international employment law firm alliance L&E Global

Norway: New Judgement from the Court of Appeal Regarding Placement of Wages and Pension Scheme in the Event of a Transfer of Undertakings

In September, the Court of Appeal handed down judgement on workers’ rights in the event of a transfer of undertakings where pilots and rescuers from Lufttransport AS were transferred to CHC Helikopter Service AS. Pursuant to Section 16-2, First Paragraph of the Working Environment Act, the new employer shall be bound by any collective pay agreement that was binding upon the former employer unless the new employer chooses to opt-out. CHC, the new employer, chose to opt out of being bound by collective agreements to which Lufttransport was bound. In connection with the transfer, the employees still demanded that wage seniority, which Lufttransport was bound by through the CBA, be transferred to CHC in accordance with Section 16-2, as they claimed that wage seniority had been transformed and was now an implemented right in their employment contract with Lufttransport. The Court of Appeal ruled that although seniority is not in itself a right that is transferred to a new employer pursuant to Section 16-2, seniority that triggers economic rights shall nevertheless be transferred if the employee will otherwise be disadvantaged at the new employer compared to earlier. The Court of Appeal found that this was not the case since CHC’s salary placement meant that the employees received the same or somewhat higher wages than they had at Lufttransport.

In addition, a new occupational pension scheme had been agreed upon for the employees in Lufttransport for the transition from defined benefit pension to hybrid pension, with an additional compensation scheme for lost pension earnings. Pursuant to Section 16-2, Third Paragraph of the Working Environment Act, employees may transfer further accrual of collective service pensions to a new employer. However, a pension exemption applies, which means that the new employer may choose to replace the scheme with a separate and already existing pension scheme for the transferred employees, even if the scheme is inferior to the one the employee had with their previous employer. The employee claimed that the exemption did not apply since the compensation scheme did not constitute a collective service pension. However, the Court of Appeal ruled that the CHC could apply this exemption to the transfer. Crucially, the compensation scheme in Lufttransport concerned the right to further accrue an old-age pension. Moreover, the scheme had such a collective character that it also had to be regarded as an integral part of the collective pension scheme and not as an individually negotiated supplement. The Court of Appeal therefore concluded that CHC was allowed to replace the employees’ occupational pension at their former employer with a separate pension scheme. As a result, the employees did not succeed in their claims. The judgement has been appealed to the Supreme Court.