EOR in Norway

Overview of Norway

Norway, situated in northern Europe, is a Nordic nation surrounded by Finland, Russia, Denmark, and Sweden. As per the World Bank, Norway boasts the fourth-highest per capita income globally.

Key Facts:

• Population: 5.3 Million
• Currency: Norwegian Krone (NOK)
• Capital: Oslo
• Official languages: Norwegian, Sámi
• GDP: $350 billion (2020)
• Working hours: 37.5 - 40 hours
• Public/bank holidays: 12 days
• Remote workers: 15.8% of the population
• Minimum hourly salary: No statutory min salary
• Tax year: 1st of Jan - 31st Dec
• Date format: DD/MM/YYYY

Setting up a subsidiary in Norway

Before initiating operations in Norway, it's essential to take into account the following factors:

1. Business considerations
   Several factors should be evaluated before establishing a business in Norway:
   - Business type and industry
   - Existing trade relationships and agreements
   - Nationality of individuals and headquarters
2. Location
   Different cities in Norway have distinct laws, expenses, and resources. Engaging a legal advisor is crucial for navigating these variations.
3. Language
   Norwegian is the predominant language, spoken by 95% of the population, with English following closely at 90%.

Employment in Norway: Essential considerations

When it comes to employment in Norway, the country's labor laws are applicable to both its citizens and foreign nationals. While there are similarities in their entitlements, distinctions do exist. It is crucial to grasp these variations and other key aspects of Norway's employment regulations. The public holidays in Norway for 2021 include New Year's Day (1 January), Maundy Thursday (1 April), Good Friday (2 April), Easter Sunday (4 April), Easter Monday (5 April), Labor Day (1 May), Ascension Day (13 May), Constitution Day (17 May), Whit Monday (24 May), Christmas Day (25 December), and Boxing Day/Second Day of Christmas (26 December). Holiday pay is disbursed before the holiday.

The Working Environment Act prohibits employee discrimination based on age, gender, race, belief, political opinions, religion, social, national/ethnic origin, and sexual orientation. Employers are prohibited from discriminating against both part-time and full-time employees.

Hiring practices in Norway

Employers in Norway are obligated to conduct a background check on potential hires, encompassing their previous work history, education, and business interests. According to Norwegian employment contract laws, employers must prepare a written contract for newly recruited employees within one month of the hiring date. These written contracts should explicitly outline key details such as job description, compensation, benefits, working hours, overtime provisions, and a termination clause.

For those seeking employment opportunities in Norway, several platforms can be explored:

1. Arbeidsplassen Website:
   - Provides a comprehensive list of job openings.
   - Note: The website is available only in the Norwegian language.
2. Eures:
   - A top website for job searches in various languages.
3. Gulesider:
   - Showcases job listings that may not be found on other platforms.
4. Finn Website:
   - Most job listings are found here, though the site is in Norwegian.

For a global perspective and opportunities in remote work, Skuad offers a unique Global HR platform. This platform facilitates the hiring, onboarding, payroll, compliance, and benefits management for teams in over 150 countries. Skuad's services are driven by a self-serve, unified, and automated HR platform, allowing businesses to focus on growth while ensuring seamless management of employee contracts and related processes.

Employment contracts in Norway

In Norway, verbal contracts, though legally binding and enforceable, are permissible only for employment periods under one month. According to the Working Environment Act (WEA), contracts for longer employment durations must be in writing. Additionally, all employment contracts must include a probationary period, which is capped at six months. Seniority plays a significant role, as both permanent and fixed-term employees may see increased benefits such as annual leave and severance pay. For foreign employers, it is crucial to align contract durations with the specific needs of the work. It is also important to ensure that these contracts safeguard the benefits and entitlements of employees. Understanding these nuances not only facilitates accurate headcount estimates and budget forecasting but also aids in the preparation of documents for global expansion.

Employee rights and protections in Norway

In Norway, employees benefit from a robust set of rights and protections that contribute to a fair and secure work environment.

Written employment contract
Employees in Norway have the right to a written employment contract, outlining key terms and conditions of their employment, ensuring transparency and clarity.

Payslip
Employers are required to provide employees with a detailed payslip, documenting earnings, deductions, and other relevant financial information.

Workload revision meeting
In certain situations, employees have the right to request a workload revision meeting to discuss and potentially adjust their work assignments and responsibilities.

Right to receive compensation during a non-compete period
Employees subject to non-compete clauses have the right to receive compensation during the specified period when they are restricted from engaging in competitive activities.

Whistleblower protection
Whistleblowers are protected by law in Norway, safeguarding employees who report wrongdoing or illegal activities within their organizations from retaliation.

Protection from discrimination, harassment, and dismissal of some categories of employees
Norwegian law prohibits discrimination and harassment, and certain categories of employees, such as pregnant women and employees on parental leave, are protected from dismissal in specific circumstances.

Working environment committee
Establishing a working environment committee is mandatory in workplaces with a certain number of employees. This committee focuses on matters related to the work environment, health, and safety.

Overtime pay
Employees who work beyond regular hours are entitled to overtime pay, ensuring fair compensation for additional work.

Unemployment allowance
In the event of unemployment, eligible individuals are entitled to receive unemployment benefits, providing financial support during periods of job loss. These rights and protections underscore Norway's commitment to ensuring the well-being and fair treatment of its workforce, fostering a work environment that values transparency, equity, and employee welfare.

Types of visas in Norway

1. Work permit (skilled labor)
   Requirements for Norway work visa include:
   - Passport and a copy of all filled pages.
   - Cover letter from the Application portal or the signed application form.
   - Recent passport size photos (two) with a white background.
   - Proof of residence in Norway.
   - Duly filled Norwegian Immigration Authorities (UDI) Offer of employment form.
   - Documents related to educational background and work experience.
   - Applicant's CV.
   - Duly filled and signed UDI’s checklist.
   
   
2. Intra company transfer
   - Applicable for employees of international companies assigned to a Norwegian branch.
   - Requirements include:
   - Completion of a vocational training program of at least three years at the upper secondary school level.
   - Education or degree from a university/university college.
   - Proof of special qualifications acquired through long work experience, equivalent to vocational training.
   - Processing times vary based on the application type and channel.
   
   
3. Business visa (Schengen visa type C)
   - Norway encourages free trade and foreign investments, offering a business-friendly environment.
   - Schengen Visa is for business and family visits with a return to the country of residence.
   - Valid for a maximum of 90 days within a 180-day period, with no extension provision after entry.

These visa categories cater to different purposes, and meeting the specified requirements is crucial for a successful application. It's important to note that processing times can vary, and applicants should choose the appropriate channel for submission based on their specific circumstances.

Taxation in Norway

Employer taxation:
- Employers in Norway are required to file tax returns.
- The financial year for tax purposes ends on 31 December.
- Corporate tax is calculated at 22% of the taxable profit.
- Withholding tax (for non-residents):

- Dividends: 0% to 25%
- Interest: 0%
- Royalties: 0%

- Employer payroll taxes are imposed on employers based on the salary, wages, and benefits provided to employees.
- Contribution is based on employee salary and benefits, levied at 14.1%. It may be lower for sparsely populated regions.
- Children under 16 receive free medical treatment. Adults must pay a certain amount annually before being eligible for an exemption card, providing free medical insurance for life.
- Supplementary pension: 2% - 25.1%

Employee taxation:
- Income tax rates are applicable to both residents and non-residents.
- Yearly taxable income:

- NOK 180,800 - NOK 254,500: 1.9%
- NOK 254,501 - NOK 639,750: 4.2%
- NOK 639,751 - NOK 999,550: 13.2%
- Above NOK 999,550: 16.2%

- Under the Norwegian National Insurance Act, Norwegian citizens are entitled to a state pension from the age of 67.
- Some salaried employees, managers, and executives receive performance-based bonuses.

Understanding the intricacies of both employer and employee taxation is essential for businesses and individuals operating in Norway to ensure compliance with tax regulations and make informed financial decisions.

Salary in Norway

Norway operates without a universal minimum wage, relying instead on collective bargaining agreements to determine most wages. In cases where there is no collective agreement, the Norwegian Labor Inspection Authority (NLIA) steps in to set the minimum wage, particularly in industries like construction, agriculture, and transport.

As a general practice, workers typically receive a minimum of 140 Norwegian Kroner per hour, equivalent to approximately EUR 12 and USD 13. It's worth noting that all wages regulated by the NLIA are higher than this minimum amount. In global assessments, Norway secured the seventh position in the 2023 World Happiness Report and ranked ninth in productivity among nations. This dual recognition emphasizes the correlation between reduced costs, increased efficiency, and the positive impact on an employer's bottom line. Norway's approach to balancing economic success with employee well-being sets it apart on the global stage.

Paid leave entitlements in Norway

In Norway, employees are entitled to various leave benefits, each governed by specific regulations.

Annual leave entitlements, as defined by the Annual Holidays Act, are contingent on both age and the type of standard workweek. For employees under 60, the allocation is 21 days for a 5-day workweek and 25 days for a 6-day workweek, with compensation set at 10.2% of basic pay. In contrast, employees aged 60 and above enjoy an extended entitlement of 26 days for a 5-day workweek and 31 days for a 6-day workweek, with compensation elevated to 12.5% of basic pay. Collective agreements may further modify these entitlements, granting employees under 60, 25 days (5-day workweek) and 30 days (6-day workweek) at 12% of basic pay, while those aged 60 and above receive 30 days (5-day workweek) and 36 days (6-day workweek) at 14.3% basic pay.

Sick leave provisions allow for up to 16 days with full pay. Additionally, a sickness benefit covering a period of up to one year is provided, calculated based on the average salary of the last three calendar months. In the event of illness during a scheduled vacation, employees can claim sick days, supported by the submission of medical proof, thus preserving their allocated vacation days.

Overtime regulations in Norway

According to the Working Environment Act (WEA) in Norway, the standard workweek spans from Monday to Saturday, with Sundays and public holidays excluded. The maximum allowable weekly limit is set at 40 hours per seven days, with a cap of nine hours in any 24-hour period. However, in practice, weekly working hours typically do not exceed 37.5, often determined by collective bargaining agreements.

Working during the night or on Sundays is generally restricted unless the nature of the work necessitates it. In such cases, the weekly hours are typically limited to 36 to 38. No specific legal provisions address special compensation for night work, which is defined as taking place between 21:00 and 6:00. Employees working on Sundays are entitled to days off the following Sunday and weekend.

Overtime, permitted only under exceptional circumstances, is defined as any hours worked beyond the established weekly limits, up to 13 hours per day and 48 hours per week, according to the WEA. Under collective agreements, overtime is any hours worked beyond the agreed-upon amounts in individual contracts and is generally restricted to 20 hours per seven days. With the employee's agreement, total hours, including overtime, can extend up to 16 hours per day. The Norwegian Labor Inspection Authority (NLIA) may allow overtime work up to 25 hours per seven days and 400 hours per 52 weeks upon the employer's application.

Compensation for overtime, as mandated by law, must be at least an additional 40% of the hourly pay rate. In collective agreements, compensation may not fall below this rate and is often higher. An alternative compensation for overtime is time in lieu, where each hour of overtime is offset by an equivalent hour of time off.

Under collective agreements, work on Sundays and any of Norway's 12 public holidays is compensated at 100% of the hourly wage. Work on May 1 (Labor Day) and May 17 (Constitution Day) is compensated with an additional 50% pay, provided they are not Sundays or coincide with other public holidays.

Setting up payroll in Norway

To effectively establish payroll and navigate taxation in Norway, understanding the rules, which can vary across different categories, is crucial. The initial and foremost decision revolves around whether you intend to employ foreign professionals or locals.

As a foreign company, compliance with local tax laws, encompassing income tax, business tax, withholding tax, employee compensation insurance, social security costs, and more, is paramount. Two primary approaches can be considered:

1. In-house payroll management
   - Establishing an in-house team to handle payroll operations in Norway.
   - Requires a thorough understanding of local regulations and ongoing compliance efforts.
2. Payroll outsourcing
   - Opting for the services of payroll outsourcing in Norway.
   - This approach not only simplifies payroll management but also ensures comprehensive adherence to Norwegian laws.

Choosing the right strategy depends on factors such as the scale of operations, familiarity with local regulations, and the desire for streamlined compliance. Outsourcing payroll can offer efficiency and expertise, allowing companies to focus on their core activities while ensuring accurate and compliant payroll operations in Norway.

Statutory benefits in Norway

In Norway, employees are entitled to various mandatory benefits that form an integral part of the country's employment framework. These include:

Healthcare coverage
Employees in Norway have access to comprehensive medical coverage. This ensures that individuals can receive necessary medical care without shouldering the full financial burden.

Additional pension provisions
Supplementary pension benefits are a statutory component of the employment landscape in Norway. This provides employees with financial support beyond the basic pension, contributing to their long-term financial security.

Occupational injury insurance
Norwegian labor laws mandate work injury insurance, offering protection to employees in case of injuries sustained during the course of employment. This coverage is designed to address medical expenses and potential income loss resulting from work-related injuries.

Compulsory medical assessments
Employees may undergo mandatory medical examinations as part of the employment process. These assessments aim to ensure the well-being of employees and may be conducted periodically to assess fitness for specific job roles.

These statutory benefits underscore Norway's commitment to safeguarding the welfare and rights of its workforce, promoting a comprehensive and supportive work environment.

Voluntary benefits in Norway

Work from home
Many employers in Norway offer the flexibility of remote work arrangements, allowing employees to balance professional responsibilities with personal needs.

Life insurance
While not mandatory, life insurance is a common voluntary benefit that employers may provide to enhance financial security for employees and their families.

Private health insurance
Some companies offer private health insurance plans as an additional benefit, providing employees with access to specialized healthcare services and coverage beyond the public system.

Stock options
Stock options are a non-mandatory incentive that companies may offer, allowing employees the opportunity to purchase company shares at a predetermined price, potentially benefiting from the company's performance.

Free meals
Certain workplaces provide free meals or subsidized dining options as an extra perk, contributing to a positive work environment.

Paid relocation
Companies may extend financial support or cover relocation expenses for employees who need to move for work-related reasons, facilitating a smoother transition.

Additional payment during parental leave
Some employers go beyond statutory requirements and offer additional financial support to employees during parental leave, acknowledging the importance of work-life balance.

Gym membership
Offering gym memberships is a common non-mandatory benefit, promoting employee well-being and a healthy lifestyle.

Flexible working hours
Flexible work hours provide employees with the freedom to adjust their schedules, promoting better work-life integration.

These non-mandatory benefits reflect the commitment of employers in Norway to create a positive and attractive workplace, fostering employee satisfaction and well-being.

Probation period and termination policies in Norway

An employer can legally terminate an employee in the following situations:
- economic reasons (such as redundancy),
- personal reasons (such as poor performance or gross misconduct),
- mutual agreement through the signing of a termination contract.

If there is a temporary need to reduce the workforce, the employer may implement temporary layoffs. In the event of a dispute regarding termination, the employee may continue in their position until the courts have reached a legal decision on the matter. While Norwegian law does not specifically mandate severance pay, it is a customary practice to include it as part of a termination agreement.

The standard probationary period for employees in Norway is six (6) months. Upon successful completion of the probationary period, employees become eligible for benefits and entitlements. It is essential to explicitly outline the details of the probationary period, including its duration and the subsequent benefits, in the employment agreement in Norway. In the event of either the employee or the employer deciding to terminate the employment contract, written notice must be provided to the other party. These notice periods are crucial components of the termination process and should be clearly defined in the employment contract to ensure transparency and compliance with Norwegian employment regulations.

Distinguishing between contractors and full-time employees

The classification of contractors and full-time employees is determined by the following criteria:

1. Full-time employment:
   - Characterized by an established employment relationship with fixed working hours.
   - Involves a predetermined monthly compensation.
   - Implies that the employer directs the person's work and sets a notice period.
   - Companies seeking to hire full-time employees must meet the criteria of a Norwegian employer.
   - Taxes for full-time employees are deducted by the employers from their paycheck, with the employee's tax generally amounting to 14.1% of their salary.
2. Contractors:
   - Identified when work is carried out under the contractor's name, at their discretion, and at their own risk.
   - Compensation may be reduced for underperformance, and contractors typically use their equipment at their premises.
   - The tax liability for contractors is 18% of their income.
   - Contract employees are often engaged for short-term projects.

Understanding these distinctions is crucial for both employers and individuals to ensure compliance with Norwegian employment regulations and tax obligations based on the nature of the working relationship.

What is an EOR (Employer of Record)?

The EOR service consists of outsourcing the formal employment of your employee in another country. With this solution, you do not have to build a legal structure in the new market. You pay a monthly subscription for the use of the service, and your employee is legally employed in another country. The EOR service covers administrative activities, payroll management, taxes, insurance and other employee benefits.

EOR is now favoured by multinational companies because it directly helps them save costs and time and reduce the risk of operating in the local market. The EOR entity is responsible for complying with regulatory and legal requirements related to employment, immigration, payroll, but has no management role in relation to the employee's position. Therefore, for your company, employment in the EOR model is viable from a strategic, financial and operational point of view. Especially in the initial phase of developing your presence in a new market.

Expanding into new markets requires three key elements: time, cost and knowledge. The complexity of global, regional and local regulations requires a trusted partner like Uniqorm to break down barriers to global expansion and ensure successful revenue growth.

What is the difference between PEO and EOR?

A Professional Employer Organization (PEO) is an entity that collaboratively manages employee-related responsibilities and payroll with your company. In contrast to Employer of Record (EOR) services, where the outsourced company bears the entire responsibility of compliance management, a PEO operates in partnership with your business.

The benefits of hiring remote workers in Norway

Norway boasts a highly educated workforce, particularly among individuals aged 25 to 34, who surpass the OECD average of 39% in tertiary education, according to the 2022 report. Additionally, the country holds an impressive seventh position on the 2022 Global Talent Competitiveness Index, a key metric in the World Economic Forum's comprehensive ranking of 132 countries based on talent readiness, education, and innovation.

The nation's strong emphasis on STEM education has cultivated an exceptionally skilled workforce. As of 2020, women constituted 55% of all scientists and engineers in Norway, a higher percentage than any other European country. This commitment to gender diversity in STEM is further supported by Innovation Norway, the government's arm for venture funding and innovation program development, which actively promotes the tech sector.

Norway's remarkable transition from being the world's eighth-largest oil exporter to emerging as a technological hub with explosive growth underscores its ongoing expansion in the global marketplace. The cost-effectiveness of hiring an employee in Norway, approximately 1.27 times their base salary, positions it as a valuable investment for foreign employers.

A notable advantage is that hiring in Norway does not necessitate permanent establishment status, resulting in reduced costs for global hiring initiatives. Leveraging an Employer of Record (EOR) platform further enhances cost-effectiveness, as foreign employers typically incur taxes only on specific payments, such as service or commission fees. Therefore, EOR stands out as one of the most economical approaches to global hiring, making it an attractive option for businesses seeking to tap into Norway's skilled workforce and innovative environment.

Selecting the appropriate Employer of Record for your business

Choosing the right Employer of Record (EOR) for your business involves careful consideration of various key factors. Firstly, it is essential to ensure that the selected EOR has the legal authorization to operate in Norway, taking into account the geographic coverage necessary for your global hiring needs.

In addition to legal compliance, the suite of employment services offered by a competitive EOR plays a crucial role in the decision-making process. A comprehensive set of services should cover vital aspects such as hiring, onboarding, global payroll management, benefits administration, and HR management.

The reputation of the EOR is another pivotal aspect to evaluate. Prioritize EORs with a proven track record and relevant experience. Understanding their past work and local expertise is essential, as it contributes to the overall value they bring to your business.

Cost considerations are paramount in the decision-making process. Opt for an EOR with transparent and reasonable pricing, ensuring that the services provided align with the value they bring to your business.

Flexibility is also a key factor to look for in an EOR. The ability to offer customized employment solutions tailored to meet the specific needs and requirements of your business adds significant value to the partnership.

In summary, foreign employers should select an EOR that provides cost-effective, reliable, and compliance-centric employment solutions. This strategic choice empowers businesses to confidently and seamlessly navigate global expansion with trust and ease.

EOR services in Norway

Expanding into new markets requires three key elements: time, cost and knowledge. The complexity of global, regional and local regulations requires a trusted partner like Uniqorm to break down barriers to global expansion and ensure successful revenue growth.

We offer a service for the employment and tax settlement of your employees in Norway. Uniqorm will handle your HR and payroll matters in Norway, local tax and compliance and benefits administration. This allows you to focus on growing your business.

Trusted by: Create your team abroad with our help.

We offer an easy and fast way to hire employees or settle accounts with contractors in Norway. Use our international corporate infrastructure and expertise to avoid wasted time, save costs, and reduce the risks that are usually associated with going it alone. Pay your employees in the local currency, take care of their fringe benefits, medical care and pension insurance.

We are a leader in EOR services in the Norwegian market. Order the service now Employ an employee in Norway without setting up a company there. You will avoid additional costs, wasted time and reduce business risks. This will allow you to focus on developing your business.

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Frequently asked questions

1. What are my options if I want to hire a worker in Norway?
There are generally four ways to employ people across borders, but not all are legal or practical. Here's an overview of each method of employing a worker in Norway, along with potential drawbacks.

I. HQ country employment & payroll:
- The person is employed and paid directly by the company's HQ entity while in Norway.
- Cons: This may seem appealing, but it is generally not legal in the long term if the person is not a tax resident in the HQ country.

II. Independent contractor agreements:
- Individuals are registered locally as sole traders or limited liability company owners in Norway and invoice for their work.
- Cons: In Norway, this is not a compliant or legal way to engage full-time workers, leading to challenges in attracting and retaining talent.

III. Direct local employer setup:
- The company establishes itself as a fully-compliant local employer, often involving setting up a local entity and tax registration.
- Cons: Expensive, time-consuming, and complex, with uncertainties regarding evolving obligations and costs over time.

IV. Employment through a local entity for employment/professional employer
organization:
- Employment is handled by a specialized company on behalf of customer companies, with the employee providing services for the client company.
- Cons: Ongoing costs may be higher than direct employment, and there are certain limitations associated with this setup.

2. How long does it take to set up a company in Norway?
Setting up a local company in Norway is relatively straightforward. However, the complexity arises after the initial setup when monthly payroll calculations, tax filings, benefit extensions, and compliance with changing rules and regulations become necessary.

3. Can I employ people as independent contractors in Norway?
While some employers hire remote workers as independent contractors, it is not recommended. Treating individuals providing full attention to your company in Norway as independent contractors can breach Norwegian employment laws, leading to potential fines for various benefits. Working with independent contractors also denies individuals the protections afforded by local employment laws.

4. What does HR compliance mean in Norway, and why does it matter?
HR compliance in Norway involves ensuring that policies and procedures respect all applicable laws and regulations regarding employment and work practices. Complying with Norwegian labor law is crucial for running your business correctly, minimizing the risk of liabilities, and safeguarding employee rights. This includes adherence to local labor laws, sick leave and illness benefits, annual leave, minimum wage, tax credits, and working hours regulations.

5. How much does it cost to employ someone in Norway?
In addition to the gross salary offered, certain costs are associated with employing a worker in Norway. Employers must make social security and supplementary pension contributions based on each employee's total taxable remuneration monthly. An online calculator tool can provide exact percentages and amounts based on the planned salary.

6. What does Employer of Record mean in Norway?
While the typical Employer of Record model doesn't exist in Norway, the employing organization can establish a company explicitly for employing workers. In this setup, the employing organization is responsible for various aspects, including pre-employment requirements, compliance with Norwegian labor law, informing employees about benefits, providing a locally compliant employment contract, processing local payroll, filing tax returns, issuing payslips, and managing salary payments to local tax authorities. Customers are responsible for sourcing and recruiting workers, day-to-day management, and following guidance on employment and HR best practices.

7. Who is responsible for filing and paying employees' taxes and social insurance contributions in Norway if employing through a local legal employer?
Boundless, as the Employer of Record in Norway, files all pertinent taxes and contributions related to compliant employment on behalf of customers. This includes handling tasks such as payroll processing, tax filings, and issuing payslips to employees.

8. Do employees get all their rights and benefits when employed through a separate employing entity in Norway?
Employees locally employed through an Employer of Record receive full employment rights and benefits specified in Norwegian employment law. This includes a compliant employment contract, statutory maternity leave, holiday pay, parental benefits, tax credits, and other entitlements.

9. What taxes do I need to pay in Norway?
Both employers and employees in Norway are required to pay taxes. Employers make social security and pension contributions, while employees contribute to social security and pay income tax. A salary breakdown calculator can provide a clear overview of both employee and employer taxes based on the planned salary.