What responsibility does the employer have to check that foreign workers have a valid work permit?

What is the limit for an employer's duty to check that foreign employees have the necessary residence and work permits? On April 15, 2021, the Supreme Court issued a judgment where the question was whether a limited liability company could be subject to a corporate penalty for employing a foreign worker who did not have a residence and work permit in Norway. The limited liability company was imposed a corporate penalty with a fine of NOK 30,000, but the judgment states that there is no objective criminal liability for companies.

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What does the ruling mean for you as an employer?

The Supreme Court's decision clarifies and establishes that corporate penalties cannot be imposed on the basis of strict criminal liability. Corporate penalties can only be imposed in the event of negligence on the part of the company. The judgment entails a duty of investigation for the company to clarify whether foreign employees have a valid work permit. A breach of this duty may result in negligence on the part of the company, and the culpability requirement for corporate criminal liability will thus be met.

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This decision is also of significance when imposing corporate penalties.

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What was the case about?

The company in the case had hired a foreign employee as general manager. The chairman of the board, who owned all the company's shares, established the company and hired the person in question to help him start his own business. At that time, the employed general manager had received a final rejection of his residence permit. In other words, he did not have a valid residence and work permit in Norway. Despite this, he was registered in the Register of Employers and Employees, and he had a tax card. In other words, the employer had reasonable grounds to rely on the information that he had a work permit in Norway.

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The employee was arrested by the police and the company was subsequently fined NOK 25,000. The company was informed that failure to accept the fine would result in a fine of NOK 30,000. The company did not accept the fine, and the case was taken to court. The prosecutor deviated from what was stated in the fine and claimed a fine of NOK 500,000.

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The Supreme Court's assessment of the guilt requirement for corporate penalties

Corporate penalties are regulated by section 27 of the Penal Code, which states that companies can be punished in cases where a penal provision is violated by someone who has acted on behalf of the company. The provision specifies that this applies "even if no individual has been guilty". According to this wording and the preparatory works, there is objective criminal liability for companies. The Supreme Court also considered whether such objective criminal liability is compatible with Article 6(2) and Article 7 of the European Convention on Human Rights, which prohibit punishment on a purely objective basis. In the event of conflict between the Convention and other Norwegian law, the Convention shall prevail, cf. section 3 of the Human Rights Act.

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The Supreme Court concluded that section 27 of the Penal Code cannot be applied according to its wording, and that under Norwegian law, corporate penalties cannot be imposed in cases where no one has been guilty. However, the Supreme Court concluded that there was no requirement for intent or gross negligence under section 108, third paragraph (a) of the Immigration Act, and that corporate penalties can thus be imposed in cases of negligence.

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The Supreme Court then specifically assessed whether the chairman of the company's board of directors had acted negligently. In this specific assessment, the Supreme Court emphasized that the chairman of the board had not investigated whether the man who was employed had a work permit, and that this was sufficiently negligent conduct on the part of the chairman. This was despite the fact that the man had informed the chairman of the board that he had a work permit, he was registered in the Register of Employers and Employees and he had a tax card.

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The Supreme Court thus imposes a very strict due diligence requirement for companies that employ foreign workers.

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The Supreme Court's sentencing

Since the conditions for a corporate penalty were met, the Supreme Court went on to consider the assessment of the corporate penalty. The original fine was NOK 25 000. It was stated in the fine that failure to adopt the fine would result in a fine of NOK 30,000. However, during the proceedings in the District Court and the Court of Appeal, the prosecutor claimed a fine of NOK 500 000.

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The Supreme Court stated that one should be able to rely on the prosecuting authorities to impose a fine in the same order of magnitude as the original fine. The Supreme Court stated that even though the prosecuting authority is not bound to the amount notified in the fine, it would be reasonable to settle on a fine of the original informed amount of NOK 30,000. The company was fined NOK 250,000 in the Court of Appeal, and the Supreme Court reduced this considerably.

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What can your company do to avoid corporate penalties in such cases?

If your company has foreign employees, this decision means that the company should have routines for checking the citizenship/residence permit of all employees at the time of employment. In order to create a uniform arrangement for all employees in the company, and at the same time make it easier for the company, this routine check at the time of employment should apply to everyone.

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The decision can be found here.