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11. Employee Benefits

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11. Employee Benefits

Social Security

The legal framework for social security is derived primarily from the National Insurance Act of 1997. Persons who work or are residents in Norway are, as a rule, obliged to be members of and to pay contributions to the Social Security Scheme. Employers have to pay social security contributions on wages and other remuneration that the employers have to report. The obligation to pay employer’s social security contributions does not follow the membership of the employee and can apply even if the employer is not engaged in activity in Norway and even if the employee is not liable to pay taxes in Norway. The employer’s social security contributions are stipulated as a percentage of the reported amount. The contributions are differentiated, with rates that vary between different geographical zones. Employees’ social security contributions are stipulated as a percentage of personal income.

Healthcare and Insurances

The National Insurance Scheme covers a range of benefits including sick pay, work assessment allowance, disability pension, unemployment benefits, retirement pensions, survivor’s pension, occupational injury benefits, healthcare allowance, benefits to single parents and benefits during pregnancy, birth, adoption and parental leave.

Required Leave

Holidays and Annual Leave

Minimum holiday rights for employees are outlined in the Holiday Act, which grants an employee a minimum right of 25 working days of holiday leave per year. The term “working days” includes Saturdays. Employees over 60 years of age are entitled to an additional 6 working days of holiday leave. The holiday year runs from 1 January to 31 December. Many collective agreements grant extended holiday rights. Five weeks of holiday is now quite common in Norway.

As a general rule, an employee is entitled to 18 consecutive working days of holiday leave during the period 1 June and 30 September. An employee is also entitled to take the remaining seven working days of holiday leave together.

Holiday pay is earned the year before it is paid (the holiday year). Holiday pay is 10,2 percent of the wages paid during the earning year. The amount is normally 12 percent if an employee is entitled to five weeks’ holiday under an individual or collective agreement. For employees over 60 years of age who are entitled to an additional week, the holiday pay is either 12,5 or 14,3 percent, depending on whether the employee is entitled to five or six weeks of holiday.

In addition, there are 10 (ten) public nonworking days per year.

Maternity and Parental Leave

Pregnancy leave: a pregnant employee is entitled to a leave of absence for up to twelve weeks during pregnancy. Absence because of sickness is regarded as sickness leave and shall not be deducted from the leave. The right to pregnancy leave is combined with the right to maternity benefits pursuant to the National Insurance Acts. Unlike the mandatory leave for six weeks after birth, leave during pregnancy is voluntary and may be used at any time during the pregnancy. However, according to the preparatory works, such leave shall be taken on a continuous basis unless practical circumstances make it necessary to split the leave period.

Maternity leave: after giving birth, the mother shall have a leave of absence for at least the first six weeks, unless she produces a medical certificate stating it is better for her to resume work.

Parental leave: parents have the right to a total leave of 12 months, including the right to pregnancy leave and the right to maternity leave. In addition, each parent has the right to 12 months of leave for each birth. The leave must be taken immediately after the parent’s pregnancy leave and maternity leave.

Leave of absence to care for a child:  in connection with childbirth, the father or co-mother of the child, is entitled to two weeks’ leave of absence in order to assist the mother. If the parents do not live together, the right to leave of absence may be exercised by another person who assists the parent. Adoptive parents and foster parents shall be entitled to two weeks’ leave of absence when taking over responsibility for the care of the child. However, this will not apply when adopting stepchildren or when the child is over 15 years of age.

Maternity leave, including compensation, lasts for a maximum of 59 weeks. 3 weeks before the birth and the first 6 weeks after birth are reserved for the mother, and are compulsory. 15 weeks are reserved for the father. If the father does not utilise the father’s quota, the benefit period will be shortened accordingly as the quota may not be transferred to the mother. The remaining period may be shared by the parents in any way they see fit.

The employees have the right to compensation during maternity and paternity leave. The compensation is either 80 percent of the salary for 59 weeks or 100 percent for 49 weeks. Compensation during this period is covered by the National Insurance Scheme and covers the loss of income within an index maximum limit 6 times the base amount (G), (1G is currently NOK 96 883), but many public and private sector employers make up any difference between their employees’ actual salary and the statuary entitlement. In addition, parents have the right to take a leave of absence for an additional year without compensation.

Sickness and Disability Leave

The employment contract, in principle, is about creating mutual obligations. However, when an employee has a right to leave due to sickness, he also has a right to sick pay (the salary is fully compensated), which is customarily split between the employer and the National Insurance Scheme.

The responsibility of issuing the sick pay is customarily split between the employer and the National Insurance Scheme (NAV). The employer is normally responsible for the payment of the compensation for the first 16 days of the employee’s sickness leave, provided the employee has been employed at least four weeks (the qualifying period). Following the employer’s period of responsibility, the National Insurance Scheme is responsible for the payment.

The employee’s right to sick pay is conditioned by documentation. Provided the employee has been employed for a period of at least two months, he has a right to self-certification of sickness for a limited period. The certification may cover up to three calendar days at a time, and may usually be used up to four times a year. A medical certificate is required if the employee has not obtained the right to self-certification, if the sickness leave lasts beyond the period of self-certification, or if the employee has more than four periods of sickness leave in 12 months without medical certification.

Under the Working Environmental Act Section 15-8, the employee is protected against dismissal on the grounds of sickness leave, during the first 12 months after the beginning of the period of absence due to such reasons.

In principle, disability leave is not a concept recognised under the laws of Norway.

Pensions: Mandatory and Typically Provided

Retirement pensions are divided into three levels:

Level 1: retirement pensions from the National Insurance Scheme ensure an income in old age. Drawing from a retirement pension can begin the month after a person turns 62, as long as sufficient pension rights have been accumulated. A person who is retired can work as much as he or she wants without their pension being reduced. They accumulate rights to a retirement pension when they work or otherwise have a pensionable income before turning 75. The pension rights are adjusted in accordance with the general life expectancy of the population.

Level 2: employers must provide mandatory occupational pensions in addition to retirement pensions.; at least 2 percent of an employee’s gross income is paid into pension funds.

Level 3: private savings, irrespective of employment and the Norwegian pension scheme.

Any questions

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