The European Free Trade Association Surveillance Authority (ESA) last week sent a letter of formal notice to Norway for introducing ‘unjustified and disproportionate’ restrictions on the use of temporary agency workers.

ESA earlier this year informed the Norwegian authorities that it had received several complaints following the introduction of measures restricting the use of temporary agency workers in Norway.

In December 2022, Norway made legislative amendments removing the possibility for companies to use temporary agency workers when the work is of a temporary nature, such as for seasonal work or production peaks.

Norway also introduced an absolute prohibition on the use of temporary agency workers in the construction sector in the counties of Oslo, Viken and former Vestfold. The main arguments for introducing these new restrictions were to reduce the use of temporary agency workers and increase permanent and direct employment.

Having assessed the information from the authorities, ESA finds Norway to be in breach of the Temporary Agency Work Directive and the freedom to provide services across the EEA.

“The restrictions are far-reaching, severe and liable to have serious consequences for temporary-work agencies and their employees, as well as for the companies who wish to use them,” the ESA stated. “While restrictions on the use of temporary agency workers can be allowed, they must be justified and proportionate.”

According to the ESA, the restrictions put in place by Norway cannot be justified on grounds of general interest since the objective pursued goes against the two-fold aim of the Temporary Agency Work Directive of protecting temporary agency workers and providing flexibility in the labour market.

In addition, ESA finds that the restrictions are not proportionate.

“Norway has not demonstrated that they are actually suitable to achieving the objective of increasing permanent and direct employment in a consistent and systematic manner,” the ESA stated. “Nor has it been demonstrated that the restrictions are necessary and that no alternative and less restrictive measures are available.”

The ESA first sent a letter to the Norwegian government in February 2023. The Internal Market Affairs Directorate of the ESA sent a request for information to the Norwegian Government, asking several detailed questions concerning the adopted measures in Norway restricting the use of temporary agency workers.

In April, the ESA then informed Norway that it had received four complaints relating to the newly adopted measures in Norway restricting the use of temporary agency workers.

In a letter by the Norwegian Government in May, Norway provided general information on its labour market model and the government’s labour market policy, as well as some statistics and information regarding the use of temporary agency workers in Norway. The Norwegian government, moreover, maintained that the adopted measures are compatible with EEA law as they constitute justified and proportionate restrictions on the use of temporary agency workers and the freedom to provide services.

Fiona Coombe, director, legal & regulatory research, Staffing Industry Analysts, said, “Article 4 of the Agency Workers Directive obliges member states to remove restrictions on temporary agency work in national legislation and collective agreements. The principle, which has been tested in the European Court of Justice, requires member states to properly assess the necessity and proportionality of any restrictions.”

The Confederation of Norwegian Enterprises (NHO) published a response to the ESA’s letter.

Nina Melsom, director of labour relations, NHO, said, “It is not surprising for NHO that ESA is following up on this case and opening a case against Norway. As far as the rental rules are concerned, this affects our members hard.”

Commenting on the ban against hiring labor from staffing companies for construction work on construction sites in Oslo, Viken and formerly Vestfold, Melsom said, “We have always believed that the hiring ban has a poor impact assessment and affects many companies disproportionately. That is why we have always been critical of the government in this matter.”

“Neither NHO nor any of the national associations have sent a separate complaint, but we have contributed to clarifying the matter with the facts,” Melsom added. “We understand that ESA is opening a case. It is up to the government to handle Norway's obligations in the EEA agreement.”

The ESA’s recent letter of formal notice is the first step in an infringement procedure against an EEA EFTA State.  Norway now has two months to express its views before ESA decides whether to take the case further.