New restrictions on hiring temporary employees from staffing companies

The following changes have been adopted:

• It is as a main rule no longer allowed to hire personnel for temporary work from staffing agencies.

In the event of a temporary need of labor (i.e. seasonal workers), it may be possible to hire temporarily if an agreement with the company’s union representatives allowing for hire of employees from staffing companies for temporary work. Such agreements will only be possible for companies bound by collective agreements with trade unions of a certain size.

• Hiring of health personnel may, subject to further considerations, still be allowed.
• Hiring of specialist workers performing advisory and consultancy services in clearly defined projects may, subject to further considerations, still be allowed.
• Employees temporarily hired for more than 3 years continuously is given the right to permanent employment in the company which hired them (independent hiring basis)
• The distinction between hiring of staff and engagements under service contracts is clarified more closely. A practical and legal guide on the matter will be prepared by the authorities.
• The Norwegian Labour Inspection Authority (Arbeidstilsynet) is given extensive responsibility and authority to ensure compliance with the new regulations.

Please note that hiring employees from companies, whose main purpose is not to hire out labor is not affected by the restrictions. There are certain criteria which will have to be fulfilled and each specific case will have to be assessed closely before hire from such companies are carried out.

Furthermore, it will still be possible to make use of service contracts (i.e., subcontractors). The legal amendments also bring new provisions to clarify the distinctions between hiring of labor and service contracting. There are new additional factors to consider when assessing whether there is a hiring of employees or a service agreement (In Norwegian: entreprise). The rules lean towards defining more contracts as hiring of employees than before.

The new regulation intends not to introduce any new regulation for determining what is a staffing agency. As of today, in addition to typical agencies whose only business is lease of personnel, companies having its main revenue from lease of personnel will be covered. The same goes for companies with longer lease contracts and lease of personnel as separate business lines.

The new regulation will definitely create a need to look further into whether the company hiring out employees, is to be defined as a staffing agency. Further, it will be important to clarify if a classification as hire of personnel is likely and, if possible, to adjust contracts to avoid such a classification. Above all, the new situation needs to be addressed in order to avoid interruptions where previous used personnel are not able to perform work agreed. Change of model will also have an impact the tax situation for both the company and foreign employees used in Norway.

In what situations will it be possible to hire from staffing companies?

• For temporary replacement of permanent employees during holidays, leave of absence, sick leave and similar situations.
• Work training as for instance trainees.
• For participants in Labor market schemes under the auspices of or in cooperation with the Labour and Welfare Administration (NAV).
• For athletes, trainers, referees and other leaders within organized sports
• Upon agreement with employees’ union representatives, if the company is bound by a collective agreement with a trade union of a certain size.

Options for companies in need of increased labor for a limited period:

• Increase the number of permanent employees
• Hire employees from companies which main purpose is not being a staffing company
• Employ workers temporarily directly in the company
• Divide the work by entering into construction agreements with clients.

These options will have to be assessed further based on the facts and circumstances of each individual case.

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