A legislative amendment has granted the Norwegian Labour Inspection Authority the power to impose significantly higher fines on businesses that violate the Working Environment Act. The fine, known as an administrative fee, can now be up to six million NOK or four percent of the company's turnover. This change applies to all companies and enterprises.
What does the legislative change mean, and what is its purpose?
The legislative change was passed by the Norwegian parliament last week. When it comes into effect, the limit for the administrative fee will be 50 times the National Insurance basic amount (G), which is approximately 6.2 million NOK at the current rate. For companies with high turnover, fines can be imposed at four percent of the company's turnover. Today, the limit for the administrative fee from the Norwegian Labour Inspection Authority is 15 G (approximately 1.8 million NOK).
The background for the legislative change is a political desire to crack down harder on work-related crime. The change is justified, among other things, by the principle that it should not be profitable to break the rules of the Working Environment Act. According to the legislators, the financial gain a company retains after a violation could exceed the current limit for the administrative fee under the Working Environment Act. This could be the case, for example, with extensive breaches of working time regulations or the obligation to pay universally applicable wages. As a result, the legislators believed that the limit for the administrative fee needed to be significantly increased.
The possibility of imposing high fees is intended to have a deterrent effect. The change is also justified by the fact that the limits for administrative fees in other Norwegian laws have increased in recent years, such as the fees imposed by the Norwegian Data Protection Authority or the Norwegian Competition Authority. According to the preparatory work for the law, the Norwegian Labour Inspection Authority's fees should be reasonably related to the limits in comparable legislation. For example, the Norwegian Competition Authority already has a maximum limit for administrative fees under the Competition Act of up to ten percent of the company's turnover.
Significance for companies with high turnover
The significant increase will be particularly important for companies with high turnover. The new provision in the Working Environment Act means that 4 percent of the company's turnover constitutes the limit for the administrative fee if this amount is higher than 50 G. With the current G-regulation, the rule will have practical significance for enterprises with an annual turnover of 150 million NOK or more. However, there is no automaticity in imposing an administrative fee beyond 50 G to enterprises with such turnover.
According to the legislators, the rule should contribute to the Norwegian Labour Inspection Authority having a flexible sanctioning tool, which ensures that the fees have the same effect on both small and large enterprises.
This is how the Working Environment Act § 18-10 first paragraph will read when the legislative changes come into effect: "The Norwegian Labour Inspection Authority may impose an administrative fine on an undertaking if any person acting on behalf of the undertaking has infringed provisions as referred to in section 18-6, first paragraph. An administrative fine may be imposed even when no person has an evident fault. The administrative fine accrues to the public treasury and may be maximally equivalent to administrative fee 50 times the National Insurance basic amount or four percent of the enterprise's annual turnover. The highest amount constitutes the upper limit."
When does the Norwegian Labour Inspection Authority issue an administrative fee?
An administrative fee is an administrative sanction. This means that it can be imposed by the administration, without the involvement of the police, the prosecuting authority, or the courts. However, an administrative fee is considered a punishment under the European Convention on Human Rights. In an increasing number of areas, administrative authorities are authorized to impose such fees, and the limits for the fees have generally been raised.
The legislator's intention is still that the most serious cases should be reported and followed up in the ordinary criminal track by the police and the prosecuting authority, with the legal safeguards this entails (for example, the right to a defense).
The Norwegian Labour Inspection Authority can impose an administrative fee on a company for serious or repeated violations of the rules of the Working Environment Act that can have major consequences for the health and safety of employees. This applies, for example, to the obligation to ensure a fully satisfactory working environment or compliance with working time regulations.
There is no automaticity in a company being imposed an administrative fee – this is up to the discretion of the Norwegian Labour Inspection Authority. When assessing whether an administrative fee should be imposed, and if so, what the fee should amount to, factors such as the seriousness of the violation, whether the company has gained or could have gained any advantage from the violation, and the company's financial ability should be considered.
What companies need to remember
Even though there is no automaticity that the Norwegian Labour Inspection Authority will issue more and higher administrative fees, the department has assumed that the legislative change will naturally also lead to a general increase in the level of fees, especially in the case of extensive and serious violations. When the legislative change comes into effect, it will become even more important for Norwegian enterprises to ensure compliance with the rules in the area of the Working Environment Act. This requires, among other things, good routines and guidelines, and sufficient competence at all levels of the enterprise. It is best to have everything in place before the Norwegian Labour Inspection Authority knocks on the door.
This is how the Working Environment Act § 18-10 first paragraph will read when the legislative changes come into effect: "The Norwegian Labour Inspection Authority may impose an administrative fine on an undertaking if any person acting on behalf of the undertaking has infringed provisions as referred to in section 18-6, first paragraph. An administrative fine may be imposed even when no person has an evident fault. The administrative fine accrues to the public treasury and may be maximally equivalent to administrative fee 50 times the National Insurance basic amount or four percent of the enterprise's annual turnover. The highest amount constitutes the upper limit."
Our advisement
As a top-tier firm, we are highly recognized for our expertise in labor law, administrative sanctions, and enterprise penalties. We assist companies and enterprises in complying with the rules of the Working Environment Act, among other things, by developing routines and guidelines. We also assist in cases concerning administrative fees and corporate punishment.
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