Hiring international employees can be an attractive option for growing companies. Countries like Norway offer a diverse, skilled talent pool to boost business competitiveness.
While salaries are important, there are many other costs to keep in mind when it comes to global hiring. For example, employers are typically required to make mandatory social security contributions. They may also provide staff with additional benefits like healthcare when competing for top talent.
This article will walk you through the fixed and variable costs of hiring in Norway.
Costs to Consider When Hiring Around the World
The basic hiring costs in Norway include:
- Employee’s gross annual salary
- Taxes and benefits
- Vacation pay and other leaves
- Overtime pay
- Severance pay
Plus, you may want to add certain optional costs like benefits, bonuses, and extras.
Mandatory Costs of Hiring an Employee in Norway
Salary
Norway is home to highly competitive IT talent, thanks to its investment in start-ups and innovation. With a lower cost of living than Silicon Valley, Norway is home to a deep pool of highly-specialized software engineers and other IT professionals.
There is no set minimum wage in Norway. Instead, each industry uses collective bargaining agreements to determine the minimum wage, other payments, and working conditions. Nine industry sectors in Norway have set minimum wage standards and others define theirs through dedicated trade unions.
For example, IT workers belong to the EL og IT Forbundet, which is part of Norway’s largest trade union, LO Norge. The former has set the minimum wage for IT workers at NOK 301,600 per year or just about USD 27,180. This is the very first salary band and can go up to 1,313,200 NOK at the highest seniority.
Mandatory Taxes and Benefits
Payroll costs in Norway add up to about 16.1% to 21.1% of the employee's gross salary. These include:
- 14.1%: National Insurance
- 5%: Additional National Insurance on salaries over 750,000 NOK
- 2%: Minimum Mandatory Pension Contribution (negotiable to higher rates)
- Union fees and other contributions based on collective agreements
Employers and employees both contribute to taxes and funds. So, employers must also withhold:
- 22%: General Income Tax
- 1.7% - 17.5%: Personal Income Tax (starting at NOK 198,350)
- 7.9%: National Insurance
Mandatory Bonuses
There are no mandatory bonuses in Norway. However, certain trade union agreements may include a performance-based end-of-year bonus in the employment contract terms.
Paid Leave
There are several types of paid leave entitlements in Norway. All leaves are subject to the terms negotiated by collective agreements and will vary accordingly. Below are statutory minimums.
- Public holidays: There are 10 public holidays in Norway.
- Paid vacation days: Full-time employees are entitled to 21 or 25 days of paid annual leave. They can take three weeks during the summer and the other two weeks can be spread out throughout the year.
- Sick leave: Norwegian employees can take up to 52 weeks of paid sick leave. The first three days do not require a medical certificate. The employer covers the salary for the first 16 days and then the National Insurance Scheme takes over sickness benefits.
- Parental leave: Both parents are entitled to parental leave in Norway. Each parent receives 15 weeks of leave. In total, employees can take 43 weeks of parental leave at full pay or 53 weeks at reduced pay. The remaining weeks after 15 can be split as the parents see fit.
Overtime Pay
The standard working hours in Norway are eight hours per day for up to five days per week. At a minimum, employees receive 40% higher pay for hours of overtime. However, specific terms are typically negotiated by and set out in collective agreements.
Severance Pay
Severance compensation is not required by law, although unions may bargain for a mutual rate that applies to their members. A notice period of at least a month applies for dismissals, the whole of which must be paid.
Additional Costs of Hiring Norwegian Talent
Today’s talent market is extremely competitive. Employers may also want to offer a benefits package to hire top Norwegian talent, which can help both search and retention. Here are some benefits you might consider offering Norwegian employees along with other possible costs.
Benefits
Offering the right benefits package can help you stand out from the competition. In Norway, many employers offer benefits like extended retirement plans, training funds, flexible work arrangements, gym memberships, accommodation stipends, and more.
Bonuses and Extras
Finally, you’ll want to consider smaller expenses like gifts for special occasions, comped meals or coffees for meetings, etc.
If you hire one or two employees in Norway, they’ll likely do remote work. Even so, you may want to pay for a coworking space or provide funding to set up a home office. Daily rates for coworking spaces in Norway start at about USD 20.
However, you might be hiring an entire team to work on larger projects such as software development. If that’s the case, it can be wise to rent an office space to facilitate collaboration among your staff in Norway.
Average Cost of Hiring One Employee in Norway (Annual in USD)
Below is an estimate based on a salary of $100,000 for an employee in Norway. This salary is for ease of calculation only. It will change as per your hiring goals including the employment contract, the candidate’s experience, and the type of position.
- Salary: $100,000
- Employer Taxes: $21,100
- 14.1%: National Insurance
- 5%: Additional National Insurance
- 2%: Minimum Mandatory Pension Contribution
- TOTAL: $121,100 + Benefits (discretionary)
Note that these totals do not include other standard costs like soft benefits commonly offered in Norway.
A Global EOR Can Help You Manage International Payroll
With so many costs to consider, it may feel overwhelming to start hiring globally. An Employer of Record (EOR) can help. An EOR like Borderless can help you compliantly hire and pay employees in Norway.
If you’d like to begin global hiring but aren’t sure where to start, book a demo with Borderless. We’ll walk you through every step so that you can reap all the benefits without the added headaches.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
