Traditionally, Norwegian employees have enjoyed extensive rights and protection. Shortly after the two right-wing parties, Høyre and Frp, formed a government in Autumn 2013, they announced changes to the Working Environment Act. The government is now in the process of adapting the legislative amendments.
The amendments include:
- expanded powers to hire employees on temporary contracts; - an increase in the retirement age; - extended limits for ordinary working hours and overtime work (on a daily, weekly and monthly – but not yearly – basis); and - extended limits for working on Sundays and public holidays.
The amendments are controversial, particularly the expansion of temporary appointments. Traditionally, Norway has had some of the strictest regulations worldwide regarding the hiring of temporary employees. The rule has been that, subject to specified limitations, all employees are employed permanently. However, the new legislation gives employers a general power to hire employees on temporary contracts of up to 12 months.
Existing temporary employment regulation
At present, temporary appointments are allowed only if certain specific and exhaustive conditions are fulfilled, as set out in Section 14-9 of the Working Environment Act:
"(a) when warranted by the nature of the work and the work differs from that which is normally performed in the undertaking, (b) for work as a temporary replacement for another employee, (c) for work as a trainee, (d) participants in labour market schemes arranged by or in collaboration with the Norwegian Labour and Welfare administration, (e) for athletes, coaches, refrees or other leaders within organized sports."
The first two points above are the most commonly used exceptions. All of the exemptions are interpreted strictly.
Proposed amendment on temporary employees
The government now plans to introduce general access to temporary employment contracts of up to 12 months. The rule will be the new Section 14-9(f): "for a period of up to 12 months. Such agreements may not comprise more than 15% of the labour force, but can at least comprise one employee (quota)."
The rule is thus limited with respect to quota regulations: only 15% of the labour force may be hired temporarily. Further, if the employer does not hire the employee permanently after the expiration of the period, it cannot hire a new temporary employee to conduct work of the same nature for a 12-month period. Thus, the limitations on this rule are quite extensive. The rule is most likely to affect small and medium-sized undertakings where there is uncertainty as to the need for labour, as it will allow such need to be tested for a period. In larger firms, the cost of abiding by the limitations of the rule will quickly weigh against the advantages of increased temporary contracts.
Reasoning and criticism
The government's justification for the amendments is that the Norwegian labour market is in need of more modern and flexible legislation, suitable to the existing employment scene. According to the government, the mendments will make it easier for people to find work, especially young people With little or no work experience.
Further, the new rules will ensure that employers can adapt quickly to market variations, such as an increase in demand for a product. The legislative changes will lower employers' thresholds for hiring, particularly in situations where the prospects are uncertain, a business or project is in a start-up period or the employer is unsure of the individual employee's productivity. Employer organisations have welcomed the new rules.
However, the amendments have been heavily criticised by labour organisations, the opposition parties and the labour inspectorates. They argue that the new legislative rules on temporary employees, together with other amendments, will undermine Norwegian traditions and create a inbalance between the employers and the employees' interests. Employment protection (ie, the right to be employed on a permanent basis) has been significantly reduced. The labour organisations note that the changes will not lead to more jobs, but rather will replace permanent positions With temporary ones.
The biggest opposition party in Norway, Arbeiderpartiet, has already stated that it would reverse the amendments if it came into power.
It is not yet clear in which direction the employment legislation is heading. There is no doubt that the new rules provide employers with broader access to temporary employment. However, the limitations on temporary employment are still strict and thus moderate the liberalisation considerably.
The government has stated that it will evaluate the amendments alongside representatives from the labour market in two years' time. At that time it should be easier to see whether the amendments have led to liberalisation and the effect on the labour market.
This newsletter was originally published on the ILO web page. ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription. Register at www.iloinfo.com.
Ole Kristian Olsby / 15.04.15
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