EOR - Employer of Record
Norway in FocusSituated in northern Europe, Norway is a Nordic country bordered by Finland, Russia, Denmark, and Sweden. According to the World Bank, Norway holds the distinction of having the fourth-highest per capita income on a global scale.
Population: 5.3 million
Currency: Norwegian Krone (NOK)
Official languages: Norwegian, Sámi
GDP: $350 billion (2020)
Standard working hours: 37.5 - 40 hours
Public/bank holidays: 12 days
Percentage of remote workers: 15.8% of the population
Minimum hourly salary: No legally mandated minimum
Tax year: January 1st - December 31st
Date format: DD/MM/YYYY
Employment in Norway: Key ConsiderationsIn the realm of employment in Norway, the country's labor laws extend to both its citizens and foreign nationals, with certain nuances differentiating their entitlements. Understanding these distinctions and other fundamental aspects of Norway's employment regulations is crucial.
While Norwegian employment laws may initially seem intricate, they align with the norms observed in many other countries. To navigate potential complexities and facilitate the establishment of a local office, it is advisable to collaborate with a knowledgeable local payroll provider. Such a partner can provide valuable insights into Norway's labor laws, addressing unique considerations for both local and foreign workers.
Norway's public holidays 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 typically disbursed before the holiday.
The Working Environment Act in Norway prohibits employee discrimination based on age, gender, race, belief, political opinions, religion, social, national/ethnic origin, and sexual orientation. Employers are strictly forbidden from discriminating against both part-time and full-time employees.
Types of visas in Norway1. Work permit (skilled labor):
- 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.
- 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, providing 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 serve different purposes, and meeting the specified requirements is essential 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 NorwayTax obligations for employers:
Norwegian employers must submit their tax returns, with the fiscal year concluding on December 31st. Corporate tax is computed at 22% of the taxable profit. For non-residents, withholding tax rates vary:
- Dividends: 0% to 25%
- Interest: 0%
- Royalties: 0%
Employers also face payroll taxes based on employees' salaries, wages, and benefits. The contribution, set at 14.1%, may be reduced in sparsely populated regions. Medical treatment for children under 16 is free, while adults must make an annual payment before qualifying for a lifetime exemption card, granting free medical insurance.
Additional contributions include supplementary pension fees ranging from 2% to 25.1%.
Tax considerations for employees:
Both residents and non-residents are subject to income tax rates based on 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, citizens are entitled to a state pension at 67. Certain employees, such as salaried workers, managers, and executives, may receive performance-based bonuses.
A comprehensive understanding of both employer and employee taxation is crucial for businesses and individuals in Norway, ensuring adherence to tax regulations and facilitating well-informed financial decisions.
Establishing a subsidiary in NorwayBefore commencing operations in Norway, it is crucial to consider the following elements:
1. Business considerations
Several factors require assessment before establishing a business in Norway, including:
- Business type and industry
- Existing trade relationships and agreements
- Nationality of individuals and headquarters
Different cities in Norway come with distinct laws, expenses, and resources. Seeking guidance from a legal advisor is essential to navigate these variations.
Norwegian is the predominant language, spoken by 95% of the population, with English closely following at 90%.
Norway legally recognizes various business forms based on the organization's size and minimum share capital:
I. Private Limited Liability Company - Aksjeselskap (AS): Commonly used for small and medium-sized businesses. Larger companies employ this entity to establish a subsidiary in Norway. It necessitates a minimum of two directors, including a European/Norwegian, with a mandatory minimum paid capital of NOK 30,000.
II. Norwegian Public Limited Company (ASA): This company must be listed on the stock market, and significant decisions are made by shareholders during the general meeting.
III. Sole Proprietorship: An incorporation where an individual assumes liability for the business. There are no separate laws governing sole proprietorships.
IV. Partnership: Governed by the Partnership Act 1985, a partnership involves a commercial business established jointly by two or more partners, one of whom has unlimited personal liability for the business's total obligations.
V. Branch: A business establishment by a foreign company, managed locally and employing personnel from Norway.
Employment agreements in NorwayIn Norway, while verbal contracts are legally binding and enforceable, they are permissible only for employment periods lasting less than one month. According to the Working Environment Act (WEA), contracts for longer employment durations must be documented in writing. Furthermore, all employment contracts are required to include a probationary period, with a maximum duration of six months.
Although fixed-term contracts are allowed under stringent conditions, indefinite contracts are more commonly favored in Norway. If the nature of the work does not justify fixed-term employment based on specific criteria, the employment relationship automatically transitions to permanent.
Seniority holds significant importance, as both permanent and fixed-term employees may enjoy increased benefits, including annual leave and severance pay. For foreign employers, it is essential to align contract durations with the specific requirements of the work. Additionally, these contracts should be crafted to safeguard the benefits and entitlements of employees. A clear understanding of these nuances not only facilitates accurate headcount estimates and budget forecasting but also assists in preparing documentation for global expansion.
Recruitment practices in NorwayEmployers in Norway have a responsibility to conduct background checks on potential hires, covering aspects such as previous work history, education, and business interests. As per Norwegian employment contract laws, it is mandatory for employers to draft a written contract for newly hired employees within one month of their start date. These contracts must explicitly outline key details, including job description, compensation, benefits, working hours, provisions for overtime, and a termination clause.
For individuals seeking employment opportunities in Norway, various platforms can be explored:
1. Arbeidsplassen Website:
- Offers a comprehensive list of job openings.
- Note: The website is available only in the Norwegian language.
- A top website for job searches available in various languages.
- Showcases job listings that may not be found on other platforms.
4. Finn Website:
- Houses a majority of job listings, although the site is in Norwegian.
Salary structure in NorwayNorway differs from some countries by not having a universal minimum wage; instead, wages are primarily determined through collective bargaining agreements. In cases where such agreements are absent, the Norwegian Labor Inspection Authority (NLIA) intervenes, especially in sectors like construction, agriculture, and transport, to establish minimum wages.
As a standard, workers usually receive at least 140 Norwegian Kroner per hour, approximately equivalent to EUR 12 and USD 13. It's important to note that all wages set by the NLIA surpass this minimum threshold.
The median salary in Norway is USD 55,000, approximately NOK 573,329, exceeding the global average of USD 51,480 in the United States. Norway consistently ranks among the top countries globally in terms of average salaries. Notably, this achievement is realized with fewer working hours compared to many other nations, showcasing the country's commitment to work-life balance and overall well-being.
In international assessments, Norway secured the seventh position in the 2023 World Happiness Report and ranked ninth in productivity among nations. This dual recognition underscores the connection between reduced costs, increased efficiency, and positive outcomes for employers. Norway's distinctive approach to harmonizing economic success with employee well-being distinguishes it on the global stage.
Setting up payroll in NorwayEffectively establishing payroll and navigating taxation in Norway requires a thorough understanding of the rules, which can vary across different categories. The first crucial decision revolves around whether you plan to employ foreign professionals or locals.
For foreign companies, compliance with local tax laws, including 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 deep 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.
The choice between in-house payroll management and outsourcing 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.
Overtime regulations in NorwayIn Norway, the Working Environment Act (WEA) establishes guidelines for the standard workweek, which spans from Monday to Saturday, excluding Sundays and public holidays. The maximum allowable weekly limit is set at 40 hours over seven days, with a cap of nine hours in any 24-hour period. However, practical weekly working hours typically hover around 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, weekly hours are usually limited to 36 to 38. Specific legal provisions do not address special compensation for night work, defined as occurring 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 established weekly limits, up to 13 hours per day and 48 hours per week, according to the WEA. Collective agreements define overtime as hours worked beyond agreed-upon amounts in individual contracts, typically 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 approve 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 cannot 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.
Employee rights and protections in NorwayNorwegian employees enjoy a robust set of rights and protections designed to foster a fair and secure work environment.
1. Written employment contract:
- Employees have the right to a written employment contract, outlining key terms and conditions for transparent and clear understanding.
- Employers are obligated to provide detailed payslips, documenting earnings, deductions, and other pertinent financial information.
3. Workload revision meeting:
- In specific situations, employees can request a workload revision meeting to discuss and potentially adjust their work assignments and responsibilities.
4. Right to receive compensation during a non-compete period:
- Employees under non-compete clauses have the right to receive compensation during the specified period when engaging in competitive activities is restricted.
5. Whistleblower protection:
- Whistleblowers are legally protected in Norway, safeguarding employees who report wrongdoing or illegal activities within their organizations from retaliation.
6. Protection from discrimination, harassment, and dismissal of certain categories of employees:
- Norwegian law prohibits discrimination and harassment, with specific categories of employees, such as pregnant women and those on parental leave, protected from dismissal in certain circumstances.
7. 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.
8. Overtime pay:
- Employees working beyond regular hours are entitled to overtime pay, ensuring fair compensation for additional work.
9. Unemployment allowance:
- Eligible individuals are entitled to receive unemployment benefits in the event of job loss, providing financial support during periods of unemployment.
These rights and protections underscore Norway's commitment to ensuring the well-being and equitable treatment of its workforce, creating a work environment that values transparency, fairness, and employee welfare.
Statutory benefits in NorwayIn Norway, employees are entitled to various obligatory benefits that constitute an essential component of the country's employment structure. These encompass:
1. Healthcare Coverage
Norwegian employees enjoy access to extensive medical coverage, ensuring that they can receive essential medical treatment without bearing the full financial burden.
2. Supplementary Pension Provisions
Additional pension benefits are a mandated element of Norway's employment landscape. This offers employees financial assistance beyond the basic pension, contributing to their long-term financial security.
3. Occupational Injury Insurance
Norwegian labor laws require work injury insurance, providing protection to employees in the event of injuries sustained during employment. This coverage addresses medical expenses and potential income loss resulting from work-related injuries.
4. Mandatory Medical Assessments
As part of the employment process, employees may undergo compulsory medical examinations. These assessments aim to guarantee the well-being of employees and may be conducted periodically to assess fitness for specific job roles.
These legally mandated benefits highlight Norway's dedication to safeguarding the welfare and rights of its workforce, fostering a comprehensive and supportive work environment.
Voluntary benefits in Norway- Remote work opportunities - Numerous employers in Norway provide the option of working remotely, enabling employees to manage their professional responsibilities while addressing personal needs.
- Life insurance - Though not obligatory, life insurance is a prevalent voluntary benefit offered by employers to enhance financial security for employees and their families.
- Private health insurance - Certain companies extend private health insurance plans as an additional benefit, granting employees access to specialized healthcare services beyond the public system.
- Stock options - Stock options are a discretionary incentive that companies may provide, allowing employees the chance to purchase company shares at a predetermined price and potentially benefiting from the company's performance.
- Free meals - Some workplaces offer complimentary meals or subsidized dining options as an additional perk, contributing to a positive work environment.
- Paid relocation - Companies may provide financial support or cover relocation expenses for employees relocating due to work-related reasons, facilitating a smoother transition.
- Additional payments during parental leave - Certain employers exceed statutory requirements by offering extra financial support to employees during parental leave, recognizing the importance of work-life balance.
- Gym memberships - Providing gym memberships is a common non-mandatory benefit, promoting employee well-being and a healthy lifestyle.
- Flexible working hours - Flexible work hours afford employees the freedom to adjust their schedules, fostering better work-life integration.
These discretionary benefits underscore the commitment of employers in Norway to create a positive and appealing workplace, prioritizing employee satisfaction and well-being.
Paid leave benefits in NorwayIn Norway, employees enjoy various leave entitlements, each subject to specific regulations.
Annual leave benefits, outlined in the Annual Holidays Act, depend on both age and the standard workweek. For those under 60, the allocation is 21 days for a 5-day workweek and 25 days for a 6-day workweek, with compensation at 10.2% of basic pay. Employees aged 60 and above receive an extended entitlement of 26 days (5-day workweek) and 31 days (6-day workweek), with compensation increased to 12.5% of basic pay. Collective agreements may modify these entitlements, offering 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% of basic pay.
Sick leave provisions permit up to 16 days with full pay, and a sickness benefit covering up to one year is provided, calculated based on the average salary of the last three calendar months. In case of illness during scheduled vacation, employees can claim sick days, supported by medical proof, preserving their allocated vacation days.
Parental leave, aimed at promoting work-life balance, is shared between parents. It provides 100% pay for 49 weeks or 80% pay for 59 weeks, reflecting Norway's dedication to fostering a flexible and employee-friendly work environment.
Probation period and termination policies in NorwayAn employer in Norway has legal grounds to terminate an employee in the following situations: economic reasons (such as redundancy), personal reasons (such as poor performance or gross misconduct), or through mutual agreement via the signing of a termination contract.
In cases of a temporary need to reduce the workforce, the employer may implement temporary layoffs. Should a dispute arise regarding termination, the employee can continue in their position until the courts reach a legal decision on the matter. Although Norwegian law does not specifically require 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 crucial to explicitly outline the details of the probationary period, including its duration and subsequent benefits, in the employment agreement in Norway. In the event of termination by either the employee or the employer, written notice must be provided to the other party.
The notice period varies based on the employee's length of service:
- During the probationary period: 14 days.
- Less than five years of employment: 1 month.
- Between five and ten years of employment: 2 months.
- Ten years and above (for employees under 50 years of age): 3 months.
- Ten years and above (for employees over 60 years): 6 months.
These notice periods are integral aspects 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 employeesThe classification of contractors and full-time employees in Norway is based on the following criteria:
- 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 employers from their paycheck, with the employee's tax generally amounting to 14.1% of their salary.
- 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)?An Employer of Record (EOR) is a service that involves outsourcing the formal employment responsibilities of an employee in another country. This solution allows a company to avoid establishing a legal structure in a new market. Instead, the company pays a monthly subscription for the use of the EOR service, and the employee is legally employed in the target country. The EOR service encompasses various administrative activities, including payroll management, taxes, insurance, and other employee benefits.
Key features of the EOR service include:
1. Outsourcing employment formalities: The EOR entity takes on the legal responsibilities associated with employing an individual in a foreign country.
2. Subscription-based model: Companies pay a regular subscription fee for the EOR service, eliminating the need to set up a local legal entity.
3. Comprehensive coverage: EOR services cover a range of activities, including administrative tasks, payroll processing, compliance with local regulations, and management of taxes and insurance.
4. Cost and time savings: EOR is favored by multinational companies for its ability to save costs and time. It allows companies to enter new markets without the initial burden of establishing a legal presence.
5. Risk reduction: By outsourcing employment responsibilities to an EOR entity, companies can reduce the risks associated with navigating complex local regulations and compliance requirements.
6. Strategic and operational viability: EOR is considered strategically and operationally viable, especially in the initial phases of entering a new market, as it provides a streamlined and efficient approach to global expansion.
7. Limited management role: While responsible for employment-related legal and administrative tasks, the EOR entity typically does not have a direct management role in relation to the employee's position.
Overall, an EOR service, such as Uniqorm, serves as a trusted partner for companies looking to expand globally by handling employment-related complexities and ensuring successful revenue growth in compliance with local regulations.
How do PEO and EOR differ?A Professional Employer Organization (PEO) is an entity that jointly oversees employee-related duties and payroll alongside your company. Unlike Employer of Record (EOR) services, where the external company assumes full responsibility for compliance management, a PEO works in cooperation with your business.
The advantages of employing remote workers in NorwayNorway boasts a highly educated workforce, particularly among individuals aged 25 to 34, exceeding the OECD average of 39% in tertiary education, as per the 2022 report. Additionally, the country holds a commendable seventh position on the 2022 Global Talent Competitiveness Index, a significant measure 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.
Choosing the right Employer of Record for your businessSelecting the appropriate Employer of Record (EOR) for your business requires careful consideration of several key factors. Firstly, it is crucial to ensure that the chosen EOR has the legal authorization to operate in Norway, considering the geographic coverage necessary for your global hiring needs.
Beyond legal compliance, the suite of employment services offered by a competitive EOR plays a pivotal role in the decision-making process. A comprehensive set of services should encompass vital aspects such as hiring, onboarding, global payroll management, benefits administration, and HR management.
The reputation of the EOR is another critical aspect to assess. Prioritize EORs with a proven track record and relevant experience. Understanding their past work and local expertise is essential, contributing to the overall value they bring to your business.
Cost considerations are paramount in the decision-making process. Choose 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.
The Uniqorm EOR solutionIf you are looking for a service that will allow you to delegate the responsibility of dealing with taxes and hiring employees from Norway, we have something special for you.
What is the Employer of Record (EOR) service?
EOR is a revolutionary employment model that allows you to hire and manage employees who are abroad without having to create new legal structures. The workers formally belong to another company, which additionally takes care of all the formal issues related to them, such as:
- tax settlements;
- all administrative activities;
- employee benefits;
The EOR service is becoming more widely used by multinational companies as they expand their operations into more foreign markets. This model of employment has numerous benefits. It allows the company to reduce not only financial, but also time costs. The external entity will take care of all formalities related to immigration, employment and employees' salaries in Norway, while the company can devote its time to more important, urgent matters. It is worth emphasizing that in the EOR model the external company has only an executive function, which means that all decisions are still taken by the main company. By using this type of service your company does not lose its independence in any way.
When a company enters a new market, the biggest obstacle is usually insufficient knowledge of how it works. Instead of risking making numerous mistakes, a better solution is to work with specialists. Uniqorm, our partner company, is an expert in doing business in Norway. It has been trusted by dozens of satisfied customers. Uniqorm specializes in managing all HR and payroll issues, benefits administration and tax settlement in Norway.
By taking up cooperation with this company you can be rest assured about the tasks entrusted to them - they will take care of your employees as well as possible.
They trusted us:
1. How exactly does the EOR service partnership work:
2. You provide us with information about the employee.
3. Together we agree on the period of employment and the salary.
4. We take care of all the formalities in Norway, such as a visit to UDI, obtaining a Norwegian personal identity number and registration.
5. You provide us with information about your employee's working hours for the month.
6. Based on the data provided by you, we issue an invoice in PLN, according to the current exchange rate of the National Bank of Poland. After receiving a transfer from you, we send the remuneration to the employee in Norway. The times when entering foreign markets was synonymous with setting up a new company are long gone. Hand over some of your responsibilities to Uniqorm and gain time, reduce risk and save money.
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