Employer of Record in Norway

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​​​​​​​​​​published on 26 April 2024 | reading time approx. 3 minutes

by Anniken Ramse

  
In Norway, the concept of EoR is little known, not clearly regulated by law and may have a limited chance of development due to political resistance to strong protection for permanent employees.

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Is the concept of EoR known in your country? Is the concept of EoR regulated by law in your country?

​There are very few, if any, Norwegian providers for EoR services. Foreign companies offering the service for Norway can be found. In our experience, there is no demand for EoR services from local companies. This could of course be due to the fact that the service is little known in Norway and the regulations on leasing of labour is quite strict. As there are several foreign companies offering the EoR service for Norway, there seems to bee a demand for the service among foreign companies. It is not known how the providers have organized themselves in order to be compliant with Norwegian law. However, checking in on some of the companies we have found, they are either offering only HR services in Norway, or they are registered as staffing or recruitment agencies.
  
The concept of EoR as such is not regulated by law. This is therefore a construction that will be considered as either
  • a subcontractor to their customer,
  • letting of labour or
  • a formal employment but the actual employer considered to be their customer.
  
We find it unlikely that an EoR provider will be considered to be a subcontractor, as we assume that the customer will define the work that will be performed (instruction right towards the employees) and will have the risk of the result of the work performed. The central service provided is labour, and not the result of the work performed.
  
Being considered as hiring of labour is more likely – in this case there is a set of regulation that must be followed. E.g., the EoR provider must be register at the Norwegian Labour Authority. There is also a principle of equal treatment governing the work conditions and salary for the hired staff, as such conditions need to be equal to the employees of the hirer. Furthermore, there is a specific prohibition on hiring of labour from staffing agencies for the construction business in certain areas of Norway. Staff may be hired from entrepreneurs provided that the staffing service is not the main activity of the entrepreneur’s business. 
  
In some cases, the customer of the EoR provider may be considered to be the actual employer. This may be the case if the customer is the only or one of very few customers of the provider, the customer is providing all equipment necessary to perform the work, etc.
    

​Is the EoR concept similar to temporary employment/labour leasing in your country?

There are obvious similarities to labour leasing, conf. above. Temporary employment might be considered to be the correct definition in some cases, depending on the agreement between the parties. Temporary employment is only legal under certain circumstances.
    

Special features of the activity within the framework of the EoR concept or labour leasing

Hiring of labour must be permitted in the area where the lender is operating.
  
Hiring of labour from staffing agencies is only permitted in the following cases:
  • Substitute work (for a person who is sick or on leave)
  • The lender has an agreement regarding hiring of labour with the union official in the company
  • There is a temporary need for specialized expertise within advising/consultancy
  • There is a need for health and medical personnel to ensure a secure operation of health- and care-services. 
  
An approval from The Norwegian Labour Inspection Authority for the economic employer's activity is required.
With respect to the limitation in time regarding employment, there is not a specific threshold, but there must be a “temporary need” for workers. The employee is entitled to the same conditions as employees working permanently for the lender.
    

​What are the special tax features of the EoR concept in your country​

The risk of establishing a permanent establishment cannot be excluded based on this concept. There is full identification between the lender and the work performed by hired labour. The assessment of whether the lender has a permanent establishment will be based on the work actually performed in Norway, even though the formal employment of the workers lies with a third party.
  
The double taxation treaty between Norway and Germany gives the taxation right to the country where the work is performed in cases of hiring labour, regardless of whether the ordinary requirements (also known as the 183 days rule) applies.
  

​​How do you anticipate the concept of EoR evolving in your country from your perspective?​

The shortage of skilled labour exists in Norway, mainly due to low unemployment rate. Traditionally the protection of the permanently employed is strong in Norway, and the concept of EoR will most likely meet resistance politically. However, several foreign companies seems to be offering this service outside of Norway. There might be a demand for the service so that a regulation of EoR as a separate legal concept might be brought to the fore in the future. However, the subject has not been raised and there are no signals that it will be raised in the near future.

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Thorsten Beduhn

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+49 911 9193 1915

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