Norway: New Legislation Prohibits “Zero-Hour” Contracts

As of January 1, 2019, so called “zero-hour” contracts, that is employment contracts without guarantee of work or pay, are illegal in Norway. The new legislation requires employers to implement any necessary changes to existing contracts by June 2019.

The strict main rule in Norway for some time has been that an employer’s permanent need for employees must be covered by a permanent employed workforce. Temporary contracts may only be used in specific situations.

Some employers have adapted to this regulation by employing workers on permanent contracts, but with no guarantee for work (hence the expression “zero-hour contract”). This has especially been the case in the staffing industry. These contracts imply that a worker is, for example, permanently employed in a staffing agency, but without guarantee of work or pay during the period he or she is not working.

In order to create predictability in the workplace, and to circumvent the conditions for temporary employment in this way, the government has decided to clarify how the term “permanent employment” should be understood by adding a clear definition in the law as follows:

Permanent employment means that the employment is continuous and not limited in time, that the legal rules on termination of employment shall apply, and that an employee is ensured predictability in his/her work in the form of an actual scope of work.

The most important part of the definition is that the employee must be “ensured predictability in his/her work in the form of an actual scope of work.” There is no minimum requirement for the scope of work, but the rights and obligations must be specified in the employment contract, e.g. by the number of working hours per week, by a percentage, or something similar. The crucial factor is that the employee is entitled to predictability for work in the form of a real minimum work scope. Furthermore, the fact that the scope of work must be real implies that it must be in accordance with the employer’s expected need for labor.

The consequence of the definition is that “zero-hour” contracts without a guarantee of work or pay may no longer be used.

As a result of the legislation, employers may need to turn zero-hours contracts into permanent contracts with a defined working time based on the practice of the employment relationship and the real underlying conditions.

For new contracts, employers need to consider whether to apply a permanent contract with a minimum working time or if the situation allows for a “framework agreement” with a specific temporary contract for each temporary assignment. The latter may be preferable from the employer’s view, but needs careful consideration and precise drafting to be valid.

Written by Pål Kvernaas of Haavind and Roger James of Ogletree Deakins

© 2019 Haavind and Ogletree, Deakins, Nash, Smoak and Stewart, P.C.