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Employment contracts

An employment contract, or an employment agreement, is a contract between you and your employer. It says something about the terms you have agreed on regarding issues such as pay, duties, working hours and where you will work. What aspects are important to include in such a contract, what are you entitled to, and how can NITO help you?

A clear, unambiguous and updated employment contract can save both you and your employer from misunderstandings and unnecessary conflicts. 

The more comprehensive your employment contract and your working conditions, the less scope your employer has to change your position and working conditions. This often becomes evident in connection with reorganisations and business transfers.

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What is an employment contract?

An employment contract is a mutual agreement between the employer and the employee regulating the employment relationship between them.

Along with laws and any collective pay agreements that may apply, the employment contract imposes important limitations on what is known as the employer's managerial prerogative. In other words:

  • The more specific and detailed an employment contract is, the less scope the employer has to change an employee's working conditions.
  • Unlike administrative provisions regarding rights and obligations, your employer may not unilaterally change your rights under the employment contract.

The law: you are entitled to an employment contract

The Working Environment Act, section 14-5 stipulates that all employment relationships must be subject to a written contract of employment.

  • In employment relationships with a total duration of more than one month, a written contract of employment must be entered into as early as possible and one month following commencement of the employment relationship at the latest.
  • In employment relationships lasting less than one month or in connection with hiring out of labour, a written contract of employment must be entered into immediately.

The employer must draft a written contract of employment in accordance with section 14-6. This provision specifies the minimum requirements for what an employment contract should contain. Note, however, that all aspects of major significance for the employment relationship must be included in the employment contract, regardless of whether or not such aspects fall outside the minimum requirements mentioned in the abovementioned provisions.

The employment contract should be signed by both parties before you start your new job. It should also be signed before you resign your current job to avoid unnecessary surprises after you hand in your resignation.

An employment contract will be valid even if it has not been entered into in writing. However, in cases like this, establishing what was agreed and even whether an employment contract was actually entered into will become a matter of proof.

At a minimum, an employment contract must contain the following items:

The Working Environment Act, section 14-6 first paragraph states that the employment contract must contain information of major significance for the employment relationship:

a) the identity of the parties
b) the place of work

If there is no fixed or main place of work, the contract of employment must provide information to the effect that the employee is employed at various locations and state the registered place of business or, where appropriate, the home address of the employer.

Working Environment Act, section 14-6, first paragraph (b)

This provision is particularly important if the enterprise has operations in multiple locations. If the original employment contract explicitly states that the place of work is Oslo but is subsequently changed to the effect that the employee is "employed in enterprise X but with Oslo as the current place of work," this will give the employer more scope to change the place of work than it did under the original contract.

c) a description of the work or the employee's title, post or category of work

This implies that the employment contract must be drafted in such a way as to clearly specify the type of work you will be performing for the employer.

  • A job title does not always say much about what job you have been engaged to do, so it is often useful to have this specified in more detail in your employment contract.
  • If it is important for you to perform certain duties, these should be included in your job description. By doing so, you limit your employer's scope to change your job description by virtue of its managerial prerogative.
  • It is normally useful to attach a separate job description to the employment contract. The job description should describe the work duties, responsibilities and competencies required for the position.
  • During the employment relationship, the job description should be regularly reviewed with a view to updating it; for example, this can be done in connection with appraisal interviews. The job description will help ensure that you and your employer agree on the expectations you have of each other, and that your position is clearly defined in relation to other employees in the enterprise.
d) the date of commencement of the employment

The employment contract must state the first day on which you either perform work for the employer or on which you are at the disposal of the enterprise.

If you commence a new position on the first day of the month and this days falls on a Sunday, the contract should still state the first day of the month. This also applies if the commencement date falls during a holiday period.

e) the expected duration if the employment relationship is of a temporary nature

In the case of temporary appointments, the reason for the temporary appointment must be given; see the Working Environment Act, section 14-9.

Under the Working Environment Act, the general rule is that employees must be appointed permanently. The employment contract must state whether the position is permanent, fixed-term or a temporary replacement.

f) any provisions relating to a trial period

The trial period must be agreed in writing.

In the case of written contracts of employment under which the employee is engaged for a given trial period, 14 days' notice must be given by either party unless otherwise agreed in writing or in a collective pay agreement.
Working Environment Act, section 15-3, seventh paragraph

PROTECTION AGAINST DISMISSAL IN CONTRACTS OF EMPLOYMENT SPECIFYING A TRIAL PERIOD

It follows from section 15-6 of the Working Environment Act that if an employee engaged by written contract for a given trial period is dismissed, such dismissal must be on the grounds of the employee's lack of suitability for the work, or lack of proficiency or reliability.

The provisions regulating dismissal during the trial period do not restrict the employer's right to dismiss an employee pursuant to section 15-7.

The provisions regarding dismissal during the trial period only apply if notice is given before the agreed trial period expires. The trial period may be agreed for up to six months.

If an employee has been absent from work during the trial period, the employer may extend the agreed trial period by a period corresponding to the period of absence.

Such extension may only take place when the employee has been informed of this possibility in writing at the time of appointment, and when the employer has informed the employee of the extension in writing prior to expiry of the trial period. The right to extend the trial period must not apply to absences caused by the employer.

It follows from section 15-3, seventh paragraph of the Working Environment Act that if you are engaged by written contract for a trial period, 14 days' notice must be given by either party unless otherwise agreed in writing or in a collective pay agreement. Notice must be given in writing.

g) the employee's right to holiday and holiday pay and the provisions concerning the fixing of dates for holidays

The Act relating to holidays ensures that all employees have four weeks and one day of holiday and receive holiday pay. However, many employees have longer holidays and higher holiday pay rates stipulated in individual agreements or collective pay agreements.

How much holiday you are entitled to beyond the minimum provision stipulated in the act, when your holiday pay is paid and how agreement is reached on when you take holiday must be agreed between you and your employer.

Holiday and holiday pay: How much will I get?

h) the periods of notice applicable to the employee and the employer

Section 15-3 of the Working Environment Act sets out the rules for notice periods, and for new employees it is normally one month.

If the notice period agreed is longer than the minimum laid down in the Working Environment Act, it is important that this is stated to avoid any doubt at a later date.

During a trial period, the notice period runs from one given date to another.

i) pay and other remuneration

...the applicable or agreed pay on commencement of employment and any supplements and other remuneration not included in the pay, and allowances for meals or accommodation, method of payment and payment intervals for salary payments.

Working Environment Act, section 14-6, first paragraph (i)

The pay agreed on commencement of employment must be stated in the employment contract. Other supplements and remunerations not included in the pay, for example pension payments, must also be stated. The same applies to the date and method of payment. Note that entitlement to, for example, bonuses are often administrative decisions, and it is an advantage that these be regulated by contract.

What payments are you entitled to beyond ordinary pay? What about company car, telephone, newspaper, loans, etc? If these are specified in your employment contract or letter of appointment, they are deemed separately agreed working conditions that cannot be unilaterally changed by your employer at a later date. You should therefore have these conditions included in the employment contract.

j) duration and disposition of the daily and weekly working hours

Under the Working Environment Act, the normal working week is 40 hours. Unless shorter working hours are agreed by a central agreement or a collective pay agreement, the rules laid down in law will apply.

Chapter 10 of the Working Environment Act discusses working hours.

As well as agreeing on a working week shorter than 40 hours, it is also usual to regulate whether or not meal breaks are counted as working hours. The same applies to whether flexible working hours apply and whether the position is subject to the provisions in the chapter on working hours and to overtime entitlement.

Read more about overtime pay

The preparatory works to the Working Environment Act state that the disposition of the daily and weekly working hours must also be specified. We find that many contracts fail to specify the time period for normal working hours. If you are employed in a position that follows normal office hours, this should be stated in your employment contract to avoid potential disagreement later on over the possibility to change the disposition of your working hours.

k) length of breaks
l) agreement concerning a special working-hour arrangement
m) information concerning any collective pay agreements regulating the employment relationship

If an agreement has been concluded by parties outside the enterprise, the contract of employment must state the identities of the parties to the collective pay agreement.
Working Environment Act, section 14-6 m)

For example, if the enterprise is a member of NHO, it should refer to the agreement between NHO and NITO.

The information mentioned in the first paragraph, (g) to (k) may be given in the form of references to laws, regulations and/or collective pay agreements regulating these matters.
Working Environment Act, section 14-6, second paragraph

Place of work and international placements

It is important to specify where your normal place of work will be in your employment contract so that your employer cannot require you to transfer to another department, branch office, etc. It is also important to make sure that the place of work is as similarly specified in any new employment contract which your employer draws up and asks you to sign.

If the place of work specified in the original contract was given as "main office in Oslo", you must make sure that this is not changed to "in the enterprise and currently in the main office in Oslo". Adding the word "currently" expands the scope of your employer's managerial prerogative to move your place of work to another location if the enterprise has multiple locations.

If you are to work abroad for more than one month, a written employment contract must be agreed before you leave. This follows from section 14-7 of the Working Environment Act. In addition to the requirements mentioned above, such contracts must contain additional information regarding currency and remuneration.

More specifically, it means that it must state the currency in which your pay and other monetary remunerations will be paid, and whether cash or benefits in kind (accommodation, fuel, etc.) will be associated with your posting abroad. Any conditions that apply to your return journey must be stated, as well as to the duration of your posting abroad.

Matters concerning your rights, membership of the National Insurance scheme and tax issues should be clarified with NAV and the Tax Administration well in advance of any international placement.

Changes in the employment relationship

Changes in the employment relationship as referred to in sections 14-6 and 14-7 of the Working Environment Act must be reflected in the employment contract as soon as possible and no later than one month after they come into effect. This generally does not apply if changes in the employment relationship are due to amendments to acts, regulations or collective pay agreements.

NB: Pay during sickness and leave of absence

In the event of sickness or statutory leave, an employee who is entitled to sickness benefit or other benefits from the National Insurance scheme will only be entitled for coverage up to 6G unless alternative agreement has been explicitly specified in either a collective pay agreement or an individual agreement such as an employment contract.

This means if your pay is higher that 6G – and if your employer does not cover the loss of income exceeding 6G – you will receive less pay during sickness and/or statutory leave.

What is the basic amount in the National Insurance scheme (G)?

As of 1 May 2019, 1 G is equivalent to NOK 99,858.

  • Most benefits in the National Insurance scheme are stated as a value of the basic amount (grunnbeløpet), denoted by G.
  • The basic amount is adjusted annually on 1 May in line with price levels and the standard of living, as decided by the Norwegian parliament.
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