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WORKING IN NORWAY

How Norway’s holiday pay rules are likely to change 

The Norwegian government has confirmed that it will work to amend the Holiday Act to allow workers to receive vacation pay during their first year of work. 

Published: 30 March 2023 11:22 CEST
Pictured are people running into the ocean.
The governemnt has said it will work to change the Holiday Act to bring it in line with EEA regulations. Pictured are people running into the ocean.

Norway’s holiday pay regulations will likely change to allow everyone at least four weeks of vacation pay in their first year of employment. 

“We want to map out alternative solutions where employees can get both holiday and holiday pay in the first year of work. The investigation will give us answers on how this can be implemented in practice,” State Secretary Maria Schumacher Walberg from the Ministry of Labour and Social Inclusion told the newspaper Aftenposten. 

Currently, the Holiday Act doesn’t entitle employees to holiday pay in their first year as an employee. However, the ESA, which is the EFTA’s monitoring body and ensures that EEA law is complied with, that Norway’s Holiday Act conflicts with EU regulations on work and employment. 

European regulations state that employees must be entitled to as least four weeks of paid holiday each year. 

Lise Lyngsnes Randeberg, leader of the Association of Norwegian Academics, told the paper that foreign workers who start working in Norway, new graduates in their first job, unemployed people entering working life and those returning from a long absence on unpaid leave or a stay abroad are some of those that lose out due to current laws. 

Norway’s Holiday Act currently has an accrual period for holiday pay. This means workers new to the workforce, or returning after an extended period away, need to work for a year to be eligible for holiday pay. During the holidays in Norway, workers get holiday pay instead of a salary. But to receive holiday pay, you must have earned it during the previous year. 

This means that you as an employee are only entitled to paid holiday in the first year if you start a new job on January 1st having worked in Norway the previous year.

If you want to take a holiday in the same year as accrual takes place, you will have the same right to holiday, but not with holiday pay.

Any changes to the Holiday Act, which entitles all workers to four weeks a year minimum, were likely to be introduced next year. 

READ MORE: What you need to know about holiday pay in Norway

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IMMIGRATION

Nordic countries urged to set common working from home rules

The Nordic countries should have common conditions on working from the place of residence, including working from home, to fulfil the objective of an integrated labour market, says a report by the region's Freedom of Movement Council.

Published: 25 September 2023 11:41 CEST
Nordic countries urged to set common working from home rules

The proposal is part of a series of recommendations to simplify tax agreements to facilitate free movement of people and make the region “the most integrated” in the world by 2030, as agreed by Nordic Prime Ministers.

The Freedom of Movement Council argues that the pandemic revealed the flaws in the current system, as a large proportion of cross-border workers had to operate from home, facing taxation in two countries, different tax levels and mounting bureaucracy.

“Now that more companies are open to their employees working from home, the current Nordic tax agreement just isn’t keeping up. I hope this analysis will pave the way for dialogue and that the end result will be simplification and less bureaucracy,” said Karen Ellemann, secretary-general of the Nordic Council of Ministers.

Internationally less known than EU free movement rules, the region has a special agreement on free movement of people that dates back to the 1950s.

Under the Nordic Passport Union, citizens can move within the region without travel documents or residence permits and enjoy more rights than those granted to EU citizens within the European Union. Non-EU residents, however, only partially benefit as they do not have the automatic right to work in another Nordic state.

The Nordic free movement area covers Denmark, Finland, Iceland, Norway, Sweden, the Faroe Islands and Åland. Greenland is not part of the Passport Union but is in practice subject to some of its provisions.

The Nordic governments set up the Freedom of Movement Council as an independent body to identify obstacles to this principle and propose how to remove them.

In an interview with The Local, chair Siv Friðleifsdóttir said the Council has identified over 100 barriers to free movement and prioritised 30. The tax system is one of them.

“The Nordic countries currently have several agreements that regulate cross-border and remote working. Common to all of them is that they’re based on the countries’ need to protect their tax base,” the Council notes.

INTERVIEW:

The report, prepared by consultancies KPMG and Resonans Nordic, points at four problems in particular: rules for domestic work, registration obligations in more than one country for employers, as well as taxation of wages and pensions when working in another Nordic state.

The Council therefore proposes to set common conditions on “permanent establishment” when working in the country of residence, including from home. It also suggests to tax salaries in the country of employment and consider work from home in the country of residence equal to work in the country where the employer is located.

In addition, advance tax should be reported and collected in the employer’s country to avoid having different rules for the same salary.

Pension contributions should be mutually recognised as deductible in another Nordic states and returns taxed only under the legislation of the country where the pension plan is established, the Council argues.

In the Øresund region, between Denmark and Sweden, a fully integrated labour market could generate combined annual socio-economic gains of 2.9 billion Danish kroner, the report estimates.

“Our countries have a lot to gain from having a flexible common labour market. It can solve the problem of skills shortages in one country and the problem of unemployment in another. In other words, a functioning labour market is a strong catalyst for our countries’ economies,” says Siv Friðleifsdóttir, chair of the Freedom of Movement Council.

The full report is currently only available in Danish but translations are expected in the coming weeks.

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