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                                      NO0202106S
                                    Kristine Nergaard
                                         Norway
                                          Study
                                           NO1
                                           EN

Background document and questionnaire for EIRO comparative study
on ‘Economically dependent workers’

Issues
Each national centre should provide information on the following points.

A) In your country, are there any employment arrangements which could be classified as
‘economically dependent’ in the sense outlined above? In other terms, are there formally
self-employed people who are dependent on one employer (or a few employers) for their
income and are not clearly distinguishable from employees as regards the organisation
and the content of their jobs (see above for details)? Please illustrate the main features of
such employment arrangements.

Is there an employment status which is specific to these workers or do they belong to a
general definition of self-employment?

In Norway, we have traditionally found such employment arrangements within the
construction sector (so-called "contractors"). By this is understood construction
employees (mainly unskilled builders/craftsmen) who are registered as self-employed and
who work for another company. The contractors are doing the same kind of work as
ordinary employees within this company and are instructed by the company who also is
responsible for building materials etc. Some years ago (late 1980's) the use of
"contractors" was subject to considerable debate. Partly because such arrangements
were seen as problematic for tax-reasons, and partly because such employment contracts
were regarded as problematic when it comes to health and safety, employment conditions
etc. ("social dumping"). Similar employment arrangements can be found within the
transport sector, for instance when truck/lorry drivers and mobile plant operators own
their own vehicles and have long-term contracts with a central agency for goods and
transport procurement. Such a transport central has at least on one occasion won a
tender for public renovation work. However, such arrangements are normally not based
on any direct transfer of personnel, i.e. that a person goes from employee to self-
employed dependent worker. Similar employment arrangements are also be found among
courier services and similar enterprises, where jobs are exchanged by a single company,
and where affiliated drivers are self-employed but subject to the instructions of the
“employer” (uniforms, similar cars etc.).

There has not been much discussion on the extent to which "dependent workers", or
similar types of contracts, are on the increase in other sectors or in other professions -
whether in low- or high competence areas. There are incidences of employees setting up
their own businesses and start working for their former employer as consultants etc.
However, we do not believe this is any substantial trend.

Persons with long-term freelance contracts with a single employer may also be regarded
as "economically dependent employees". There are however no indications to suggest
that this type of work is on the increase, e.g. among journalists the number of freelancers
has remained stable.


B) Even if there are no workers who could be classified as ‘economically dependent’,
please indicate specifically:
 which are the essential criteria utilised to identify ‘employees’;

In a conference paper by Jon Gisle, Law Clerk, written in collaboration with Stein Evju,
Special Adviser, the Labour Court of Norway ("New Employment Relationships.
NORWAY". Eighth Meeting of European Labour Court Judges. Jerusalem, September 3,
2000) it i stated that:

'In Norwegian law the decisive factor in whether a contract of employment, or - more
precisely - an employment relationship exists in essence is whether the person performing
work is deemed to be an "employee". The concept of "employee" is legally defined in
labour and employment legislation (…. ) Section 3 No. 1 of the 1977 Act relating to
Worker Protection and Working Environment (AML) lays down a definition in the
standard form: for the purposes of the Act an "employee" is "any person who performs
work in the service of another".

From this point of departure the delineation of the concept of "employee" rests basically
with the courts, which in case law have elaborated a series of criteria, or factors, to be
taken into account in deciding whether a person in a given case is to be considered an
employee.

Among the factors mentioned by Gisle and Evju are:
1) …. whether the worker concerned pursuant to the contract has a duty to perform work
himself, in person
2) …. the individual performing the work owns the equipment that is needed for carrying
out the tasks
3) … employer's power of instruction and control
4) … who is responsible for the results achieved

See full report for further information.
http://echo.ilo.org/public/english/dialogue/govlab/papers/2000/mlcj8/theme2/norway.htm


   whether the definition of ‘employee’ is currently the object of any discussion or
    reconsideration in your country;

The definition of 'employee' is currently discussed by the public committee who is
revising the AML. Among the issues that are to be deliberated are:

       “The committee is to evaluate the extent to which the terms ‘employer’ and
       ‘employee’ as defined in the AML and other Acts relating to labour law, are
       sufficiently able to accommodate contemporary and future ways of which to
       organise working life”

   if there has been any significant labour disputes, grievances or case law which
    address the demarcation between ‘employee’ and ‘non-employee’ status in order to
    grant to the latter protections and rights granted to the former, notably as far as
    workers who could be labelled as ‘economically dependent’ are concerned.

       As mentioned above, the concrete distinction between employees and independent
       contractors (and employers) is partly decided by case law.

C) Are there data on the number of ‘economically dependent workers’? Are there figures
on their distribution in the different sectors? In other words, are they particularly present
in some specific industries? If so, are there studies available which identify any particular
reasons or possible interpretations for this uneven distribution of ‘economically
dependent workers’ across sectors?
Referring to either official statistics or other research such as case studies (please,
indicate the source), try to provide data on ‘economically dependent employment’, as far
as the following aspects are concerned:
 gender;
 age;
 education;
 job positions and skills.

There are no data on the number of economically dependent workers as defined above
(i.e. both self-employed and 'economically dependent'). It is not possible to make a
distinction between groups of self-employed workers dependent on a single proprietor of
jobs, and others. Statistics show, however, that the number of self-employed workers
(excluding the primary industries) as a proportion of all employed people have declined
somewhat during the 1990s (OECD Employment Outlook 2000).
D) If there are any relevant statistics or research, please provide information on
‘economically dependent workers’ with regard to:
 any link to reorganisation processes (that is, does the importance of ‘economically
    dependent workers’ increase in the event of company restructuring, as a means to
    reduce costs, increase the firm’s adaptability, etc?);

There has been some debate on this issue in connection with competitive tendering in the
municipal sector (there is at least one instance of a "company" consisting of self-
employed drivers with their own trucks took over waste disposal services). However, the
focus is mainly on outsourcing to other (specialised) companies or
privatisation/competitive tendering where another company takes over the work in
question. In most instances this means that another company is responsible for the work,
and that the work is done by "ordinary employees", not economically dependent workers.

   the use of this kind of employment arrangements as a substitute for dependent
    employees or/and as a possible ‘selection mechanism’ for future recruitment on a
    permanent employment contract;

One might argue that such employment relations will by nature be a substitute for
ordinary employees (i.e. there is a fixed amount of work to be done!). In some instances
such kind of employment arrangements are used by the employer to save money (and
reduce the taxation level for both the employee and the employer). This was an important
issue in the debate in the late 1980s and early 1990s, especially in the construction
sector. However, in 1995 the AML was amended to prevent companies from firing
employees in order to contract in the same kind of services.

       "A new second paragraph was inserted stating that "dismissal owing to an
       employer's actual or planned contracting out of ordinary operations of the
       enterprise to a third party shall not be warranted unless it is absolutely essential
       in order to maintain the continued operation of the enterprise". (Gisle and Evju
       2000)

This does not stop an employer from outsourcing so-called support services. As argued
above, this usually means the outsourcing of functions such as maintenance, cleaning,
canteen, IT-services etc. to another company specialising in such services. Often - but not
always - the employees are also offered jobs in the company that takes over the function.

We have no knowledge of such employment relations being used as a "selection
mechanism", even though for instance freelance journalists etc. might be offered a more
permanent job if they do a good job.


   place of work and integration in the employer’s organisation;
No information available. However, level of integration in the employer's organisation is
one of the factors that can be used to determine whether a person is an ordinary
employee or an independent contractor (i.e. a self-employed person).

   wage differentials with respect to employees in similar job positions;

No information available. However, self-employed persons are submitted to other rules
with regards to taxes etc. This makes it difficult to compare wage-level etc. between self-
employed and ordinary employees.

 working time.
No information available. Self-employed persons are not submitted to the AML-rules with
regards to working hours, overtime etc.

E) Is ‘economically dependent employment’ regulated by law in any respects? Where
there are legislative provisions, what is the content of the law? In replying to this
question, please refer to the following ‘check-list’ of issues for potential legal regulation:
 wage levels;
 working time;
 duration and termination of contract;
 illness and sick leave;
 holidays;
 maternity, parental or sabbatical leave;
 collective representation;
 information and consultation;
 training;
 health and safety.

As long as ‘economically dependent employment’ is understood as self-employed
persons, they are subject to different legislative provisions than ordinary employees. The
working time regulations in the AML do not apply to self-employed. Self-employed
persons do not get any sick-pay the first 16 days of sickness absence and are only
compensated 65 percent for the rest of the sickness-period (compared to 100 percent
compensation from the first day for ordinary employees). Self-employed persons are not
covered by the Act relating to Holidays (and are not obliged to take time off for holiday
purposes each year and do not enjoy the right to paid holidays). Self-employed have the
same right to paid maternity/parental leave as ordinary employees, although
compensation is calculated in a different way (65 percent of average income over the last
three years). Self-employed do not enjoy the right to collective representation, to
information and consultation, or training - this is rights that are reserved for ordinary
employees only. As a general rule the AMLs regulations on health and safety does not
apply to self-employed. However, contract workers and others that are working at a
workplace (for instance a construction site) where one main contractor is in charge, are
subject to some kind of safety regulations.
Another group that might be considered as "dependent employees", even tough they are
not formally self-employed, are "wage earners without employment contracts" (among
others some groups of freelancers). This group is not covered by the AML. They receive
sick pay, but not for the first 16 days.


F) Are there any draft bills or legislative proposals on the regulation of ‘economically
dependent employment’? Please, indicate the areas of intervention covered by these
proposals, referring to the abovementioned check-list.

As mentioned above, a public committee is reviewing the AML and will also look into the
definition of the terms ‘employee’ and ‘employer’. A reason for this is the fact that
atypical employment contracts/employment arrangements (broadly defined) are expected
to become more usual. The committee's work is in the process of starting up, and the
committee will not present its recommendations before November 2003.

G) Regardless of the existence of legislative provisions, is there a debate on
‘economically dependent workers’ in your country which highlights their specificities (in
particular, their ‘dependence’) and relates to formal recognition (that is the introduction
of a specific employment status or the extension of some prerogatives of employees to
such workers), especially as regards the protection and rights of this kind of worker?
Please, indicate specifically whether, and in what terms, such debate covers the issues of:
a) wage levels; b) working time; c) employment security; d) leave periods (illness,
maternity, parental or sabbatical leave); d) trade union representation; e) information and
consultation; f) vocational training; g) social protection; and h) health and safety
regulations. Are any other aspects prominent or relevant in the debate on ‘economically
dependent workers’ in your country? Which are the areas where proposals for regulation
are mostly controversial in this debate?
In covering the debate, please mention specifically the positions of trade unions and
employers' associations on ‘economically dependent workers’.

In the late 1980s and early 1990's, the debate mainly focused on contractors in the
construction sector. In the late 1990s, there has been some debate on contractors' role in
connection to competitive tendering in the public sector (see above). The matter will be
discussed in connection with the public committee that is looking into the WEA.

There has also been a debate on whether the public sector can include so-called "anti-
contractor" paragraphs in tenders for public purchases - mainly due to worries that such
arrangements may encourage tax evasion and that they are problematic when it comes to
health and safety at work. However, such contracts are today seen as problematic as they
may hamper "free competition" among providers.

H) Are there signs of an extension of the coverage of industrial relations to ‘economically
dependent workers’? Essentially, are there developments relating to the following
aspects:
   representation: the creation of new trade union organisations specific to these workers
    or their representation by existing ones. Please specify the details of any such
    organisational developments;


Several trade unions organise self-employed persons, for instance the organisations for
engineers, lawyers, dentists, doctors etc. The trade union for journalists organises both
employees and freelancers, the same applies to the union for musicians (an LO-union),
the union for actors etc. Among the traditional "blue-collar" trade unions, the LO-
affiliated transport workers union also has members among self-employed drivers. The
Finance Sector Union of Norway have decided to start a (mainly) Internet based unit (not
a traditional union) for young and non-unionised employees among the "new groups",
offering among other things finical and legal advise. This unit will probably also try to
apply to self-employed consultants etc.


   collective bargaining: the conclusion of collective agreements which cover
    specifically these workers or the inclusion of chapters on ‘economically dependent
    workers’ within collective agreements at any level (national, sectoral, territorial,
    company). If such provisions are present, please specify the content of at least one
    such collective agreement or chapter (as a reference, try to use the check-list provided
    for legislative regulation, above in question no. 5).

The vast majority of "economically dependent workers" (self-employed persons) are not
covered by collective agreements (or parts of these). However, we know of a few
exceptions to this. None of these are specifically aimed at "economically dependent
employees" but cover groups of self-employed/freelancers, regardless of how dependent
they are on a single employer.

According to Gisle and Evju 2000: "(…)collective agreements may - to a certain extent,
at least - expand on the general concept of "employee" by defining who are to be
considered as "employees" for the purposes of the agreement(…). Provisions of this kind
are found in some collective agreements, notably in the forestry sector."
         The agreement between the Norwegian Confederation of Trade Unions
(Landsorganisasjonen i Norge, LO) and the Confederation of Norwegian Business and
Industry (Næringslivets Hovedorganisasjon, NHO) for the forestry sector defines which
groups that are covered by the agreement and states that these applies without regard to
whether a person pays VAT or not (i.e. is registered as self-employed) - this would apply
to drivers who own their own vehicles. The agreement regulates pay levels/pay systems
(this is a sector with much piecework), working hours etc. The agreement also states that
all persons covered by the agreement are subject to the AML, i.e. that this also applies to
self-employed persons that fall within the scope of the agreement.

The agreements between the Norwegian Union of Journalists (Norsk Journalistlag -
including the division for freelance journalists) and a couple of major television stations
in Norway, also regulate groups that may be considered as economically dependent
employees. These agreements basically regulate copyright/compensation for use of
articles etc. However, there are also some guidelines regarding pay and they also
stipulate that freelancers are entitled to sick-pay for the period that is normally covered
by the employer (the first 16 days). There also exist agreements that regulate the wage-
and working conditions of freelance actors.


I) Is the issue of ‘economically dependent workers’ (whatever the actual definition
utilised in your country) present on the trade union agenda? What are the main strategies,
if any, that unions are discussing and implementing with respect to these workers?

The issue of contractors has been on the trade unions agenda for a long time.

J) Please, give the NC assessment of the issue of ‘economically dependent workers’ in
your country, its present relevance and possible future developments, notably as far as
industrial relations are concerned.
Economically dependent employees - as defined in the introduction to this questionnaire -
are not a distinct group with regards to statistics or legislation. However, groups that fall
within the classification or the meaning of the concept can be found in the Norwegian
labour market. So far, it's little evidence that there has been any major development in
the number of so-called economically dependent employees. However, within some
sectors we believe that such employment arrangements have increased (for instance in
courier services).
The public committee who is examining the AML will discuss employment arrangement in
a broader context. The committee will have to look into different aspects of employment
arrangement, including how to define who is an employer and who is an employee. So
far, the focus on changes in employment arrangements has been on other kind of
arrangements than dependent employees, namely outsourcing and the use of external
experts, temporary agency work and other kinds of labour hire, and changes in
employment situation due to company restructuring, competitive tendering etc. The
implication of many of these arrangements is that the traditional employer-employee
relationship is challenged, but not necessarily because traditional employment
arrangements are substituted by self-employed or freelance employment.

By Kristine Nergaard

				
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