Employee board-level representation

| Insight

In Norway, employees have a right to be represented on the Board of Directors in companies with more than 30 employees. In companies with more than 200 employees the company is required to have employee representatives, provided that it has been agreed that the company shall not have a corporate assembly. Anyone employed in the company at the date of election may serve as an employee representative and anyone employed in the company on the election date may vote.

Introduction
The employee’s right to be represented on the Board of Directors («BoD») is governed in the Limited Liability Companies Act (Nw: aksjeloven) and the Public Limited Liability Companies Act (Nw: allmennaksjeloven). We will in the following refer to the Limited Liability Companies Act («the Company Act»), as the wording is the same.  The provisions are the basis for the right of employee representation on the board of directors through direct election by and among the employees.

Section 6-4 of the Company Act distinguishes between the following two situations; i) where the employees may elect employee representatives and ii) where the employees shall elect employee representatives. Whether the employees may or shall elect depends on the number of employees in the company.

The rules concerning the implementation of the employee representatives are laid down in the regulation regarding employees’ right to representation on the board and corporate assemblies of private and public limited liability companies («the Employee Representation Regulation») (Nw: «representasjonsforskriften«).

The rights and obligations of an employee representative
The employee representatives on the BoD will have the same rights and obligations as all other members of the board of directors. The responsibility of all board members, regardless of how they are elected, is to attend to the company`s interest in the best way possible. This implies that the role as a board member is an entirely different one compared to the  role as a union representative or employee representative.

The employee representatives may on the other hand provide a somewhat different focus than the other board members and may also contribute constructively with their inside knowledge of the business.

Board representation requirements
The distinction between situations where the employees may elect employee representatives and where the employees shall elect employee representatives, will as mentioned above depend on the number of employees in the company.

In companies with;

  • More than 30 employees (where no corporate assembly has been established), a majority of the employees may require the election of one member of the board of directors and one observer, both with deputies by and amongst the employees.
  • More than 50 employees (where no corporate assembly has been established), a majority of the employees may require the election of up to one-third and at least two of the members of the board of directors with deputy directors.
  • More than 200 employees (and it has been agreed that the company shall not have a corporate assembly), the employees shall elect one member of the board of directors with deputy director or two observers with deputies in addition to what is required for companies with more than 50 employees (up to one-third and at least two of the members of the board of directors with deputy directors).

To summarize; in companies with more than 30 employees (where no corporate assembly has been established), the employees may elect employee representatives, and in companies with more than 200 employees (when it has been agreed that the company shall not have a corporate assembly) the employees shall elect employee representatives.

A request for employee representation from the employees must be raised by a majority (simple majority). Accordingly, it is not a requirement that the company on its initiative establishes such representation unless the number of employees exceeds 200. However, if a request along these lines is received, employee board-level representation must be established.

Employees employed in a full-time position have one vote, while employees in part-time positions have half a vote. A part-time position (in this context), is where the average working hours are less than 50% of normal working hours. Accordingly, employees working more than 50% of normal working hours are defined as employees in full-time position.

The election process
The election of employee representatives is managed by an election committee (Nw: «valgstyre«), which is to be formally established by the company in collaboration with the employee representatives.

The election committee shall consist of at least 3 employees eligible of voting, which the employees and the management shall elect at least 1 representative each. The election must be anonymous and in writing, but the voting can be done electronically.

The election of employee representatives shall take place every other year. The period is calculated from the election date and runs until the end of the annual general meeting the year the election period expires. If the employees have not elected a new representative by the end of the two-year period, the employee representatives in place will function as employee representatives until a new election has taken place.

Length of service
An employee has both the right and the obligation to a two-year period of service as the employee representative, unless he or she resigns from his/her position in the company, or alternatively in the event of special circumstances or the employee representative wises to resign from the positions as the employee representative.  If an employee resigns, an observer or deputy representative will take the place as employee representative in the elective period (the two-year period).

SVW assistance
We regularly assist companies when carrying out an election process. We normally act as advisors to the election board; guiding the election board through the election process. Our advice typically consists of:

  • Coaching the election board on their role and what to do
  • Drafting of necessary notices and information to the employees
  • Answering questions that might come from the employees during the election process
  • Response to questions from the election board

We also offer training of new employee representatives to ensure that they understand their role as board members.

Do not hesitate to contact Simonsen Vogt Wiig`s employment law team should you require our assistance.