How Norway got EU benefit regulations wrong for seven years

There are many who carry a responsibility: politicians and government ministries, the judiciary, the NAV welfare agency and the media which did not manage to unveil what was going on. So far only NAV has been investigate – in an internal report written by Terje Klepp, a former auditing director at NAV. 

The three Cs

Terje Klepp summed up his report at a press conference on 12 December, listing what he believed to be the key reasons behind the benefits scandal. 

“I call it the three Cs: a lack of competence, capacity and communication.”

The scandal centres on the fact that EU rules trump Norwegian law. It upholds the free movement of people across national borders as a very important principle. It should be possible for EEA citizens (EU + Norway, Iceland and Lichtenstein) to bring with them benefits to other countries without having to apply for this.

According to Norwegian benefit rules, however, you must be residing in Norway in order to receive a number of benefits. The courts have not questioned the authorities’ interpretation of the law. They have carried on using the Norwegian benefit legislation rather than EU’s benefit regulations, which became part of Norwegian law after 1 June 2012.

A lack of competence

The internal report presents several examples of lacking competence. The Ministry for Foreign Affairs is believed to have translated the EU benefit regulations incorrectly. Using the Danish version, it had changed the Danish wording for “temporary stay” to “temporary place of residence”. 

Such mistakes led to a distinction between stay and place of residence that does not exist in the EU regulations. The right to receive benefits in a different EEA country was interpreted to mean only those who were residing abroad had that right. Those who were temporary resident in an EEA country would be treated according to the more restrictive Norwegian legislation.

Norway’s National Insurance Court is the institution that processes complaints relating to NAV’s decisions. It supported NAV’s resolution without questioning NAV’s interpretation of the regulations' implications when it comes to temporary stays in another EEA/EU country. 

Only five years later, in June 2017, did the National Insurance Court issue the first ruling which questioned whether NAV has correctly interpreted the benefits regulation.

Not everyone who stayed in a different EEA country was refused benefits from NAV, however. The internal report says NAV offices each year processed some 22,000 applications for keeping sick pay during foreign stays. Only 2,000 were declined. 

Bad communication

The bad communication meant people who questioned the legal interpretation were not listened to.

“Between 2012 and 2017, experts repeatedly questioned our practice when it comes to temporary foreign stays. In 2017, EFTA’s surveillance authority ESA also asked relevant questions. None of this led to the unmasking and correction of NAV’s incorrect actions,” the internal report’s author writes.

Bad capacity

In the end, the issue was not given sufficient priority, even after the first ruling by the National Insurance Court questioned the legal interpretation.

“The directorate must seek the agreement of the government ministry before NAV can change its practice. The internals process at the directorate also takes a lot of time. The reason could be a lack of continuity in this work, as several different people are working on the case at different times due to a lack of capacity at the Benefits department,” writes Terje Klepp.

“Too many activities are ‘competing’ for attention, and the issue does not receive sufficient comprehensive and concentrated attention. Most of the employees involved face other challenging tasks which were seen as more urgent in the spring of 2019.”

So what conclusions does the NAV Director, Sigrun Vågeng, draw from the report

“It shows us that the practice we have maintained until now, with several judicial environments, makes us vulnerable and not capable enough to solve complex judicial problems,” Vågeng says.