid benefits.
- Liability for Benefits: If a contractor is misclassified as an independent contractor, the employer may be liable for benefits that the worker was entitled to as an employee, such as paid sick leave and holiday pay.
- Tax Obligations: Employers are responsible for withholding taxes and social contributions for employees. Misclassifying an employee as a contractor means the employer may fail to meet these obligations.
Avoiding Misclassification
To avoid misclassification, employers should:
- Conduct Regular Reviews: Regularly assess the nature of the working relationship with contractors to ensure compliance with labor laws.
- Clarify Roles and Responsibilities: Clearly define the roles, responsibilities, and expectations in contracts to minimize ambiguity.
- Seek Legal Guidance: Consult with legal experts to ensure that contracts and working arrangements comply with Norwegian labor laws.
Other Considerations for Contractors
Tax Responsibilities
Independent contractors in Norway are responsible for their own taxes, including income tax and VAT. They must file their tax returns and pay any owed taxes directly to the tax authorities. Unlike employees, contractors do not have taxes withheld from their payments.
Benefits and Protections
Independent contractors do not receive the same benefits and protections as employees. They are not entitled to:
- Paid sick leave
- Holiday pay
- Pension contributions from the employer
Contractors must manage their own benefits and may choose to purchase private insurance or retirement plans.
Contractual Agreements
It is essential for independent contractors to have well-drafted contracts that outline the terms of their engagement, including payment terms, project scope, and termination conditions. This helps protect their rights and clarifies expectations for both parties.
Visa Requirements
When hiring foreign employees in Norway, understanding the visa requirements is crucial. Employees from the European Union (EU), European Economic Area (EEA), or Nordic countries (Sweden, Denmark, Iceland, and Finland) do not need a work permit to work in Norway. However, they must register with the local police and apply for a registration certificate within three months of arrival.
Citizens from other countries need a residence and work permit. The most common type of work visa for professionals is the Skilled Worker visa. Requirements include:
- A formal job offer from an employer in Norway
- A full-time position that matches the applicant’s qualifications
- Pay and working conditions at or above the standard level for Norway
The application process involves submitting documents such as a valid passport, photos, proof of accommodation, and employment offer to the Norwegian Immigration Authorities (UDI). Residence permits are renewable and should be renewed 1-3 months before expiration.
Cultural Considerations
Norway has a unique business culture that emphasizes collaboration, transparency, and sustainability. Understanding and respecting cultural norms is essential for successful business relationships.
Communication Style
Norwegians value direct and honest communication. They prefer straightforward conversations and avoid ambiguity. Active listening and allowing everyone to contribute are important in meetings.
Hierarchy and Decision-Making
Norway has relatively flat hierarchies in the workplace. Individual contributions are valued, and decision-making is often consensus-based. Treating all colleagues with respect, regardless of position, is crucial.
Punctuality and Attire
Punctuality is highly regarded in Norway. Arriving on time for meetings demonstrates respect for others’ time. Professional attire is typically conservative, with men wearing suits or blazers and women in business suits or dresses.
Networking and Relationships
Building personal relationships is valued in Norway. Networking events and social gatherings provide opportunities to establish connections and deepen professional bonds. Participating in these activities can benefit long-term collaborations.
Religious and Cultural Holidays
Norway celebrates several public holidays that can impact business operations:
| Holiday | Date |
|---|---|
| New Year’s Day | January 1 |
| Easter | April 6-10 (2023) |
| Labor Day | May 1 |
| Constitution Day | May 17 |
| Ascension Day | May 18 (2023) |
| Pentecost | May 28-29 (2023) |
| Christmas Day | December 25 |
| St. Stephen’s Day | December 26 |
