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Do temporary agency workers have the same right to bonus payments as permanent employees?

A recent court ruling from Gulating lagmannsrett (Court of Appeal) states that bonus payments are not covered by the principle of equal treatment for temporary agency workers, cf. LG-2018-162656. The ruling has been appealed, and the result of the appeal to the Supreme Court will be of great importance to many companies and employees of temporary work agencies.

The essence of the dispute was whether two agency workers hired from the temporary work agency Semco Maritime AS to Aker BP were entitled to the same bonus payments as the permanent employees in Aker BP. The bonus scheme practiced by Aker BP in Norway was based on two elements: (1) performance achievement in the Aker BP group and (2) performance achievement for their unit within the group. The scheme was applicable to all permanent employees and apprentices in Aker BP. Since 2013, the bonus payments had varied between approx. NOK 45,000 to 75,000 per employee in the job category corresponding to the positions of the two temporary agency workers. They claimed bonus for the period 2014-2017, and this amounted to approx. NOK 270,000 (including holiday pay) for each of them.

Contrary to the district court, the Court of Appeal found that the bonus scheme in Aker BP was not to be regarded as “pay” under the Norwegian Working Environment Act section 14-12 a. The provision implements the Temporary Agency WorkDirective 2008/104/EC to Norwegian law, and states that temporary agency workers are entitled to the same pay and other benefits as the permanent employees of the hiring in business.

In the grounds of the judgment, the Court of Appeal referred to another judgment by the Supreme Court (HR-2018-1037-A). In this judgement, the Supreme Court found that a temporary agency worker was entitled to travel time allowance equal to the permanent employees of the hiring company. Although this case involved a different type of benefit than the bonus in Aker BP, the Supreme Court’s statements were general when it came to interpreting the term “pay”. The Supreme Court referred to the preparatory works where it is held that the equal treatment provision should have a relatively broad area of application, that the rule is intended to include more than remuneration for work and that the purpose of genuine equality would not be fulfilled if the travel time allowance were not comprised by the equal treatment principle.

Despite these general statements from the Supreme Court, the Court of Appeal meant that the Supreme Court’s ruling did not fully resolve the issue of whether bonus is to be regarded as “pay”. The Court of Appeal stated that in the 2018-judgement, the Supreme Court held that it is not a condition to be comprised by the term “pay” that the benefit is closely related to the employees’ working hours. On the other hand, the judgment does not provide explicit guidance as to whether it is a condition that the benefit must be linked to the employee’s work assignment.

When the Court of Appeal concluded that the temporary agency workers were not entitled to bonus, it mainly emphasized the following:

  • The bonus did not have elements that made it dependent on the employee’s work performance
  • The main purpose of the bonus was to stimulate loyalty to the employer, maintain a culture of performance and retain employees
  • The bonus scheme was not part of the employees’ employment contracts and was not subject to negotiations or discussions
  • The bonus program was an administrative scheme that was subject to the employer’s right of management and there was no automatic payment of bonuses each year.
  • Industry practice has stated that company bonus schemes fall outside of the “pay” term
  • The conclusion was supported by legal theory
  • Admission of bonus to temporary agency workers would be difficult to practice

Based on the above, it appears as the Court of Appeal mainly emphasize elements of substantial considerations in its interpretation, and that the court apparently does not give as much weight to the Supreme Court’s directions that the law’s purpose of genuine equality should be heavily weighted.

We have been informed that the two temporary agency workers have appealed the judgment to the Supreme Court. Only if the Supreme Court takes the appeal to trial will we get more clarity of current law regarding the term “pay” and right to equal treatment. It remains to be seen whether the Supreme Court Appeals Committee approves the appeal for trial in the Supreme Court.