Make sure to be familiar with the rules on use of contractors!

| Innsikt

New regulations underline the importance of having control over the rules on the use of contractors from temporary work agencies.

On 1 July 2020 new regulations came into force assigning the Norwegian Labor Inspection Authority to control companies use of contractors from temporary work agencies. Up and until 1 July 2020, the companies’ use of contractors from temporary work agencies could only be controlled if expressed to the court by the contractor pursuant to section 14-14 of the Norwegian Working Environment Act («WEA»). In the event of a breach of the rules on use of contractors, the contractor would be entitled to permanent employment in the company hiring the contractor. Effective from 1 July 2020, the Norwegian Labor Inspection Authority is assigned the competence of issuing orders in the event of breach of the rules on use of contractors, in addition to the contractor claiming permanent employment.

The main goal is to ensure an increased compliance with the rules on use of contractors and only affect the use of contractors from temporary work agencies.

There are strict legal requirements regarding the use of contractors from temporary work agencies. Such use of contractors is only permitted to the same extent as the company may appoint employees on a temporary basis. The use of contractors from undertakings whose object is not to hire out labor is not subject to the same strict regulations, given the fact that the contractor is permanently employed in the undertaking and only for a limited period hired out to the company.

A large proportion of contractors are not familiar with the rules on use of contractors pursuant to section 14-12 of the WEA, and consequently not aware of the fact that they may be entitled to permanent employment in the company in the event of breach of the legal requirements for use of contractors.

The Government believes that the increase in the use of contractors, also considering the fact that a large proportion of breaches of the rules on the use of contractors are not followed up due to limited knowledge of the legal requirements, indicates that there is a need to strengthen enforcement of the rules on use of contractors.

The key is that abuse of, and breaches of, the use of contractors can be counteracted through effective enforcement of the regulations.

Equal treatment regarding working conditions and salary

On 13 October 2020, a case regarding whether company bonus is covered by the principle of equal treatment pursuant to section 14-12a of the Norwegian Working Environment Act was heard by the Supreme Court. The result of the case will be of great importance to many companies and contractors from temporary work agencies.

The legal point of departure is that the temporary work agency shall ensure that the contractors receive the same salary and working conditions as if the contractor was formally employed in the company pursuant to section 14-12a of the Norwegian Working Environment Act. This include

  1. the length and placement of working hours,
  2. overtime work,
  3. the length and placement of breaks and rest periods,
  4. nightwork,
  5. holidays, holiday pay, days off and remuneration for such days, and
  6. pay and coverage of expenses.

The equal treatment shall take place from the first day the contractor starts the work for the company. The duty of equal treatment is as a main rule on the temporary work agency, however, the company hiring the contractor has a joint and severable liability to ensure that the contractor receives equal treatment with regards to salary, holiday pay and other remuneration.

The Norwegian Labor Inspection Authority now has the competence to control whether the company in fact comply with the legal obligation of equal treatment. Worst case scenario the company may get a penalty in the form of a fine or the loss of the right to carry on the business until the company ensure equal treatment.

Legal significance

To sum up – it is important to both have knowledge of and act in accordance with the terms and conditions for the use of contractors from temporary work agencies. The risk of not complying with the rules is that the company is given a penalty from the Norwegian Labor Inspection Authority and the contractor will be entitled to permanent employment in the company.