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Norway: New Ruling on Vacation Pay from the Court of Appeal

For several years, there has been a dispute between Norway’s largest provider of care services, Stendi (formerly Aleris) and the Trade Union. In the aftermath of the Supreme Court’s decision in the Stendi case, where care workers were deemed to be permanent employees, the issue of the statute of limitations on vacation pay claims has been raised. This article discusses the recent ruling from the Court of Appeal, which confirms that the vacation pay claims are not statute barred despite the usual limitation periods.

At the core of the dispute has been whether Stendi’s care workers were effectively employees even though they were classified as contractors in their contracts.

In a judgment dated April 5 this year, Stendi was ordered to pay 60 million Norwegian kroner (NOK) in vacation pay to 184 employees for the period 2008 to 2018.

This includes, among other things, entitlements to pension schemes and vacation pay. The following year, a new group of care workers brought similar claims to court. Stendi accepted that the care workers were employees but argued that parts of the vacation pay claim were statute barred. Neither the Oslo District Court nor the Borgarting Court of Appeal agreed with this.


Assessment by the Court of Appeal

The question the Court of Appeal had to consider was whether vacation pay earned more than three years before the summons was issued is statute-barred. Stendi argued that the vacation pay claims became statute-barred continuously after three years from each vacation year.

In the judgment handed down on May 4 this year, the Borgarting Court of Appeal found that the crucial point was when the care workers could have earliest demanded payment of the vacation pay.

According to the Holiday Act, employees have both a right and an obligation to take vacation, and the consequence of vacation not being taken is that the untaken vacation and the corresponding vacation pay are automatically carried over to the next year without limitations. The Court of Appeal concluded that the care workers could have earliest demanded payment of the vacation pay in connection with the actual utilization of carried-over vacation. Since the care workers had not taken vacation and Stendi had not enabled them to take vacation, the limitation period had not started to run.

Stendi was thus ordered to pay nearly 60 million NOK in vacation pay for the period 2008 – 2018, in addition to over four million NOK in legal costs.

In the judgment, the Court of Appeal unusually sharply criticized the employer, stating that “it is unfortunate that Stendi, after several legal rounds against its own employees, still uses significant resources to prevent the opposing parties from receiving rightful claims.”

The judgment is, as of May 2024, not legally binding, and Stendi can still appeal the case to the Supreme Court.