Compulsory approval for cleaning companies, Norway

The Norwegian cleaning sector has been heavily exposed to social dumping and undeclared work for many years. Since 2011, a tripartite sector programme has contributed to new and innovative measures to raise the level of decent work practices in the sector and prevent distortion of competition. The compulsory approval scheme for cleaning companies and the ban on purchasing cleaning services from companies that are not approved by the Labour Inspectorate will be implemented during the second half of 2012. Both authorities and social partners are hopeful that the combined measures will help to tackle social dumping and undeclared work in the sector.

Background

Undeclared work is seen as a substantial challenge in the cleaning sector, and has been for a number of years. This is not restricted to services for households, but also a problem in the industrial cleaning sector. Tax and VAT evasion as well as substandard wage and working conditions are seen as a challenge for the sector. Companies within the sector which adhere to laws and regulations are competing against service providers that can push down prices to a level not consistent with paying taxes and complying with standards for wage and working conditions set by collective agreements as well as by legislation. In 2010, the Labour Inspectorate stated that 'some businesses can even be linked to criminal networks, in addition to undeclared work and violation of rules'.

The government, and the employer and employee organisations within the sector, have for many years had concerns about working conditions and violations of laws and regulations in the sector. Since 2011 the government, The National Federation of Service Industries (NHO Service) and Norwegian Union of General Workers (Norsk Arbeidsmandsforbund) have collaborated on a tripartite sector programme to secure the working environment and decent wage and working conditions in the sector. As a result of the tripartite collaboration, the Ministry of Labour now implements a regulation stating that all companies that offer cleaning services must be approved by the Labour Inspectorate to operate legally. From 1 December 2012 it will be prohibited to purchase cleaning services from businesses that are not approved.

Objectives

The approval scheme is a part of the tripartite sector programme’s strategy to raise the level of decent work practices in the cleaning sector. More specifically, the ban on purchasing cleaning services from businesses that are not approved is thought to make it more difficult to operate for businesses that are not interested in following the law.

Specific measures

All companies that sell cleaning services (regardless of industry code) need to apply to the Labour Inspectorate for approval. To be approved the companies need to document that they meet requirements for residence permits for all employees, registration and reporting obligations to public registers and requirements for wage and working conditions in line with the general application of the collective agreement in cleaning. In addition, the companies need to document that they fulfil important requirements related to health, work environment and safety. Finally, it is required that all employees of approved companies carry ID-cards that they receive from the Labour Inspectorate upon the approval. (Forskrift om offentlig godkjenning av renholdsvirksomheter og om kjøp av renholdstjenester (The statute, in Norwegian)).

Approval of the companies is decided on the basis of the documentation the Labour Inspectorate has received from the applier. In addition, approved companies will be inspected after the approval has been given. If the Labour Inspectorate finds that the conditions for approval are not met, both the approval and the ID-cards will be drawn back. Approved companies will be listed in a central register, which will be easily available for customer companies and others through the inspectorate’s websites. The validity of the ID-cards is set to two years. Therefore, the Labour Inspectorate will get another limited form of verification of the conditions for approval when the ID-cards must be renewed.

In 2012, the government has allocated NOK 20 million (approximately €2,690,240) directed at the Labour Inspectorate’s work with the implementation of the approval scheme.

Actors involved

The Labour Inspectorate is responsible for establishing and running the approval scheme. The Inspectorate is also responsible for carrying out inspections to control cleaning companies are approved and that the companies follow the requirements for approval.

Outcome of evaluations: lessons and conclusions

Achievement of objectives

The approval scheme came into force on the 1 December 2012 and has not yet been evaluated. However, all parties to the tripartite sector programme express great expectations that the scheme will contribute to better work and wage conditions, as well as fairer competition in a sector with great challenges when it comes to social dumping and undeclared work.

Obstacles and problems

The Norwegian Confederation of Trade Unions (LO) expresses concern that the period between when the approval is given and the subsequent inspection can become too long, since the turnover among companies in this sector is high. LO states that 'even though many of the companies that disappear are small, they can still start up again (under a new name) and run a business for a longer period of time, without being inspected by the authorities'. The government states that the Labour Inspectorate shall prioritise inspections of newly approved companies, and LO means this is decisive to secure the scheme’s legitimacy.

Lessons learned

The criteria for the obligation to apply for an approval are relatively strict, in that all companies that sell cleaning services must apply for approval. In contrast to the register for temporary work agencies, listing in the register for cleaning companies also requires that the companies can document that they meet requirements to wage and working conditions, requirements to documentation of residence permits for all employees, as well as requirements to health, working environment and safety. Finally, the requirement that all employees of approved companies carry ID-cards is another, potentially important, control mechanism.

Transferability

The tripartite sector programme and the approval scheme should be transferable to other countries.

Contacts

• The Norwegian Labour Inspection Authority (Arbeidstilsynet).
• The Ministry of Labour (Arbeidsdepartementet, AID).
• Norwegian Union of General Workers (Norsk Arbeidsmandsforbund).
• The National Federation of Service Industries (NHO Service).
• The Norwegian Confederation of Trade Unions (LO).

Bibliography

Magasinett.org on the initiation of the tripartite sector programme in cleaning (in Norwegian): http://www.magasinett.org/arbeidslivet/article5277363.ece

Regulation on public approval of cleaning companies and purchase of cleaning services: http://www.regjeringen.no/nb/dep/ad/dok/lover_regler/forskrifter/2012/forskrift-om-offentlig-godkjenning-av-re.html?id=681124#

Kristine Nergaard and Jørgen Svalund (Fafo) on the former clean development scheme (ERM 2009)

Fafo’s report on the Norwegian cleaning sector (in Norwegian): Trygstad, Sissel, Kristine Nergaard, Kristin Alsos, Øyvind M. Berge, Mona Bråten & Anne Mette Ødegård (2011), (For the price of cleaning). Oslo: Fafo-report 2011: 18.

Requirements to cleaning companies for approval from the Labour Inspectorate (in Norwegian): http://www.lovdata.no/for/sf/ad/td-20120508-0408-002.html#5

The minister of labour, Hanne Bjurstrøm, on the tripartite sector programme and the new measures directed at the cleaning sector (in Norwegian): http://www.nhoservice.no/article.php?articleID=2985&categoryID=140

Tom Erik Vennesland, Fafo Institute for Labour and Social Research