Employment 2020

Last Updated September 08, 2020

Norway

Law and Practice

Authors



Advokatfirmaet Selmer AS is a full-service law firm with offices in Oslo and Stavanger. Selmer provides expert business law advice rooted in deep industry insights and business understanding to domestic and international companies. The firm's unique combination of law, strategy and finance gives Selmer an edge in understanding the market, and creates better solutions and added value for the client through increased flexibility and highly effective implementation. Selmer's extended employment team consists of 13 members, and combines standalone employment and pension law advice with assignments requiring close co-operation with Selmer’s other business areas. The team is best known for its commercial approach and quick turnaround time, in addition to capabilities and skills within transaction-related employment law, pensions and incentive schemes. Selmer's employment team assists a wide variety of international, regional and local clients in different sectors, including several of the world's largest offshore oil and gas companies operating on the Norwegian continental shelf.

No significant changes in employment law have been enacted or decided in Norway during the last 12 months, other than actions and initiatives related to the COVID-19 crisis (see 1.2COVID-19 Crisis).

Several actions and initiatives have been introduced in Norway to reduce the negative effects of the COVID-19 crisis and the temporary shut-down of major parts of society. From an employment law perspective, the most significant measures are as follows.

Temporary Lay-offs

  • the period the employer has to pay salary at the start of the lay-off was reduced from 15 to two working days (the period will be increased again to ten working days as of 1 September 2020);
  • the government introduced a scheme where the employee receives full pay (up to certain thresholds) from the government from day three to 20 of the lay-off; this scheme will be terminated from 1 September 2020;
  • parts of the unemployment benefits for people who have been laid-off have been increased to 80% of salary;
  • the period employees can be laid-off with unemployment benefits and without pay from the employer is proposed to be extended from 26 weeks to 52 weeks. However, an additional five working days employer-paid period has been introduced if the lay-off exceeds 30 weeks.     

The period employers must pay salary for care and sick-related leave was reduced from ten to three weeks for care-related leave and from 16 to three weeks for COVID-19-related sick leave. For care-related leave, the period is increased to ten days again from 1 July 2020.

The number of days parents can stay home with sick children aged 12 and under was doubled for a limited period. However, this has been reversed as of 1 July 2020, but at the same time the number of days used before this date has been deleted and will not count when calculating the yearly maximum days.

In addition, a number of temporary financial and tax relief measures have been introduced, including:

  • a compensation scheme for otherwise sustainable businesses with at least 30% drop in revenue due to the virus outbreak;
  • economical support to businesses taking back people who have been laid-off in the same employment fraction as before the lay-off;
  • a state guarantee scheme for bank loans to enterprises;
  • postponed deadlines for tax filing and payments;
  • temporary reduced level of employer's social security contributions;
  • temporary reduced VAT rate for certain sectors.

There is no distinction between blue-collar and white-collar workers under Norwegian law. As a main rule, all employees have the same legal protection. Nevertheless, employees holding a leading or particular independent position may be exempted from most of the provisions concerning working time, including the right to overtime payment. Further, it is possible to agree other terms for the chief executive of an undertaking. This includes waiving statutory employment protection and statutory rules regarding non-competition and non-solicitation against severance pay, and more flexibility with regard to fixed-term employment and dispute resolution.

As a clear main rule, employees shall be employed for an indefinite period. A definite (temporary) employment can only be agreed when certain specific circumstances are in place, the two most important exemptions being when the work is of a temporary nature (eg, time-limited projects not normally carried out as part of the company's business) or as a temporary replacement for another person or persons (substitute/temp).

It is also possible to agree a definite employment for a maximum period of 12 months without any specific circumstances being in place. However, this may only apply to a maximum of 15% of the employees of the undertaking. Units within the undertaking with at least 50 employees may be regarded as separate undertakings. When the agreed definite employment period expires, the employer will be subject to a quarantine period of 12 months, unless the temporary employee is offered the opportunity to continue in an indefinite position. During this quarantine period, the employer cannot make new definite appointments for work tasks of the same kind within the undertaking.

The Norwegian Working Environment Act (WEA) requires that a written employment agreement is entered into no later than one month after the commencement date, both for definite and indefinite employment. As a minimum, the employment agreement shall include the following information:

  • the identity of the parties;
  • the workplace – if there is no permanent or main workplace, the agreement shall state that the employee works at different locations, and shall state the business address of the employer, or, where appropriate, the employee's home address;
  • a description of the work or the employee’s title, post or category of work;
  • the date of commencement of the employment;
  • expected duration and the legal basis for the appointment if the employment is definite;
  • any provisions relating to a trial period;
  • right to holiday and holiday pay, and the rules for determination of holiday periods;
  • the employee’s and the employer’s notice periods;
  • agreed salary on commencement, including other benefits that are not part of the salary (eg, pension entitlements, method of payment and payment intervals for salary payments);
  • duration and disposition of the agreed daily and weekly working hours, including length of breaks – in the case of periodical work, it must state when the work shall be performed or provide a basis for calculating when the work shall be performed;
  • agreement concerning special working hour arrangements; and
  • information concerning any collective agreements that apply to the employment.

If the employee is working from home, an agreement concerning the home office also needs to be entered into.

The main rule is that normal working hours that can be worked without paying overtime are nine hours per day and 40 hours per week. Work extending these limits is overtime. The minimum statutory overtime pay is a 40% supplement in addition to ordinary pay. The overtime supplement has to be paid out as salary, even if the actual working time and overtime is taken out as time off. Collective bargaining agreements normally have higher overtime pay supplements – many have 50% until 9pm and 100% for subsequent hours at night. Employees working in a leading or particularly independent position may be exempted from most of the rules regarding working time, including overtime.

Employees may have the right to reduced working hours due to health, social or welfare reasons. Employees are also entitled to flexible working hours if this can be arranged without major inconvenience for the employer.

Average calculation of working hours over a period of time, that give more flexibility and longer daily/weekly normal working hours within defined thresholds, can be:

  • agreed with the individual employee;
  • agreed with elected employee representatives when the employer is bound by a collective agreement; or
  • granted following application to the Norwegian Labour Inspection Authority.

A part-time employee shall have a predictable structure for work – for example, by way of a specific percentage of employment (such as 40% of full-time employment). If a part-time employee is to perform work periodically, the employment contract must state when the work is to be performed or provide a basis for calculating when the work shall be carried out. A part-time employee who, during the previous 12 months, has regularly worked in excess of the agreed working hours is entitled to a post equivalent to the actual working hours during this period unless the employer can substantiate that the additional work is no longer needed. A part-time employee also has a preferential right to an extended position as long as the employee is qualified for the position.

There are no general statutory minimum wage requirements in Norway, but minimum wage provisions are often found in collective bargaining agreements. Minimum wage and benefits in accordance with nationwide collective bargaining agreements are also made universally applicable by law to everyone working within certain industries or sectors. This includes important areas such as construction work, shipyards and the fishing industry, as well as hotel work, cleaning work and electrical work.

Employers often have bonus schemes/systems for their employees. Such bonuses may be based on the employee’s own work, the team's work, the company's performance or a combination of these. Thirteenth-month bonuses are not normally applied in Norway, but some employers may choose to award the employees with an annual bonus (for instance, a Christmas bonus).

The only government intervention in private sector employees' compensation, increases, etc, in Norway applies to employees in finance institutions, investment firms, insurance undertakings and pension undertakings. The Norwegian Regulation on Financial Undertakings sets out provisions relating to the calculation of fixed and variable compensation for employees in such undertakings, among other things. For other private sector employees, compensation and increases are often governed by collective bargaining agreements.

As regard to government intervention in public sector employees' compensation, the government has adopted guidelines for the calculation of compensation (including severance pay) to certain categories of senior executives employed by the state or by state-owned companies.

Vacation and Vacation Pay

Vacation and vacation pay is governed by the Norwegian Holiday Act. The statutory minimum holiday is 25 working days where weekdays and Saturdays are considered as working days. (Please note that this is just an way of counting days – Saturdays are not, in general, regarded as working days in Norway, except within certain sectors such as retail.) This means a statutory minimum holiday of four weeks and one day. However, it is common to offer five weeks of holiday, as this is in line with nationwide collective bargaining agreements. If the employment commences after 30 September, the employee is only entitled to six days' holiday including Saturday (one week) during the commencement year. From 60 years of age, the employee is entitled to one additional week.

Employees are entitled to take out three consecutive weeks of holiday during the main holiday period, which runs from 1 June until 30 September. The employee may claim that the remaining seven days should be taken consecutively.

The employee earns the right to holiday pay in the first year of employment (the qualifying year), which runs from 1 January to 31 December. Accrued holiday pay is paid the following year (disbursement year), on the last ordinary pay day before the holiday period, or no later than one week before the holiday commences. The employee does not receive salary when on holiday. It is common to pay all accrued holiday pay in June or July in the disbursement year, and at the same time deduct salary for all holiday to be taken though the year. The calculation rate for holiday pay is 10.2% of all salary and other payments for work paid the year before. In the case of holiday above the statutory minimum, the percentage increases (12% for five weeks' holiday).

It is the employer's responsibility to make sure that the employee takes his or her statutory holiday during the holiday year. It is not allowed to pay cash in lieu of unused holiday. However, the employee can claim compensation if it is the employer's fault that the employee has not been able to take the remaining holiday. The employer and the employee may agree in writing that the employee shall take holiday in advance (maximum 12 working days), and that holiday shall be transferred to the following holiday year (maximum 12 working days).

Required Leaves (Including Pay) for Maternity, Disability, Childcare, Illness, Etc

An employee is entitled to one year's paid sick leave, where the employer pays sick pay for the first 16 calendar days. Thereafter, the employee receives payment from the Norwegian National Insurance Scheme, which covers sick pay of salary up to six times the Norwegian Basic Amount ("G"), which, as at 1 May 2019, amounts to NOK99,858 (the determination of the G for 2020 is postponed to autumn 2020, due to the COVID-19 situation). The employer is not obliged to cover any additional amounts in the case of salary above 6G, but may agree to do so.

A pregnant employee is entitled to paid leave for birth-related examinations.

A pregnant employee is entitled to up to 12 weeks' maternity leave during the pregnancy ("pregnancy leave").

The father or, if the parents do not live together, one other individual assisting the mother in connection with birth, is entitled to care leave for two weeks in connection with birth to assist the mother. The same applies in connection with adoption.

After giving birth, the mother is entitled to six weeks' maternity leave.

Parents are entitled to parental leave in connection with birth and adoption to a total of 12 months, including any pregnancy leave, maternity leave and care leave, or as long as parental benefit is paid. The parental leave can be taken within a period of three years and can be extended by 12 months for each parent and 24 months for parents with sole responsibility for the care. The same applies to adoptive or foster parents in connection with the transfer of care.

The Norwegian National Insurance Scheme pays parental benefits for 49 weeks with 100% of salary, or 59 weeks with 80% of salary in connection with birth and, respectively, 46 or 56 weeks in connection with adoption. Three weeks before birth and 15 weeks following birth is reserved for the mother, and 15 weeks following birth is reserved for the father (18 weeks instead of 15 weeks if 80% salary is chosen). Parental benefit is limited to 6G. The employer is not obliged to cover any additional amounts in the case of salary above 6G, but may agree to do so. An employee may receive payment for a longer period for multiple births or adoption of multiple children.

The mother is entitled to breastfeeding breaks as long as required during the first year of the child's life. The employer shall pay for any such breaks up to one hour per day.

In the case of illness of children and childminders, an employee is entitled to a maximum ten days' leave per year up to and including the calendar year in which the child turns 12 years of age, or 15 days per year if the employee has more than two children. If the child has a chronic illness or disability, the employee is entitled to leave of up to 20 days per year up to and including the year in which the child turns 18 years, in addition to leave for training at an approved medical institution or public competence centre. If the employer has sole care, the employee is entitled to twice as many days of leave. The first ten days are covered by the employer, and thereafter benefits are paid by the Norwegian National Insurance Scheme.

An employee is also entitled to leave in the case of a hospital stay for a child, when the child needs continuous monitoring and care or the child has a life-threatening illness or injury.

An employee is entitled to 60 days' end-of-life care for close relatives and up to ten days' leave per year for essential care for parents, their spouse, a cohabiting partner or registered partner, or a disabled child, including the calendar year the child turns 18 years of age.

Employees are also entitled to study leave (up to three years if the employee has worked for at least three years and has been employed by the employer for the last two years), leave in connection with military service, civic statutory duty and religious holidays for employees not belonging to the Church of Norway (up to two days per year). Such leave is unpaid.

Limitations on Confidentiality, Non-disparagement Requirements

During the employment, the employee's duty of confidentiality follows from the employee's duty of loyalty in an employment relationship. A duty of confidentiality can also be agreed with the employee to apply after the termination of the employment. It is market practice to include a confidentiality clause in the employment agreement.

Business secrets are protected against misuse both during and after the employment under the Norwegian Penalty Act and the Norwegian Marketing Act.

Non-disparagement requirements are not common in Norway. However, the duty of loyalty includes non-disparagement requirements to a certain extent.

Employee Liability

The employer has a strict liability for damage caused by the employee through fault or negligence during the employee's performance of work or duties for the employer, as long as the liability is reasonable taking into account the nature of the business, subject area and nature of the work.

Non-competition clauses can only be enforced if they have been agreed in writing in advance, and provided that mandatory formal and material requirements are followed. Non-competition clauses are only valid if the employer has a special need for protection against competition at the time the clause is invoked. The clause may not be invoked for a period longer than 12 months following termination of employment, and shall further provide the employee compensation equivalent to 100% of all salary (including bonuses and other variable pay) up to 8G, and thereafter a minimum of 70% of salary in excess of 8G. The compensation may be limited to a maximum of 12G. The compensation may be reduced to 50% of all fixed and variable salary/compensation received by the employee from others during the non-competition period.

At any time during the employment relationship, the employee can request that the employer provide a written statement accounting for whether and to what extent the non-competition clause will be invoked, as well as the particular need for protection against competition. The same obligation applies if the employee terminates the employment or if the employer gives dismissal with notice or summary dismissal.

In the case of dismissal with notice from the employer, the statement shall be provided at the same time as the notice of dismissal, or within four weeks if the employee terminates the employment or requests a statement. In the case of summary dismissal, the statement shall be provided within one week after dismissal.

The statement is binding for the employer for three months, and always during the notice period (if longer than three months). If the statement sets out that the employer will invoke the non-competition clause, the employer is obliged to pay compensation if the employee quits while the statement is binding. This applies even if the employer's need to invoke the non-competition clause changes after the statement is given, typically that the employer receives information about the new employer and regards the non-competition clause as unnecessary. During the employment, the employer may decide to waive the non-competition clause, provided that the employer is not in a period where it is bound by a written statement.

The chief executive may be exempted from statutory rules relating to non-competition and non-solicitation if he or she in writing agrees to renounce such rights in advance of termination against severance pay. There is no statutory requirement as to the size of such severance pay. Non-competition and non-solicitation obligations for chief executives must, nevertheless, be reasonable, based on an overall assessment.

Non-solicitation clauses with reference to customers may not exceed 12 months following termination of employment. Such clauses may only include customers the employee had contact with or was responsible for during the year prior to termination. There is no compensation requirement. The requirement on the employer to provide a written statement, as explained above in relation to non-competition clauses, also applies for customer clauses.

There are no explicit statutory limitations for non-solicitation clauses between the employer and an employee with regard to solicitation of employees. The decisive factor is whether such non-solicitation clause is reasonable. A non-solicitation clause concerning solicitation of employees for a period of up to 24 months following the termination of employment is normally considered reasonable.

Norwegian law prohibits non-solicitation clauses with reference to employees, which are entered into between the employer and another undertaking – eg, clauses that prohibit or impose fines on a customer that attempts to recruit consultants working on site with the customer. An exception is made in relation to negotiations regarding transfer of undertakings, where such clause could be invoked during negotiations and for six months following the end of negotiations if the transaction is not completed. Further, such clause could be invoked from completion of a transfer of undertaking and for six months thereafter.

Processing of personal data is governed by the Norwegian Personal Data Act with regulations, which implements the EU's General Data Protection Regulation 2016/679 (GDPR). The Personal Data Act with regulations sets out exceptions from the GDPR and additional provisions relating to data privacy, which are specific for Norway. The Norwegian Personal Data Act also applies in the employment sphere.

In Norway, there are also specific regulations of employers' rights and obligations relating to the use of closed-circuit television (CCTV)/video surveillance and relating to access of employees' email and other private electronic file areas. This involves having to fulfil general material criteria in order for the undertaking to carry out such activities, as well as procedural requirements.

There are no limitations on employing citizens of the Nordic countries (Sweden, Denmark, Finland and Iceland). Such workers have the right to work in Norway without a residence and work permit.

Citizens from the EU/European Economic Area (EEA) also have the right to work in Norway without a residence and work permit. However, if the worker stays in Norway for more than three months then he or she must be registered with the Norwegian police within three months from the date of entry into Norway.

Citizens from countries outside the EU/EEA need a residence and work permit in order to work in Norway. As a main rule, an employee cannot start working in Norway before the employee has been granted a residence and work permit. Citizens from such countries are normally not granted a residence and work permit unless there are specific reasons for the stay in Norway, such as studies, vacation or family reunion. However, exceptions may apply for skilled workers, in addition to seasonal workers if it can be substantiated that it is not possible to get the labour supply from an EU or EEA member state.

Employers who employ foreign workers who do not have the right type of residence and work permit can be punished by fines or imprisonment.

EU/EEA citizens who plan to stay in Norway for more than three months must be registered with the police at the latest three months after the date of entry. The certificate of registry is issued by the police subject to personal attendance at the police office with their passport or other valid identification papers in addition to documentation of the employment relationship. The employment agreement must meet statutory requirements under the WEA.

Citizens from countries outside the EU/EEA must apply for a work and residence permit. As regard to applications for residence permits for skilled workers and seasonal workers, an employer can apply on the worker's behalf.

Trade unions play an important role in Norway, both from a judicial and political perspective.

Trade unions are defined as “any associations of workers or workers’ associations when the association has the purpose and interests of promoting workers’ interests to their employers”. There is no requirement that the union has its own board, statutes, etc. Trade unions can be national or local. However, most trade unions are affiliated to a national, trade-specific or sector-specific federation, which in turn is affiliated to a main confederation of employees.

The largest employee confederation in Norway is the Confederation of Norwegian Trade Unions (Landsorganisasjonen i Norg, LO).

Companies with ten employees or more must have a safety representative to safeguard the employees' interest in matters relating to environment health and safety (EHS).

Employers that regularly employ at least 50 employees are obligated to establish a working environment committee to deal with EHS issues. The same applies if the Norwegian Labour Inspection Authority considers it necessary (irrespective of the number of employees) or when the company has between 20 and 50 employees and the company or employees require it.

If a company has 30 or more employees, the employees can demand employee representation on the company's board of directors, if such demand is supported by a majority of the employees. Companies with 200 or more employees are obligated to establish employee representation on the board. The number of employee representatives depends on the number of employees in the company. Detailed provisions and regulations set out rules regarding the election of employee representatives to the board and the corporate assembly (see below).

Companies with more than 200 employees shall also establish a corporate assembly with 12 members, or a larger quantity divisible by three if determined by the ordinary general meeting. One-third of the members shall be elected by and among the employees. The duties of the corporate assembly are, inter alia, election of board members, to supervise the board and general manager’s management, and to make statements to the shareholder meetings regarding the accounts. The company and a majority of the employees (or unions representing a majority of the employees) may, however, agree in writing that the company shall have an extended employee board representation instead of a corporate assembly. Such agreements are common in Norway.

Companies with 50 or more employees must inform and consult with elected employee representatives/union representatives concerning issues of importance for the employees’ working conditions; eg, in connection with redundancies and reorganisation. The right to representation is not linked to employees being members of a union and such union being party to a collective agreement. The company has a clear obligation to take an initiative towards the employees to make sure that all affected employees are duly represented. It is not sufficient to inform and consult with employee board members in their capacity as such.

If the company is bound by collective bargaining agreements, additional requirements to inform and consult with employee representative bodies may apply.

Collective bargaining agreements are concluded between a trade union and an employers' organisation or directly between a trade union and the employer. The establishment of a collective bargaining agreement requires that one of the parties puts forward a claim for a collective bargaining agreement, which normally is the trade union. When the employer is a member of an employers' organisation, it is usually a requirement that 10% or more of the workforce are unionised.

Collective bargaining agreements between a trade union and an employers' organisation are normally based on a hierarchic system with three levels:

  • national level between a national confederation of trade unions and a national confederation of employers' organisations that sets the framework for bargaining of collective agreements, election of union employee representatives, the co-determination rights and rules for taking industrial action (normally referred to as the "basic agreement");
  • industrial/sector-level agreements between employers' organisations and trade unions in the various sectors, which normally include provisions concerning working time, salary, holiday, welfare leave, etc; and
  • local-level agreements between the company and the local unions.

During the duration of a collective bargaining agreement, a labour peace guarantee applies, meaning that the parties may not take industrial actions such as strikes, lockouts, etc, before the agreement has expired. Such actions may only take place when the parties negotiate the terms of a new agreement. Legal disputes about the interpretation, etc, of collective bargaining agreements do not entitle industrial actions. Such disputes shall be brought before the Labour Court following mandatory negotiations and mediations.

In order to lawfully terminate an employee, the employer must have objectively justified grounds for dismissal on the basis of matters related to either the undertaking (eg, redundancies) or the employee (eg, underperformance).

Prior to any final decision concerning dismissal, an individual consultation meeting shall be held with the employee in question. The employee is entitled to meet with a trade union representative, lawyer or other adviser. In the meeting, the employee shall be informed of the reasons why the employer is considering dismissal and the assessments made in this regard. The employee shall be given the opportunity to provide his or her feedback.

A notice of dismissal shall be in writing and must meet statutory requirements with regard to content, such as deadlines for claiming a negotiation meeting, instituting legal proceedings and for claiming preferential right to new positions in the company (applicable when the dismissal is based on circumstances related to the undertaking). The notice letter shall be delivered in person or sent by registered mail.

When the dismissal is based on matters relating to the undertaking, additional requirements apply, as outlined below.

  • Selection of redundant employees shall be based on fair selection criteria commonly accepted under Norwegian law, normally qualifications, seniority and social concerns. If the company is party to a collective bargaining agreement, the main rule will normally be that the selection shall have seniority as a clear starting point.
  • The company must weigh its need for dismissal against the disadvantage a dismissal will have for each employee; the consequences of a termination for the employee shall not outweigh the company’s interests in a downsizing.
  • Dismissals are not objectively justified if the employee can be offered other suitable vacant work with the company.

In the case of collective redundancies (which applies when dismissing at least ten employees within a period of 30 days), the employer must as soon as possible enter into consultations with the employee representatives for the purpose of reaching an agreement to avoid collective redundancies or to reduce the number of persons made redundant. Employee representatives shall receive all relevant information, hereunder a written notification about:

  • the reasons for redundancies;
  • the number of employees who may be made redundant;
  • which category/group the redundant employees belong to;
  • the number of employees normally employed;
  • the groups of employees that are normally employed;
  • the period within which such redundancies may be carried out;
  • which employees may be made redundant; and
  • details regarding calculation of possible severance pay.

The consultations should cover the above and possible social welfare measures, such as providing support for redeploying or retraining of redundant employees. The employee representatives have the right to be assisted by advisers.

Further, the employer must notify the Labour and Welfare Service (NAV) in writing of the mass dismissal and the above information.

Collective redundancies cannot take effect earlier than 30 days after NAV was notified. NAV may extend this period for up to 30 days. Within this period, notices may not be given effect.

The minimum statutory notice period in Norway is one month. Longer statutory minimum notice periods apply based on the employee's seniority in the company or seniority and age combined, as follows.

  • five years' consecutive seniority – two months;
  • ten years' consecutive seniority – three months;
  • ten years' consecutive seniority and 50 years of age – four months;
  • ten years' consecutive seniority and 55 years of age – five months;
  • ten years' consecutive seniority and 60 years of age – six months.

The notice period is calculated from the first day of the month following that in which notice was given. The notice period is mutual. However, when the employee has ten years' seniority and is aged 50 years or more, he or she can terminate the employment with three months' notice period.

The employee may be employed on a trial period during the first six months of the employment. The statutory notice period during the trial period is 14 days, unless otherwise agreed in writing (14 days is market standard). The employer must also have objectively justified grounds for dismissal during the trial period, but the threshold for termination is somewhat lower, provided that the employer is able to document that the termination is based on the employee's lack of suitability for the work, or lack of proficiency or reliability.

There are no statutory requirements relating to severance pay in Norway. An employee cannot agree in advance to waive his or her employment protection and/or right to work during the notice period. Such agreement can, however, legally be entered into in direct relation to termination of employment (see 7.4 Termination Agreements). An exception is made for the chief executive of an undertaking. Under Norwegian law, the chief executive may validly enter into a pre-agreed severance pay arrangement in lieu of notice, meaning that the executive waives employment protection against severance pay. (For large companies, the leader of a division, etc, may be regarded as chief executive in relation to this rule.)

A summary dismissal can take place if the employee is guilty of gross breach of duty or other serious breach of the employment agreement.

In order for a summary dismissal to be valid, it must be proportionate and reasonable. Further, it must be given within reasonable time after the employer is made aware of the breach. The threshold for giving a summary dismissal is high, and the employer shall consider if the same purpose could be reached by means of a dismissal with notice.

As a main rule, the same formal requirements apply to a summary dismissal as a dismissal with notice. An individual consultation meeting prior to a final decision concerning summary dismissal needs to be held, the summary dismissal shall be in writing and contain statutory information, and the summary dismissal shall be delivered in person or by registered mail; the summary dismissal will have effect once the employee receives the notice of summary dismissal (no notice period applies).

Employees may enter into a termination agreement in connection with termination of the employment. There are no statutory requirements, formalities or procedures for termination agreements. However, there is a long-developed market practice on how to draft termination agreements. An agreement may be deemed wholly or partly invalid if the court finds the agreement unreasonable from a contract law perspective.

As stated above, only the chief executive may pre-agree to waive his or her employment protection against severance pay; such agreement must be in writing. There are no statutory requirements with regard to the level of the severance pay. The level normally varies between six and 12 months' base salaries in addition to the notice period, depending on the industry, size of the company, etc.

Dismissal may not be given based on absence due to sickness or injury during the first 12 months of sick leave. In the case of dismissal during this period, a reversed burden of proof applies, meaning that the employer must make probable that the dismissal is not due to sickness. Following the 12-month period, dismissal may be given due to long-term sick leave if the employer can document objectively justified grounds for dismissal, where, inter alia, the likeliness of the employee returning to work will be emphasised.

Pregnant employees may not be dismissed on grounds of pregnancy and employees may not be dismissed with effect during maternity, paternity or adoption leave. If an employee is lawfully dismissed at a time falling within this period, the notice is valid but shall be extended by a corresponding period and the notice period (or remainder of such) will not start to run before the employee returns to work from such leave.

Employees who are serving military or civil service may not be dismissed on grounds of absence related to their service.

Under the whistle-blower provisions in the WEA, a whistle-blower is protected against any retaliation in connection with a whistle-blowing, including dismissal.

Normally, collective bargaining agreements include a specific protection against dismissal for union-elected representatives, by requiring that due regard must be given to the special position that they have in the company.       

Most collective bargaining agreements give employee elected representatives some additional protection against dismissal, based on their special position.

If the employee is of the opinion that the dismissal is not objectively justified, the employee may demand negotiations with the employer within two weeks from when notice is given. The employer is obligated to hold the negotiation meeting within two weeks from when such claim is put forward. While the dispute is subject to negotiations between the parties, the employee has the right to remain in his or her position.

The employee may also institute legal proceedings. The employee may claim that the dismissal is invalid (meaning that the employee shall keep the position) and claim compensation for an unlawful dismissal. Alternatively, the employee may choose only to claim compensation.

The main rule is that the employee has a right to remain in his or her position until the court has rendered a legally binding decision, provided that a lawsuit is brought before the courts with a claim for invalidity within the deadlines set out in the WEA. This could mean that the employee has the right to remain in the position for several years, if the case is appealed in the legal system. However, if demanded by the employer, the court may, as a temporary measure, decide that the employee shall leave the post while the case is in progress. This requires that the court finds it unreasonable that the employment continues during the case. The right to remain in the position is often used as leverage in termination negotiations.

The basis for compensation in the case of unlawful dismissal may consist of a combination between economic loss and damages for non-economic loss.

Equality and anti-discrimination issues are governed by the WEA Chapter 13 and the Norwegian Equality and Anti-Discrimination Act. Pursuant to these provisions, direct and indirect discrimination on the basis of political view, membership of a trade union, temporary or part-time employment, age, gender, pregnancy, leave in connection with childbirth or adoption, care responsibilities, ethnicity, religion, belief, disability, sexual orientation, gender identity, gender expression, age or other significant characteristics of a person is prohibited.

However, differential treatment is not regarded as discrimination if it has an objective purpose, is necessary to achieve the purpose, and does not have a disproportionate negative impact on the person subject to the differential treatment. For instance, it is explicitly stated in the WEA that preferential treatment that contributes to promoting anti-discrimination does not contravene the provisions in Chapter 13 of the WEA. Such preferential treatment shall cease when the purpose is achieved.

Another noteworthy prohibition under the Norwegian anti-discrimination law is that during an appointment process, the employer, as a main rule, may not collect information about an applicant's views on political issues, membership of employee organisations, pregnancy or plans to have or adopt children, religion or beliefs, ethnicity, disability, sexual orientation, gender identity or gender expression.

In discrimination cases, the burden of proof is reversed. This means that discrimination shall be deemed to have occurred if there are circumstances that give reason to believe that discrimination has occurred, and the employer is not able to substantiate that discrimination did not in fact occur.

A person who has been unlawfully discriminated against may claim compensation for economic loss resulting from the unlawful discrimination and non-economic losses that shall be set at a reasonable amount taking into account the extent and nature of the damage, the parties' relation and other facts of the case. This applies regardless of whether the employer can be blamed for the discrimination (ie, strict liability).

Disputes concerning collective bargaining agreements shall be brought before the Labour Court. Such disputes may only be initiated by the involved trade union or employers’ organisation (or employer if a direct agreement). Other employment disputes are handled by the ordinary courts.

Some employment matters shall be brought before a special Dispute Resolution Board before they can be brought before the ordinary courts.

Claims of discrimination can be brought before the Equality and Anti-discrimination Tribunal prior to the ordinary courts.

Class action claims may be initiated if the claimants have claims based on uniform or predominantly uniform facts and legal grounds. Additional requirements for initiating class action claims are that:

  • the claims need to be handled by the same court composition and under the same procedural rules;
  • the class action procedure must be deemed the best way to handle the dispute; and
  • the court must be able to appoint a group representative.

The Civil Procedure Act also allows for multiple parties to act as claimants or defendants in one action, provided that certain conditions are fulfilled (inter alia, that the parties agree or that the claims are closely connected).

With regard to disputes concerning the termination of an employment relationship, arbitration can only be pre-agreed as dispute resolution with the chief executive of the company. After a dispute has arisen, other employees may also agree to arbitration.

The main rule for disputes that are subject to the ordinary courts is that the losing party shall fully compensate the opposite party's litigation costs. However, the court may exempt the losing party from liability, wholly or partly, if the court finds that that compelling grounds justify exemption, where it particularly shall be taken into account whether:

  • there was just cause to have the case heard because the case was doubtful or because the evidence was clarified only after the action was brought;
  • the successful party can be reproached for bringing the action or whether the party has rejected a reasonable offer of settlement; or
  • the case is important to the welfare of the party and the relative strength of the parties justifies an exemption.

The first and third points have often been emphasised by the courts in employment disputes to reduce the employee's responsibility to pay litigation costs where the employee is the losing party.

The main rule for disputes subject to the Labour Court is that legal costs are not awarded. However, the Labour Court may award litigation costs under special circumstances.

Advokatfirmaet Selmer AS

Postboks 1324 Vika
0112 Oslo
Norway

+47 23 11 65 00

A.johansen@selmer.no www.selmer.no
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Trends and Developments


Authors



Wiersholm is one of Norway's largest law firms, with expertise in all significant areas of business law. Its professional expertise, understanding of different business sectors and collaborative culture make it well equipped to understand, simplify and improve its clients' everyday lives. Wiersholm's network, its lawyers’ international experience and their co-operation with actors in other countries give the firm an international approach that benefits clients. The large employment law team contains some of Norway's foremost employment law experts and provides practical and efficient assistance tailored to clients' needs. Work includes employment agreements and collective wage agreements; incentive and bonus schemes; changes in working conditions, restructuring and downsizing; privacy in the workplace, control measures and e-mail access, in co-operation with the firm's data protection team; integration processes and employment law due diligence in connection with transactions, mergers and acquisitions, in co-operation with Wiersholm's M&A team; equal treatment and discrimination matters; and litigation and dispute resolution before the courts.

Perhaps to a greater extent than within other legal fields of expertise, labour and employment law should adapt and adjust to developments in society. External factors, such as technological advancements and changes in consumer behaviour, rapidly affect and challenge how we work. A consequence of such developments is that the need for certain occupations is reduced, while the need for others increases – as an example, the onset of the internet and the rapid shift to email as the default method of communication have caused the number of postal workers to steadily decrease during the last decades.

In order to remain competitive and cost-effective, businesses must adjust and adapt to both long and short-term changes. For example, during the course of a few months, the COVID-19 pandemic (corona crisis) has had a severe impact on our society: some business sectors have completely shut down, others have had to change their way of conducting business, while some have thrived and experienced massive growth. Many employers have been forced to initiate temporary layoffs, which is a well-established measure during times when there is a sudden fall in demand for labour. Some effects of the corona crisis will disappear as our society returns to normality, whereas others may permanently alter the conduct of business and how work is performed. Such developments may again force employers to rethink the structure, purpose and use of their workforce.

However, labour and employment law imposes legal thresholds and guidance as to which measures employers may initiate as a response to these changes. From a Norwegian employment law perspective, two recent trends and developments should be noted as employers' responses, or attempts at adaptation, to new structures and changes in society.

Increased Legal Review of Employers' Assessments during Redundancies

Employees generally enjoy extensive employment protection rights under Norwegian law. An employer may only dismiss an employee if this is objectively justified based on circumstances relating to the undertaking, the employer or the employee. Traditionally, the courts have largely accepted workforce reductions based on the employer's needs as such an objectively justified reason for dismissals, provided that the employer has carefully and objectively considered the need for the workforce reduction and that the assessments and decisions were made by a competent body. Furthermore, the employer must present necessary and sufficient written documentation substantiating an adequate and thorough assessment of the employees who are made redundant.

Redundancies under Norwegian law are generally considered as quite straightforward processes with few formal requirements for the employer. For instance, initiating a redundancy process is not contingent on public permission, but rather subject to the employer's discretion and decision. Moreover, there is no statutory duty to pay the affected employees any severance pay – the employer is only obliged to pay regular salary and benefits throughout the notice period.

Generally, Norwegian courts have widely recognised the employers' right to decide on rationalisation measures. The courts are generally reluctant to overrule the employer's grounds and justification for such measures. For example, if a manufacturing business initiates a redundancy process due to technological advancements that render physical employees redundant, the courts will generally not overrule the employer's assessment of the situation or its decision to initiate the redundancy process.

However, while the Norwegian courts are prone to accepting employers' decisions to downsize, the courts have increased the requirements for documentation and procedure during such redundancy processes. An effect of this is that although the courts recognise the legality of initiating the redundancy process, the courts deem a number of dismissals as invalid due to lack of or insufficient documentation of the employer's assessments of the employees, and in particular the selection of the redundant employees as part of the process. During the last couple of years, the courts have increasingly scrutinised whether the employer has substantiated the evaluations of the redundant employees in order for the evaluations to be verified by the courts.

Non-objective criteria

The above applies in particular if the employer bases its selection of redundant employees on so-called "non-objective" criteria, such as personal traits and capacities. Personal qualifications are relevant and may be applied as one of various selection criteria. However, when applying non-objective criteria, the courts apply stricter requirements for documentation and procedure in the process.

Recent case law indicates that the employer, as a minimum requirement, must make written and thorough assessments of the relevant employees to substantiate the employer's grounds for the selection. For larger undertakings with many employees, these strict requirements are typically challenging to meet – especially in redundancy processes on a larger scale in which the employer must evaluate and compare multiple employees against each other.

Seniority

The stricter requirements relating to the selection process have also initiated a debate on the weight of seniority as a selection criterion, which was exemplified by a 2019 Supreme Court case concerning the use of seniority as a selection criterion in a redundancy process in a collective bargaining-bound construction company. Employers bound by certain collective bargaining agreements must generally emphasise seniority more than employers who are not bound by these agreements. Employers bound by such collective bargaining agreements are also allowed to place emphasis on selection criteria other than seniority. The key issue in the mentioned case was to what extent the employer may rely on criteria other than seniority when selecting redundant employees. Recent case law demonstrates an increased focus on seniority as a selection criterion in all undertakings, and that employers that largely rely on selection criteria other than seniority, or rely on them to a greater extent, must document the basis for selecting the redundant employees. Furthermore, the employer must document the assessment and weighting of the selection criteria for each employee and how the employees are compared to each other.

Employment disputes and agreements

Employment protection rights under Norwegian law may entail a long and costly process for the employer if an employee disputes a dismissal, as the employee is entitled to dispute the dismissal, to demand negotiations and initiate court proceedings. In such cases, the main rule is that the employee is entitled to remain in his or her post until the matter is finally resolved – either through an agreement or through a legally enforceable decision. If the court rules the dismissal as invalid, the employee will be entitled to remain employed and to be awarded damages.

Many employers are prone to offer termination agreements and severance pay in exchange for a waiver of claims and the right to institute legal proceedings pursuant to the rules of the Employment Act, in order to avoid the risks involved in formally dismissing employees. From an employee's perspective, accepting a termination agreement will often be considered a better option than being formally dismissed. Termination agreements are thus an important mechanism for both the employer and employee during the redundancy process, as they may shorten the process, reduce the number of conflicts and legal proceedings – allowing both parties to move on more quickly. Legal proceedings in Norway may be lengthy affairs, and entering into termination agreements may thus save both the employer and the employee time, money and emotional strain.

New Forms of Contractual Relationships as an Alternative to Permanent Employment

The main rule under Norwegian law is that employees must be permanently employed. Together with employment protection, the principle of permanent employment is considered fundamental in Norwegian employment and labour law, and is acknowledged by all political parties. However, there are political differences as to the conditions that must be met to allow for a deviation from the main rule. Some political parties have opted for wider access to the use of fixed-term employment contracts, while labour organisations have been firm defenders of the principle of permanent employment. According to current legislation, temporary employment is only accepted on certain conditions and if strict requirements are met.

However, developments in social and market structures, as well as increased competition, have put pressure on the main rule of permanent employment. More employers have applied flexible contractual relationships, such as contracts for independent contractors, as an alternative to permanent employment. The debate in this regard is whether an alternative contractual relationship is to be considered as an unlawful bypassing of the employment protection rights that are granted to employees, or if such constructions are legitimate and necessary due to social and technological developments, and that they may therefore provide opportunities for workers who would otherwise not be employed. Moreover, although the legislation on employment protection rights largely serves the employees' interests, many employees also actively seek less rigid affiliations, and alternative contractual relationships may thus serve the interests of both parties.

Social dumping

The construction sector has been undergoing public scrutiny for its extensive use of hired-in personnel, and has been criticised for perpetually undermining the fundamental principle of permanent employment, as well as for social dumping. Strict compliance with the rules on permanent employment has traditionally been considered as crucial for tackling work-related crimes in sectors that are prone to social dumping issues. The above has led to recent legislative amendments, which have narrowed employers' ability to hire-in workers from temporary work agencies and placed a ban on employment agreements that do not guarantee work for the employee (so-called zero-hour contracts). As an effect, the market for temporary work agencies' services has been considerably reduced.

Independent contractors

A perhaps unintended consequence of the above, is an increase in the use of independent contractors, which again has led to an increased number of disputes relating to whether the person in question is de facto an employee or an independent contractor. As an example, there is currently an ongoing and lengthy legal proceeding between a health care company and a number of self-employed workers, referred to as "consultants". As opposed to regular employees, such consultants have no rights in terms of, for example, employment protection rights, regulated working hours and overtime payment, or breaks. The courts have still not concluded whether this can be considered a legal arrangement. However, the case demonstrates the recent trend of employers challenging, and seeking alternatives to, permanent employment contracts, as well as the pertinent risk of such alternatives being challenged by the workers, claiming that they are unlawful and that the employers are bypassing the fundamental principle of permanent employment.

Group companies

Another similar development is that employees of a group company challenge their formal employing entity, and claim that their employment contracts are with another group company. A high-profile case before the Supreme Court concerned such a claim against an airline that had recently undergone a comprehensive reorganisation process that included the transfer of pilots and cabin crew to a different legal entity within the same group. The pilots and cabin crew subsequently claimed that their employment contracts were with another entity than the entity with which they had a formal employment relationship. The Norwegian Supreme Court dismissed the employees' claim, acknowledging the employer's right to decide the structure of the group, including where the employees should be employed. 

Technological advancement and changes in employment

Norwegian employment legislation is largely a result of a long-term industrialisation process. However, during the last decades, the growth in the service sector as well as technological advancements have introduced new business sectors and types of businesses that did not exist when the Norwegian employment legislation was implemented. This includes businesses like Foodora, Uber, web-based work and other services relating to the sharing economy. As Norwegian employment legislation was generally implemented with traditional industrial or office-based employment in mind, we expect that there will be work-related challenges relating to these new types of businesses as they solidify their presence on the Norwegian market.

During the ongoing corona crisis, another indication that the current employment legislation may soon be up for review has become evident. Whereas certain business sectors have struggled and thousands of workers have been temporarily or permanently laid off in Norway, other sectors have thrived and experienced massive growth and a dire need for labour, for example food delivery services and online pharmacies. However, as the corona crisis is unlike anything previously experienced in Norway, there has been considerable uncertainty relating to the extent of this surge in market shares and the related need for labour. Consequently, it has been a challenge for these businesses to arrange for flexible and adaptable arrangements for labour supply, which is not a particularly straightforward process under the current legislation.

The corona crisis and technological advancements are merely examples of developments that are affecting employment legislation. Other developments, such as changes in demographics, climate change, globalisation, international competition and web-based services will have consequences for our current structures of employment. These change processes will affect how we consider employment.

New EU and Norwegian approaches to employment regulation

The EU has developed flexicurity as an integrated strategy for enhancing flexibility and security in the labour market. The mission of the strategy is to reconcile the employer's need for a flexible workforce with workers' need for security, and one of the key elements of the strategy is to develop flexible and reliable contractual arrangements. In Norway, there is no similar concept. Some groups of non-employed workers are granted certain welfare rights as well as rights in terms of whistle-blowing, non-discrimination and general requirements regarding the working environment. However, there is no uniform legislation applicable to the various groups of non-employed workers in Norway. It is worth mentioning that the Norwegian Confederation of Trade Unions has established a co-operation offering membership for freelancers and self-employed persons as a response to the increased number of workers who are not permanently employed.

As a response to the structural changes in Norwegian working life, and recent case law, the Norwegian Government has put together an expert committee mandated to consider different contractual relationships and business structures in Norwegian working life. Even if permanent employment is a core principle under Norwegian employment law, social research demonstrates that 11% of workers in Norway are hired employees, employed on a fixed term contract or independent contractors. The expert committee is led by Wiersholm's partner Jan Fougner and is to consider whether the current employment legislation is adapted to such relationships. The committee will submit its conclusions by 1 June 2021.

Wiersholm

Dokkveien 1, 6. etg.
0250 Oslo, Norway

Postboks 1400 Vika
0115 Oslo, Norway

+47 210 210 00

firma@wiersholm.no www.wiersholm.no
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Law and Practice

Authors



Advokatfirmaet Selmer AS is a full-service law firm with offices in Oslo and Stavanger. Selmer provides expert business law advice rooted in deep industry insights and business understanding to domestic and international companies. The firm's unique combination of law, strategy and finance gives Selmer an edge in understanding the market, and creates better solutions and added value for the client through increased flexibility and highly effective implementation. Selmer's extended employment team consists of 13 members, and combines standalone employment and pension law advice with assignments requiring close co-operation with Selmer’s other business areas. The team is best known for its commercial approach and quick turnaround time, in addition to capabilities and skills within transaction-related employment law, pensions and incentive schemes. Selmer's employment team assists a wide variety of international, regional and local clients in different sectors, including several of the world's largest offshore oil and gas companies operating on the Norwegian continental shelf.

Trends and Development

Authors



Wiersholm is one of Norway's largest law firms, with expertise in all significant areas of business law. Its professional expertise, understanding of different business sectors and collaborative culture make it well equipped to understand, simplify and improve its clients' everyday lives. Wiersholm's network, its lawyers’ international experience and their co-operation with actors in other countries give the firm an international approach that benefits clients. The large employment law team contains some of Norway's foremost employment law experts and provides practical and efficient assistance tailored to clients' needs. Work includes employment agreements and collective wage agreements; incentive and bonus schemes; changes in working conditions, restructuring and downsizing; privacy in the workplace, control measures and e-mail access, in co-operation with the firm's data protection team; integration processes and employment law due diligence in connection with transactions, mergers and acquisitions, in co-operation with Wiersholm's M&A team; equal treatment and discrimination matters; and litigation and dispute resolution before the courts.

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