Expanded employee definition (Section 1-8 of the Working Environment Act)
The Norwegian Working Environment Act (WEA) has introduced a new definition of the term “employee” in Section 1-8:
“In this Act, an employee means anyone who performs work in the service of and subordinate to another. In deciding, emphasis shall be placed on whether the individual continuously makes their personal labor available, and whether they are subordinate through management, leadership, and control. It shall be assumed that an employment relationship exists unless the employer makes it highly probable that an independent contractual relationship exists.”
The purpose behind the legislative change was to simplify the understanding of who is considered an employee by incorporating the elements involved in the assessment into the statutory text. Furthermore, a presumption is made that an employment relationship exists, meaning that companies using independent contractors must prove and make it highly probable that an independent contractual relationship exists.
Simonsen Vogt Wiig is now assisting several consulting firms and their clients with a new review of the engagement contracts.
Expanded employer responsibility in downsizing within a group.
New provisions have been introduced that will expand the employer’s responsibility in downsizing within a corporate group. Previously, downsizing processes in a group could be carried out in each subsidiary in isolation, without regard to possible alternative positions in other companies in the group.
The new legislation means that downsizing obligations now apply to all companies within the group. This means that even if an employee is formally employed in one specific company within the group, all companies within the group must consider offering the individual other suitable work before termination can be carried out.
The same applies to the preferential right, which shall apply in addition to the preferential right which the employee has in their own company. This means that an employee who is terminated in a downsizing has preferential rights for new positions with the employer they were previously employed by, as well as for positions in other companies within the group for 12 months after the termination. The preferential right assume, however, that it concerns positions the employee is qualified for.
Simonsen Vogt Wiig assists clients with new procedures for downsizing within corporations and updated termination letters in this context.
Safety representatives and Working Environment Committees (AMU)
Furthermore, the requirements for establishing safety representatives and Working Environment Committees (AMU) are getting stricter.
The threshold for when a business must establish a Working Environment Committee is lowered from regularly employing 50 employees to 30 employees. Additionally, a Working Environment Committee may be required in businesses with 10 employees.
As for safety representatives, the main rule is that all businesses are obligated to have safety representatives. Previously, however, an alternative solution could be agreed upon if the company regularly employed fewer than 10 employees. This threshold has now been lowered to 5 employees.
Moreover, the Working Environment Act has been clarified to include that the tasks of the safety representative also cover leased employees and independent contractors who perform work in close connection with the business.
New requirements for the employment contract (Section 14-6 of the WEA)
From July 1, 2024, a range of new requirements will be introduced for the information that must be included in employment contracts, including a description of the procedure for termination, overtime arrangements, competence enhancement offers, all benefits included as salary for the work, and social security.
Furthermore, two new presumption provisions have been introduced. The first presumption rule implies that if the employment contract does not state that the employment is temporary, it is considered a permanent employment relationship unless the employer can prove that the opposite is highly probable. The second presumption rule implies that if the employer has not informed about the percentage of the position in the employment contract, the employee’s claim about the scope of the position shall be assumed correct unless otherwise is considered highly probable.
Simonsen Vogt Wiig assists clients with new procedures for downsizing within company groups and updated termination letters in this context.
New Jurisprudence
The Supreme Court and Court of Appeal has recently issued several judgments of significance within employment law that will affect the rights and obligations of employers and employees. These judgments provide clarification on various legal questions and interpretations of the Working Environment Act, and we will look more closely at some of the most important decisions.
HR-2023-2068-A: Reduced working hours and on-call plans
This case concerned an employee in the oil service industry who had a work schedule that alternated between fixed on-call periods and off periods. In the on-call periods, he had to be prepared to be called out to perform tasks on the offshore platform. The work was preferably to be scheduled during the on-call periods, but he was not protected from being called out during off periods. The employee had been granted reduced working hours due to age or health, but also claimed that the on-call time should be reduced accordingly. The central question in the case was therefore whether on-call time could be considered “working time” under the law. The legal starting point is that working time is “the time the employee is at the employer’s disposal”.
The Supreme Court stated that the question depended on a concrete assessment where one must consider whether the employee is subjected to restrictions that objectively and to a significant extent affect the employee’s ability to dispose of their free time and pursue personal interests. If the response time during standby is only a few minutes, the main rule is that the entire period counts as working time. Longer response times would argue against considering on-call periods as working time. Furthermore, the frequency of callouts and other elements will also be considered. The Supreme Court concluded, after a concrete assessment, that the on-call period could not be considered “working time” in the legal sense.
HR-2023-2430-A: Whistleblowing
In this judgment, the question was what constitutes a notice under the rules regarding whistleblowing in Section 2 A-1 and 2 A-2 of the WEA. A union representative had sent an email to a leader in the company criticizing the behavior of an HR-responsible. The union representative received a written warning as a result of the e-mail and was later reassigned. The employee sued the employer for compensation for illegal retaliation. The question was whether the email could be considered a notice.
The Supreme Court concluded that the assessment of whether a statement is a notice or not depends on a closer interpretation of the statement, including the employee’s choice of words, context, and the familiarity between the parties. The decisive factor is whether it is reasonably ground for the employer to perceive the statement as a notice regarding issues of concern. The majority concluded that the e-mail must be considered a report under the law. It was not relevant that the employee who reported was a union representative, or that the union representative did not consider himself as a whistleblower.
Simonsen Vogt Wiig was engaged to declare party intervention in the case and attended the negotiations in the Supreme Court. The Supreme Court decided that only the parties to the case were allowed to participate.
HR-2023-1637-A: Retroactive enrollment in pension scheme
The case concerned a musician who had been misclassified as an independent contractor when he was in fact an employee. As a consequence of the reclassification, the employee was entitled to be retroactively enrolled in the employer’s pension scheme. For the Supreme Court, the question was whether the musician was entitled to be retroactively enrolled from when he started in the company in 2011, or whether the enrollment should take effect from 2018 because of the statue of limitation of three years. The Supreme Court concluded that the claim for retroactive enrollment in the pension scheme must be considered a claim for money or another performance subject to ongoing limitation, so the enrollment should take effect from 2018.
LB-2023-157019 – Competition and customer clauses in shareholder agreement
The case concerned a temporary injunction against a former shareholder (and employee) in the company from engaging in competing business after he had resigned. The Court of Appeal found it likely that a customer and competition clause entered into in connection with a shareholder agreement was an obstacle to such competing business. A central question in the case was whether the competition and customer clauses were invalid because they were in conflict with the rules of the WEA.
The Court of Appeal concluded that the competition clause was not in conflict with the rules of the WEA, because the shareholder agreement did not have the character of being an agreement between an employee and employer, but rather a commercial agreement between shareholders. In this context, it was emphasized that the agreement was not entered into between the employee and the employer company, but rather between a shareholder and the company that acquired the employer company. Furthermore, there was no closeness in time between the employment agreement and the shareholder agreements, so they could not be considered the same contractual relationship.
It is important for both employers and employees to be aware of the new legislative changes and case law, as they have significant implications for the employment relationship and the rights that come with it. Contact us at SVW for further explanation of what consequences the new changes will have for you, and to assist with ensuring compliance with the new requirements.
Other Cases
Simonsen Vogt Wiig represents 10 staffing agencies that have filed a compensation lawsuit following the significant limitations on hiring from staffing agencies starting April 1, 2023. The case is pending before the EFTA Court in Luxembourg, where Simonsen Vogt Wiig will argue the case during 2024.
Simonsen Vogt Wiig also represents SMB Norway in the Council of Europe’s Social Rights Committee, where the issue is whether it is consistent with the freedom of association provision in Article 5 of the Revised European Social Charter to require a trade union to have at least 10,000 members to accept hiring from staffing agencies.