Enhanced obligations for the employer in reorganizations and redundancies
From January 1, 2024, certain employer obligations that previously applied to each separate company will now extend to all companies within a corporate group. The legislative changes mandate that the employer is obliged to consider (and offer to the employee) other suitable work throughout the group, even if the employee is not formally employed in any of the other companies within the group. Therefore, an employee cannot be terminated due to downsizing in one company if there is another suitable position available for the employee within the group. This obligation is considered “secondary,” meaning it is only applicable when the employer cannot offer other suitable employment within its own company.
The same will also apply to the preferential right, ensuring that an employee who has been terminated due to downsizing in one company will have a preferential right for other available and suitable positions within the group for a period of one year after the termination. This “group preferential right” is also secondary, meaning for example that employees will not lose the preferential right in the company they were previously employed in if they decline an offer of a new position in another company within the group.
According to the new rules, in groups with a total of at least 50 employees the (Norwegian) parent company is required to establish frameworks for cooperation, information sharing, and discussions between the companies and their employees. The cooperation must be agreed upon between the group and a majority of employees or local trade unions. An example of a cooperation could be establishing a collaborative body between the employer and the employees’ representatives, where information and discussions about plans such as expansions, contractions, or reorganizations that may significantly impact employment in multiple companies within the group will take place. If you wish to read more about the changes related to downsizing in corporate groups, you can find more information (in Norwegian) here.
New Requirements for Employment Contracts
From July 1, 2024, new rules will come into effect based on a new EU directive, specifying information that must be included in employment contracts. The purpose of these new requirements is to ensure safer and more predictable working conditions for employees. The new requirements include:
- A description of the procedure to terminate the employment relationship, including the formal requirements.
- For employees without a fixed workplace: clarification that the employee works from different locations or is free to determine their own workplace.
- Any arrangements for overtime and overtime pay, as well as detailed information about working hours if the work is performed periodically.
- Information about the right to skills development offered by the employer.
- Details about any entitlement to leave other than vacation paid by the employer.
- Specific details of the various elements in the employee’s salary model.
- Information about shift schedules and changes to them.
- Information about social security.
From July 1, 2024, it will be crucial for employers to update their contract templates in accordance with the new rules. Please note that there is no requirement to update existing employment contracts at the time of enactment of the new rules unless employees request it. If requested, the employment contract must be updated within 2 months.
Furthermore, the deadline for having an employment contract in place will be reduced from 1 month to 7 days after the start of employment, for employment relationships lasting more than 1 month. Additionally, employers previously had one month to inform in writing about any changes in the employment conditions. This deadline is also reduced under the new rules, requiring employers to inform in writing about any changes from the date the changes come into effect.
From July 1, 2024, new rules regarding probationary periods will also be introduced. Firstly, for temporary employments, it will not be permissible to agree on a probationary period exceeding half of the duration of the temporary employment. Secondly, there will be a prohibition on agreeing to a new probationary period where an employee continues in the same position or in a substantially similar position that the employee has previously held in the same company. This is already considered established practice by case law but is now also specified in the law.
Two new presumptions will also be introduced, having significance in cases where the employer has not provided sufficient information in the employment contract. If there is no information about the temporary nature of the employment, it will be presumed that the employment is permanent unless something else is considered more likely. The same will apply if the employer has not informed about the employment percentage of the position. In such cases, the employee’s claim about the scope of the position will be presumed to be true unless something else is considered more likely.
The new legal changes will therefore place significant demands on oversight and coordination across companies in reorganization and downsizing processes. Additionally, there will be new requirements for employment contracts in the future.
If you, as an employer, have any questions or need assistance to act in accordance with the new rules, please reach out to us, as we are ready to help you.
Season’s Greetings and a Happy New Year!
From the Employment Law Team at Simonsen Vogt Wiig