Compulsory registration of temporary work agencies, Norway
The compulsory reporting and registration scheme for temporary work agencies was implemented by the Norwegian Government in 2009. An evaluation from 2011 showed that the measure probably has had a limited overall effect on government efforts to tackle social dumping and undeclared work. Although the measure has helped to weed out some of the most disreputable players in the industry, it is unclear as to whether it has helped the government improve control over industry as a whole, especially smaller companies and companies hiring out workers from the new EU Member States.
The compulsory reporting and registration scheme for temporary work agencies (Bemanningsforetaksregisteret) was implemented by the Norwegian government on 1 January 2009. On the 1 March 2009, the government also introduced a supplement provision (in Norwegian, 270Kb PDF) to the Labour Market Act (Arbeidsmarkedsloven). The amendment placed a ban on hiring workers from companies that are not listed in the register. Breaches of this ban are punishable by fine (NO0808039I). The measures were evaluated in 2011.
The background for implementation was linked to the increase in labour migration to Norway from the new EU-countries after the EEA enlargement in 2004. Since then, a significant part of the labour immigration to the country has come in the form of temporary agency workers. In 2010, workers from EU-countries in eastern Europe accounted for 22 % of those employed in temporary work agencies. Norwegian research has shown that parts of the workers from the new EU-countries have substandard wage and working conditions, particularly those employed in foreign subcontractor companies. In addition problems were registered regarding unregistered work.
In 2007 the Norwegian Ministry of Labour and Social Inclusion stated that the government aims to improve the control of companies hiring out temporary workers and their customers, get a better overview of a growing industry and ensure that the industry’s actors comply with statutory obligations to the state. The compulsory reporting and registration scheme for temporary work agencies was implemented to achieve these objectives. It was also thought that the combination of the register with the ban on hiring workers from unregistered companies would help to tackle undeclared work (NO0808039I). In light of the research results mentioned above, the government particularly aimed to improve the control with companies hiring workers from the new EU Member States.
For a brief description of the requirements that need to be met for temporary work agencies to be listed in the register, as well as information on the ban on hiring of workers from unregistered companies see NO0808039I. The main principle is that in order to be allowed into the register, the agency has to present documentation proving that it has been listed in the Central Coordinating Register for Legal Entities – which is the national Norwegian company register – as well as registered with the Norwegian tax authorities. Foreign companies operating in Norway must also have a representative based in Norway or appoint such a representative to act on its behalf.
In January 2011, the register contained 1,362 businesses, of which 87 were registered as foreign companies operating in Norway.
The Labour Inspectorate has the practical responsibility for registration and maintenance of the register. Customers of temporary work agencies are responsible for checking whether the agency they intend to use is registered through the Labour Inspectorate’s website. It is the customer of the temporary work agency (the hirer) who is given an order by the inspectorate if the agency used is not listed in the register (the order is followed by a fine if not followed up).
Outcome of evaluations: lessons and conclusions
Achievement of objectives
The register was evaluated by researchers from Fafo on behalf of the Ministry of Labour (Arbeidsdepartementet) in 2011. The register’s requirement for foreign temporary work agencies to have a permanent representative in Norway is pointed out as its biggest advantage, especially from the Labour Inspectorate’s side. This requirement has made it easier for the inspectorate to get in touch with a company contact person. The Labour Inspectorate finds that it has become easier for the customer company to terminate the contract with the agency if it’s not listed in the register. According to representatives from the Labour Inspectorate the register has helped to screen out some of the most disreputable players in the industry, as the proportion of intermediaries, who appear as temporary work agencies (but in reality is only one person), has become smaller.
The evaluation showed that 86 % of union representatives from businesses in industry/construction that use temporary workers from agencies, state that it is always, or most often, checked that the agencies are listed in the register.
Obstacles and problems
The evaluation shows that the Labour Inspectorate reports that the register seems to be relatively unknown among customer companies. This is confirmed by a survey among inspected companies, showing that only 44 % of the representatives from these companies have heard about the register.
The evaluation is mainly focused on wage and working conditions. The inspectors experience that the customers of temporary work agencies often state that they feel safe that the agency has everything in order because the agency is listed. Therefore the customer companies often don’t feel the need to do their own research on whether the agencies they use actually fulfil the set requirements. This has been seen as problematic, because being listed in the register only implies that the agency has been registered legally with the authorities, which is not a guarantee for compliance with regulations regarding taxation (including VAT payments) or that wage and working conditions are appropriate.
The evaluation of the register from 2011 concluded that it probably has had a limited effect on wage and working conditions. The evaluation does not directly address the question of undeclared work, but the Labour Inspectorate has not issued many orders regarding the use of non-registered temporary work agencies. However, being registered is not a guarantee for fulfilling tax and VAT requirement.
According to the Labour Inspectorate’s annual report from 2010 most of the temporary work agencies they meet when they carry out inspections, are registered.
These measures should be transferable to other countries. With regards to undeclared work, it is notable that representatives from the Labour Inspectorate experience that the register has helped to screen out intermediaries, who appears as temporary work agencies, but in reality is only one person recruiting workers from other countries to Norway. Such activity is seen as especially problematic with regards to transferability.
- The Norwegian Labour Inspection Authority (Arbeidstilsynet).
- The Ministry of Labour (Arbeidsdepartementet, AID).
Eldring, Line, Anne Mette Ødegård, Rolf K. Andersen, Mona Bråten, Kristine Nergaard & Kristin Alsos (2011), Evaluering av tiltak mot sosial dumping (Evaluation of measures against social dumping). Oslo Fafo-report 2011: 9.
Government hearing on the Temporary and Agencey Work Directive, in Norwegian: http://www.regjeringen.no/nb/dep/ad/dok/hoeringer/hoeringsdok/2007/horing--forskrift-om-bemanningsforetakvi/horingsnotat.html?id=485396
Note from government hearing on 'measures to secure that rules on hiring and hiring out of work-force are complied with': http://www.regjeringen.no/nb/dep/ad/dok/hoeringer/hoeringsdok/2011/horing--forslag-til-tiltak-for-a-sikre-a/horingsnotat.html?id=666369
Tom Erik Vennesland, Fafo Institute for Labour and Social Research