Norway to tighten staffing and temp agency laws from April

A controversial amendment to the working law in Norway will make it harder for companies to hire labour from agencies and staffing firms to try and create more full-time positions.

Pictured is a worker cutting wood.
The government will tighten rules on temp agencies from April 1st. Pictured is a construction worker cutting wood. Photo by Greyson Joralemon on Unsplash

The new law will come into effect from April 1st, which will see a ban on staff in the construction industry in Oslo and Viken being outsourced by recruitment firms.

Additionally, the new rules find that those who have worked with the same business for more than three years will have the right to a permanent direct job with the employer they are sourced to.

Furthermore, the right for firms to hire from staffing companies when the work is of a temporary nature will be revoked.

Since forming in 2021, the government has prioritised increasing the number of permanent positions in Norway. It and LO, Norway’s largest trade union umbrella, say the practice reduces permanent employment and erodes the rights of workers and the responsibilities of companies.

Up to two percent of the workforce in Norway is employed by a staffing agency. In certain industries, such as construction, the proportion of those employed by agencies is around eight percent.

Companies which rely on the temporary hiring of labour to meet their needs have reacted strongly to the law change, while permanent employees at staffing agencies also risk losing their jobs.

Two staffing firms, one Lithuanian and one Norwegian, have complained to the ESA, which is the EFTA’s monitoring body and ensures that EEA law is complied with, the Norwegian newspaper Aftenposten reports.

They argue that the new law goes against EEA regulations on temporary workers. The ESA has contacted Norway’s Labour Minister and asked for documentation and for the ministry to answer a number of questions.

The ministry will be asked to explain or prove why Norway’s labour market is not working correctly and that permanent employment will increase as a result of the law change. Furthermore, it will be required to prove health and safety will improve and highlight that staffing firms have a negative consequence in Norway.

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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.

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.


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.