Payroll for remote workers in Norway: Everything you need to know

In response to the health risks posed by the pandemic, companies and organisations switched to remote working to avoid overcrowding in offices and locations.

This shift required an update to payroll systems for remote workers in Norway, as employees are now spread across different locations, including international regions.

This guide provides insights on how to set up a payroll system that ensures timely and accurate compensation for all remote employees in your organisation, regardless of their location.

Classification of your workforce

To manage your payroll system effectively, it is important to know the composition of your workforce. Generally, a workforce is categorised into two main groups:

Employees: These individuals,are employed directly by an organisation, regardless of whether they work full-time or part-time. They are subject to numerous government regulations regarding compensation. It is important that you comply with these regulations when managing payroll for your external employees.
Independent Workers: Many organizations hire independent workers, also known as freelancers, because they are flexible and have specialised skills. As self-employed individuals, freelancers are not subject to the same legal framework as employees, meaning companies are not responsible for withholding their taxes.

By precisely determining the classification of each employee, you can tailor your payroll system to the specific needs of your employees in Norway.

Documenting Employee Locations for Payroll

In a remote working environment, employees may be spread across a wide geographical spectrum, including both domestic and international locations. Correctly categorising the residency status of employees is critical to efficient payroll.

Resident Employees: For employees residing within the company's home country, the payroll process is generally more straightforward, adhering to familiar local tax regulations and requirements.
Non-Resident Employees: Payroll for employees who live outside the company's home country requires additional considerations. These include compliance with the tax laws of the employee's country of residence, as well as potential bank charges, transfer fees and other financial obligations to local and national authorities. Given the complexity and time required to manage these aspects, some companies prefer to employ independent staff on a global basis to mitigate the impact of cross-border taxes and fees.
Accurate documentation of each employee's location is essential to tailor payroll to the specific needs and legal requirements of both resident and non-resident employees.

Selecting an Appropriate Payroll Method

Once you have made the initial considerations, it is critical for a company to find a payroll method that complies with labour laws while ensuring timely and accurate compensation.

Service Provider: For companies with geographically dispersed employees, using a payroll service provider is often the most efficient solution. Choosing a reputable provider is important to minimise errors and avoid potential financial implications. Many companies are opting for cloud-based payroll solutions that are known for their reliability in processing payments in a timely manner, keeping detailed records and offering additional features to streamline the payroll process.
Manual Process: Some organisations also choose to manage their payroll in-house by employing a dedicated team of accountants. This approach requires a thorough understanding of the complicated tax rules and financial obligations in the country in which the company operates. Whilst this method provides direct control over payroll, it is neither sustainable nor cost effective in the long term due to the complexity involved.

As organisations adapt to remote working and explore hybrid working models in response to global health concerns, there is a growing trend towards partnering with payroll service providers to efficiently manage the complexity of paying remote workers in Norway.

For organisations looking at setting up payroll systems for remote workers in Norway, Swapp Agency offers expert advice and services tailored to your needs.