In December 2022, the Norwegian government decided to significant tightened the regulations for hiring of labor from staffing agencies. The changes meant that the general access to hire labor for work of temporary nature was cancelled, and a geographically restricted ban on hiring in the construction industry was introduced.
Specifically, these changes restrict hiring from staffing agencies to the same limited circumstances that allow temporary employment under the Norwegian Working Environment act section 14-9, first paragraph, letters b to e (temporary work, internships, labor market initiatives and athletes). Additionally, the government imposed a complete ban on hiring from staffing agencies for construction work in Oslo, Viken, and the former Vestfold region. Both rule changes came into force on 1 April 2023.
In 2023, the EFTA Surveillance Authority (ESA) initiated infringement proceedings against Norway over these regulatory changes, and on 19 July 2023, ESA published its letter of formal notice to Norway, asserting that the new rules violated the EEA Agreement.
Following ESA's assessment, several staffing agencies and a Polish recruitment company sued the Norwegian state in Oslo District Court, seeking compensation for financial losses due to the regulatory changes. The companies argued that the new regulations violated Article 28 (free movement of workers), Article 31 (freedom of establishment) and Article 36 (freedom to provide services) of the EEA Agreement.
Oslo District Court found it necessary to obtain an advisory opinion from the EFTA Court, which issued its opinion on 20 November 2024. The EFTA Court referred the matter back to Oslo District Court, concluding that it was up to the national court to assess whether the measures were contrary to the EEA Agreement.
- The EFTA Court emphasized that Norwegian courts must determine whether the measures constitute indirect discrimination by having a disproportionate impact on workers from other EEA states compared to Norwegian workers.
- The court also had to evaluate whether the measures satisfied the proportionality principle — specifically, whether they effectively achieve their stated objectives in a consistent manner and whether they go beyond what is necessary to accomplish those legitimate goals.
New hiring rules do not conflict with the EEA Agreement
On 18 August, Oslo District Court ruled that the new hiring rules are not in conflict with the EEA Agreement. The court determined that while only one of the eleven plaintiff companies had standing to claim violations of the EEA Agreement's freedom of establishment provisions, the restrictions were nonetheless justified and consistent with EEA law. None of the companies were therefore awarded damages.
The Oslo District Court judgment is not final, and both parties may appeal the decision.
We continue to monitor this case closely, as any successful appeals could impact the current regulations. If you have questions about how these rules affect your business or need assistance with hiring and staffing compliance, please contact us.
