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FIRST CONVICTION FOR WAGE THEFT

On 1 January 2022, the Criminal Code's two new provisions on wage theft entered into force. The provisions are placed in chapter 30, which includes fraud etc. The description of the offense is in § 395. In § 396, the penalty for aggravated wage theft is tightened, and the provision contains elements to be emphasized when deciding whether wage theft is aggravated.

The description of the offense in § 395 reads as follows:

Anyone who improperly and with the intention of an unjustified gain for himself or others fails to pay a salary, holiday pay or other compensation to which the employee is entitled according to an agreement or provision in law or regulation, is punished by a fine or imprisonment for up to 2 years.

Oslo District Court’s ruling 21 September 2023 is the first sentence for wage theft. A restaurant owner was sentenced to 30 days' suspended imprisonment and confiscation of profits, for, among other things, in a period of two years, having paid an employee NOK. 207,786 too little salary in relation to what she was entitled to according to the general minimum wage. The conviction under Section 395 of the Criminal Code only applied to a period of approx. five months from when the provision came into force, and an underpayment of NOK NOK 37,992. However, the General Application of Wage Agreements Act has long had a penal provision that came into force before the wage theft started, and the defendant was sentenced according to this for the entire period and the full amount. The judgment also concerned the lack of withholding tax, but the court notes that the wage theft and the violation of Section 15 of the General Application of Wage Agreements Act are the main factors in sentencing.

What is new is therefore not that it is a criminal offense to pay employees wages below the statutory minimum wage, but the provisions on wage theft affect several cases of non-payment of wages. The Working Environment Act has also long had a penal provision, which includes illegal wage deductions and non-payment of statutory overtime pay. What is new is that provisions on non-payment of wages are included in the Criminal Code, and that they cover more cases of non-payment of wages than the penal provisions in the special laws.

For the employers, this means that they risk penalties for non-payment of wages to a greater extent than before. However, the conditions regarding intent to receive unjustified gain, and the requirement that the default is inappropriate, mean that many cases of non-payment of wages are not subject to punishment. If there is a justified disagreement about the salary requirement, it is difficult to imagine that the penalty provision will affect the employer.

For employees' legal security in general, the provisions can be important in that they clarify the employer's responsibility, and make it riskier to speculate that the employees are not aware of their rights.

For the individual employee, the possibility of enforcement of the wage claim is presumably of greater importance than the threat of punishment. An employee who is not paid cannot trust the police to solve the problem. Anyone who has an unpaid salary claim has a faster and safer route to coverage through general enforcement, and possibly a bankruptcy petition against the employer.

AMENDMENTS IN THE WORKING ENVIRONMENT ACT'S RULES ON HIRING

On 20 December 2022, the Parliament adopted amendments to the Working Environment Act with the aim of reducing the use of hiring and renting out labor from staffing companies. The changes come into force on 1 April 2023.

The main points of the changes are:

• Access to hiring "when work is of a temporary nature" is revoked.

• Temporary workers' right to permanent employment is extended.

• Factors in the assessment of whether an assignment agreement between two businesses involves the hiring of labor are legislated.

Clarification of "hiring"

A new fifth section in § 14-12 lists elements which point towards the conclusion that a commission agreement between two businesses is hiring of workers. The list of elements is not intended to be exhaustive, and the relevance and importance of the listed elements will depend on the specific agreement. Most important is which business is responsible for management of the work and for the result. The purpose is in particular to clarify the boundary between hiring and contracting.

A new fifth paragraph in section 14-13 makes it clear that these elements are also relevant for the assessment of whether there is hiring from businesses which are not staffing companies.

The fact that the work is of a temporary nature cannot justify hiring

Hiring from staffing companies has until now been permitted to the same extent as temporary employment. The alternative that "… the work is of a temporary nature" should still be able to justify temporary employment, but no longer the hiring of labour. The change is carried out by repealing the reference to section 14-9 second paragraph letter a in section 14-12 first paragraph.

Right to permanent employment after three years as an employee

The right to employment after a certain three or four years as a hired worker has been regulated in the same way as for temporary employment, by reference to the provisions on temporary employment. This is changed by introducing a separate provision on the right to permanent employment after three years in section 14-12, fourth paragraph. The four-year option is not continued, as this falls away when work of a temporary nature no longer gives rise to hiring.

Authority for special rules for healthcare personnel

It is open for the ministry to issue special rules on the hiring of health personnel to ensure proper operation of the health and care service. It is intended that this regulatory authority should only be a narrow exception access.