EMPLOYER OF RECORD IN NORWAY
Norway is known as one of the best countries to expand a business in. People of Norway are highly educated and hard working, living standards in Norway are one of the highest in Europe.
Employer of Record service can help your company to expand without a legal entity in this country. This solution can also help to save money and time.
Table of contents:
- What is an Employer of Record?
- Pros and cons of hiring in Norway
- Details of employing in Norway
- Signing a contract
- Taxes
- Minimum wage
- Working hours and working overtime
- Holidays and paid time off
- Health insurance
- Employment costs
- mployee’s rights
What is an Employer of Record?
Employer of Record (EOR) is one of the simplest ways to hire new employees in a new country without a legal entity. It allows your company to expand into the whole world and reduce some costs. All the formalities become the external entity’s responsibility, but the main company makes all decisions. EOR is also known as a time saving solution, when it comes to expanding a business to a new country.
Pros and cons of hiring in Norway
Norway is known as one of the best places to run your own business. This country has high GDP per capita and the highest education expenses. As a result Norwegians are one of the most skilled and professional employees in the world. High costs of employing and taxes in Norway may seem like a disadvantage of expanding a business to this country, but all things considered it is highly beneficial for every company.
Norway is not a member of the European Union, but it belongs to the EEA - European Economic Area. That is also beneficial for a company, because it simplifies formal procedures. Also citizens of EU and EEA member states can move to Norway and work there without any formalities. Work and residence permit is required when the employee is not an EEA member state citizen.
You should get familiar with Norwegians' lifestyle before hiring them. They prefer talking directly and rarely start small talk. They are punctual and they value their personal space and home life.
Details of employing in Norway
Signing a contrach
Every employee in Norway has a right to get a written employment contract within a month after getting a job, even if it is a temporary employment. Contract must contain employee’s and employer’s personal data, state the employee’s responsibilities and duties, working hours, the amount of paid time off, notice period, benefits and the employee's salary. Payment method and timing also must be included in the contract. Usually employees get paid once a month. Other important information, that every contract should contain, is the location of work and date of commencement.
Probation period can be max. 6 months long. When the probationary period is ending, employers must give 2 weeks’ notice to employees before the end of a contract. It is not necessary when the contract is going to be extended for another length of time.
Norway law allows temporary employment, but under some circumstances. Most contracts are signed permanently. Employment becomes permanent when it doesn’t meet the requirements of temporary employment. Temporary employment may last no longer than a year.
Employer can dismiss the employee when the employee’s work is below the standards of the company. The information of termination must be written and given to the employee in person. Employee can appeal against the employer's decision if he considers the reason for dismissal as unreasonable. Basic notice period is 1 month long. It can be longer for employees, who had worked for the company for a long time. Normally it extends to 3 - 6 months. Employees can be dismissed without notice when their behaviour is unacceptable. Employee also can submit a written resignation to the employer.
Taxes
Every employee in Norway is obliged to pay taxes. These are three basic taxes: ordinary income tax (22% of gross wage income), national insurance contribution (8.2%) and pension contribution (5.1%). Another important tax is VAT, which rate is 25%.
A person who is self-employed must pay the self-employment income contribution which is 11.4% of gross wage income.
Taxes paid for labour and pension income have progressive rates (0%-16.2%). The tax rake depends on the amount of income. Capital income has a flat tax rate. That's because of a dual income tax.
Minimum wage
Minimum wage in Norway is set by collective agreements, not by the government. These agreements are made by the country's unions. They decide about that taking into consideration how difficult the job is, employee’s age and skills that are necessary for this job.
Working hours and working overtime
In Norway employees usually work for 40 hours per week (8 hours a day). Some collective agreements shorten this time to max. 37,5 hours per week. Employees can work overtime up to 10 hours a week, 200 hours per 52 weeks. Working overtime must be paid at a rate of 140% of the regular employee’s income.
Employees must have a break for at least 11 hours before the next working day and at least 35 hours break before next week.
Holidays and paid time off
Employees in Norway can get at least 3 weeks of paid time off. Many collective agreements extend this to a minimum 5 weeks. Employees can take three weeks leave between the 1st June and the 30th September.
When the employee gets sick he can take 3 days off work. When it takes longer to go back to work, employee must present a medical certificate. Employee get paid for the first 16 days of their sick leave by the employer. After that time The National Insurance Scheme pays for that.
At the time of public holidays in Norway employees get paid time off.
Female employees have the right to get paid time off during pregnancy. It can take up to 12 weeks before childbirth and minimum 6 week after childbirth. Also female employees can take up to 59 weeks of paid maternity leave at a rate of 80% of the regular employee’s income. A father has the right to get two weeks of unpaid time off to help the mother.
Health insurance
Everyone in Norway has the right to healthcare. When they decide to go to public hospitals they get healthcare for free. Private healthcare is fully paid for by the patient.
Norway law requires every employee to have occupational injury insurance. When a work related injury happens, the employee has to report it to the Norwegian Labour and Welfare Administration and has a right to receive compensation.
Employment costs
The main employment cost is a social security contribution. It is 14.1% of an employee's gross wage income. Also they have to provide necessary training for their employees.
Employee’s rights
Discrimination based on gender, age, race, religion, sexual orientation or political opinions is prohibited.
Benefits that an employee can get, depend on the employee’s achievements, general work performance.
