Strong labour rights, a high quality of life and competitive wages are the hallmarks of Norway. While this makes Norway a desirable location for skilled individuals, it also means that it can be costly for companies to recruit staff there. Companies setting up in Norway need to budget carefully for salaries, employer taxes, social security contributions and related benefits.

This article provides a thorough cost analysis of recruitment in Norway and explains how an Employer of Record (EoR) can help companies control the financial risks of entering the Norwegian market.

Costs Associated With Hiring in Norway

Below you will find an overview of the various costs that Employers may incur when hiring in Norway.

Employees salaries

At first glance, employee salaries in Norway appear to be quite high, especially compared to many other countries. One of the reasons for the high average wages is that the economy is doing well, the cost of living is high and great value is placed on employee rights and social benefits. 

However, companies also have to factor in mandatory social security contributions, pension plans, holiday pay, insurance requirements and a host of other administrative costs. Taken together, these costs can amount to thirty to fifty per cent or more of the base salary.

Payroll Taxes &  Employer’s Contribution

The payment of social security by the employer, sometimes referred to as Arbeidsgiveravgift, is another item contributing to the additional expenditure. It is set as a percentage of the employee's gross salary, and the amount varies depending on the geographical region in which the employee is employed. The typical rate in most urban areas is 14.1%, but it can vary between 0% and 14.1% depending on the municipality. This payment finances the extensive Norwegian welfare system, which includes benefits such as pensions, healthcare, parental leave and unemployment benefits.

Sick & Parental Leave

Sick leave and parental leave are also important considerations. The first 16 days of sick leave are covered by the employer. After that, the Norwegian Labour and Welfare Administration (NAV) covers the rest, up to a maximum limit. When it comes to Parental leaves, parents can get up to 100% for 49 weeks and 80% upto 59 weeks.

This can impose a short-term cost burden on employers, especially in smaller companies where the absence of an employee can significantly affect productivity.

Insurance

Another area to consider is insurance. Employers must provide mandatory occupational injury insurance and are also strongly encouraged to offer additional health or life insurance benefits, especially to attract top talent. Some industries may also require specific insurance under Norwegian law or collective bargaining agreements.

Mandatory occupational pension

In addition to social security, employers must provide a mandatory occupational pension, known as obligatorisk tjenestepensjon (OTP). The minimum employer contribution is 2% of the employee's gross salary, but many companies offer higher rates to stay competitive in the labor market.

Additional Costs

Office overheads and equipment costs should not be forgotten. Although remote work is more accepted than ever, many companies still provide employees with laptops, phones, home office stipends, and ergonomic setups. In Norway, where workplace standards are high, these costs can quickly add up. In addition, employers may cover commuting expenses or offer lunch subsidies, depending on company policy or local expectations.

Hiring costs don’t end once an employee is onboarded. Recruitment in Norway can be expensive, particularly for specialized roles. Fees for recruitment agencies can range from 10% to 25% of the annual salary. Even in-house recruitment involves time, advertising expenses, and often several rounds of interviews. Moreover, onboarding and training require resources, both in time and direct costs.

For foreign businesses, there may also be legal and administrative costs associated with establishing a local entity or registering as a foreign employer. 

How Can an EOR Help Reduce Hiring Costs in Norway ?

Employer taxes, high Norwegian wages and mandatory benefits make hiring employees costly. By helping companies hire legally, an Employer of Record (EOR) can help reduce risks, administrative burden and costs. Below is how an EOR can help.

No need for a local entity: By working with an EOR in Norway, you will not be required to register a local entity which helps you save on the registration , legal and account costs. This will improve the hiring process as you can start hiring instantly.

No need for in-country HR: With an EOR service in place, you do not need a separate HR dept for Norway, as they will manage all the administrative tasks related to employment.

Minimizing Termination Risks & Costs:

The EOR will manage the downsizing process in line with local regulations which will reduce legal exposure and unexpected costs arising due to it.

Final Thoughts

When you hire someone from Norway, you need to be aware of the high costs and the employer's responsibilities. This is a premium talent market; companies need to spend 25 to 35% above the base salary to cover taxes and benefits. But with the right approach— - like using an EOR such as Swapp Agency— - organisations can recruit effectively while keeping costs under control.