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Ensuring compliance with labour laws and regulations is one of the key challenges faced by legal and HR teams around the world. And, if your operations span several countries, these challenges are multiplied simply because each one has its own rules and requirements.
Ignorance is no excuse for non-compliance — but keeping up with ever-evolving regulations across multiple jurisdictions is a never-ending task. In this article, we’ll share some of the biggest compliance management challenges faced by companies operating across the Nordic region — plus our advice on how to overcome them.
Understanding labour regulations across the Nordic region
The Nordic region is made up of five countries: Denmark, Finland, Iceland, Norway and Sweden, as well as three autonomous regions. Of these, Denmark, Finland and Sweden are EU member states. While Norway and Iceland are not part of the EU, many EU regulations apply within their borders.
However, this doesn’t mean that labour regulations are uniform across the Nordic region. Far from it: each country has its own rules, laws and employment customs that employers need to be aware of. The region is also characterised by a strong trade union presence, with collective bargaining agreements setting standards in many areas.
Plus, labour regulations frequently change. That means that businesses operating across multiple jurisdictions within the Nordic region need robust compliance, governance and monitoring systems to ensure adherence to both EU and national labour regulations — and avoid the consequences of non-compliance.
Key compliance challenges for companies operating in the Nordic region (and how CXC can help)
Here are some of the biggest challenges you’ll face if your operations span multiple Nordic countries.
1. Navigating complex compliance requirements across multiple jurisdictions
Each of the Nordic countries has its own labour regulations that employers must comply with. And if you operate across multiple jurisdictions, you’ll need to understand the differences between them. For example, a company based in Sweden with workers in Norway and Finland will need to comply with the relevant employment laws and labour standards in all three countries — or face fines and penalties.
That means employers need to understand the different regulations governing things like:
- Minimum wages
- Working hours
- Mandatory employee benefits
- Employment background checks
- Employment contracts
- Remote work
- Termination
If you don’t have the internal resources to manage these things, consider working with a partner for localised compliance support. For example, an employer of record (EoR) provider like CXC can help you easily hire talent across the Nordic region, handling all things compliance on your behalf.
2. Ensuring workers’ rights and protections
The Nordic region is known for its particularly strong worker protections, with labour laws generally being favourable to employees. Businesses hiring workers in one or more Nordic countries need to understand their workers’ rights to ensure their operations are compliant.
This includes things like:
- Data protection: Each of the Nordic countries has its own rules governing employee data protection, which are crucial for employers to understand. While these are all based on the EU’s General Data Protection Regulation (GDPR), the law has been implemented slightly differently in each country. Understanding exactly what you can and can’t do with employee data is critical, especially if you’re transferring that data across borders.
- Health and safety: Employers in all Nordic countries are required to put in place protections to keep their workers safe and healthy. However, requirements vary from one jurisdiction to another. Taking a blanket approach to health and safety across the Nordic region could result in non-compliance with local labour regulations — and lead to fines and penalties.
- Pay equity: All of the Nordic countries have protections in place to prevent pay discrimination between men and women. However, these are not consistent across the region. For example, each country requires employers above a certain size threshold to regularly audit their pay practices, and in some cases to report their findings publicly or to an external body. But the exact rules and who they apply to are different in each country.
These are just a few examples of the different employee rights and protections that apply within each of the Nordic countries. For more insights and guidance on hiring in each country, head to our Global Hiring Guide.
3. Monitoring ever-changing labour regulations
Keeping up with regulatory changes is one of the primary challenges for multinational businesses operating within the Nordic region. New laws are regularly introduced, both on an EU level and within individual countries. Plus, the implementation of EU directives is often different in different jurisdictions — so compliance in Sweden may not look the same as in Denmark, for example.
Businesses that engage workers across multiple countries within the region must monitor regulatory updates and implement a robust compliance management system that allows them to react quickly to changes. All of this is both time-consuming and labour-intensive — and may simply not be possible for some businesses. Working with an experienced compliance partner like CXC can help you stay up to date on changing regulations without overstretching your internal team.
4. Mitigating the risk of penalties and other consequences of non-compliance
The consequences of non-compliance with labour laws vary from one country to another and depend on the rule that has been breached. However, they typically include fines, penalties and other legal repercussions. Handling lawsuits related to purported labour law breaches can also be extremely costly. Plus, companies that gain a reputation for disrespecting labour regulations can suffer significant reputational damage, harming their ability to both attract talent and retain customer loyalty.
When it comes to mitigating compliance risks, it’s not enough to be reactive. Partnering with an expert provider like CXC can help you stay ahead of regulatory changes and identify risks in your operations. For example, we support our clients by performing comprehensive audits and risk assessments, helping them to iron out problems before they turn into legal issues.
Best practices to ensure compliance with labour regulations across the Nordic region
Navigating compliance challenges in the Nordic region can be tricky — but it’s not impossible. Here are our top tips for overcoming compliance hurdles and protecting your business.
Draft robust, localised employment contracts
Your employment contracts should be reflective of your internal policies, processes and culture. But they also need to comply with the legal requirements of the country each worker is located in. Since each Nordic country has specific requirements for the information that must be included in employment contracts, the language they must be written in and when they must be provided, a blanket approach won’t work. If you employ workers across multiple Nordic countries, you’ll need to ensure each one of your contracts is both locally compliant and in line with your internal policies.
Leverage technology for compliance monitoring
Maintaining full visibility is one of the biggest challenges related to managing a large workforce. For most international businesses, keeping track of every decision to ensure it complies with the relevant labour regulations is almost impossible. Using dedicated tech tools to track compliance metrics and ensure adherence to legal requirements can help you stay compliant in areas such as minimum wages, working hours, data protection and more.
Conduct regular compliance audits
As we’ve mentioned, labour regulations change frequently. And, if you’re operating in more than one country, that can be a lot to keep track of. But if you’re not carefully monitoring labour regulations, you could be caught out by a law you didn’t know has been updated — which is no excuse for non-compliance. As a minimum, conducting regular audits of the regulatory landscape in the countries you operate in is key. In most cases, working with legal counsel and compliance experts is necessary to not only stay up to date on new regulations but also to effectively interpret and apply them.
Provide regular training to internal teams
It’s likely that your legal and HR teams understand the ramifications of non-compliance with labour regulations. But ensuring the rest of your team is aware of them too can help you to avoid costly mistakes. To minimise the risk of fines, legal fees and other unpleasant consequences of non-compliance, you’ll need to provide regular and comprehensive training to HR, hiring managers, finance, payroll and others. Implementing monitoring tools and tracking employee compliance also helps you to identify issues and address them promptly.
Navigating Nordic labour regulations with confidence
Keeping up with evolving regulations, ensuring consistency across borders and maintaining compliance while looking after the needs of your business isn’t easy. If you’re struggling to juggle these things, you’re not alone.
But developing robust compliance management frameworks is essential if you want to mitigate risks to your business while supporting workforce growth and stability in the Nordic region. If your internal teams are struggling to keep up, partnering with an external expert could help you to meet your compliance needs.
At CXC, we offer a range of workforce solutions. We can help you draft localised, compliant employment contracts, advise you on critical employee rights and protections, and safeguard your business against the legal risks and reputational damage associated with non-compliance.
Get in touch with our team to learn more.
