Workers hired from temporary work agencies are entitled to performance-related bonus from the company

| Insight

We have summarized the key elements from the Supreme Court verdict in HR-2020-2109-A, with important clarifications on the concept of remunaration and the principle of equal treatment for hired workers.

A temporary work agency had, over a period of four years, hired out workers to an oil company that had a bonus scheme at company level for its employees. The Supreme Court found that the bonus scheme was a form of performance-related pay and thus covered by the term «pay» in section 14-12 a subsection 1 (f) of the Working Environment Act. The temporary work agency was thus obliged to pay a bonus to the two workers as if they had been permanently employed in the oil company. Emphasis was placed on the goal of achieving real equality between the contractors and permanently employed employees.

The legal point of departure is that the temporary work agency shall ensure that the contractors receive the same salary and working conditions as if the contractor was formally employed in the company pursuant to section 14-12a of the Norwegian Working Environment Act. This include

  1. the length and placement of working hours,
  2. overtime work,
  3. the length and placement of breaks and rest periods,
  4. nightwork,
  5. holidays, holiday pay, days off and remuneration for such days, and
  6. pay and coverage of expenses.

The equal treatment shall take place from the first day the contractor starts the work for the company. The duty of equal treatment is as a main rule on the temporary work agency, however, the company hiring the contractor has a joint and severable liability to ensure that the contractor receives equal treatment with regards to salary, holiday pay and other remuneration.

Are hired workers entitled to bonus?

Bonus schemes in employment relationships can be of different nature and have different purposes. A bonus will often be linked to the achievement of specific goals or results and therefore act as a reward for work performed. Such bonus schemes can be based on the performance of each individual employee, or on the performance of groups of employees or the performance at company level. Bonus schemes without an explicit connection to any specific goal achievement also occur, and often in the form of full or partial profit sharing. While performance bonuses are linked to work that has already been completed, a bonus scheme may also have a more forward-looking perspective to increase the employee’s loyalty to the company or provide an incentive to maintain the employment relationship.

The Supreme Court states that the main element is whether the benefit can be considered as remuneration for work. In the case at hand, the bonus scheme was tied to the group’s and the single unit’s results. The Supreme Court found that the main element in this bonus scheme was consequently to «reward the joint achievements of the employees» during a year; also taking into account that the bonus scheme highlighted the importance of a culture focused on achievements.  With this as its background, and also emphasizing the purpose of ensuring real equal treatment of hired workers, the Supreme Court found that the bonus was to be considered as «pay»,

Consequently, hired workers from temporary agencies have a right to have the value of a bonus amount added to their salary when the bonus scheme is linked to performance – both individual performance and performance on a more collective level. The value of this bonus amount shall be equivalent to the amount the hired worker would have received if he or she was directly employed in the company he or she is hired out to perform work for.

In practice this will mean that the rates from the temporary agencies will increase if the company has a bonus scheme of this character.

On the other hand, if the bonus scheme is linked only to ensuring that employees remain employed, hired workers will not be entitled to have the value of bonus added to their salary. Furthermore, it remains unclear if temporary agency workers will be entitled to have bonus added to their salary if the bonus scheme is tied to t a combination of performance and loyalty to the company.