Grounds for termination include: i) dismissal of an employee due to business related reasons; ii) dismissal of an employee due to reasons related to the individual employee; iii) collective dismissal based on objective grounds; iv) resignation by the employee; v) expiration of the contract term or end of the specific job in case of temporary employments; and vi) employee’s death, retirement, or permanent illness.
Terminations based on economic, technical, organisational or productivity grounds are deemed collective when at least ten employees have been given notice of dismissal within a period of 30 days. Other forms of termination that are not warranted by reasons related to the individual employee shall be included in the calculation, provided that at least five employees are made redundant.
When an employer considers dismissing a number of employees at the same time, the employer must follow a strict procedure; the most important regulations are found in the WEA. The employer must hold information and discussion meetings with the employees’ representatives and inform NAV (the Norwegian Labour and Welfare Administration) about the mass redundancy. The employer must define the selection group and criteria for the selection of employees, which may receive notice of termination. After the employees are informed, individual meetings must be held with the employees who might be dismissed.
The WEA provides that a dismissal must be objectively justified due to circumstances relating to the operation of the business, the employer or the employee. This applies to both individual and collective dismissals.
Norwegian employment legislation does not specify or indicate by way of example what kind of conduct on the part of the employee is sufficient to justify dismissal. This must be determined on the basis of a consideration of all of the circumstances of the case. An employer can assert different reasons for dismissals based on the employee’s breach of contractual terms and conditions, such as poor performance, misconduct, lack of attendance to work, lack of discipline, insubordination, etc.
In cases of individual dismissals based on the conduct of the employee, there is no statutory obligation to give a written warning or to consider other suitable available work for the employee, but these are circumstances are often taken into account in considering whether the dismissal was justified.
Before making a decision regarding dismissal with notice, the employer shall discuss the matter with the employee and an elected representative of the employee, unless the employee himself does not desire this. The notice of termination itself needs to be in writing and shall fulfil certain minimum requirements.
In case of severe breach of obligation, either party can also terminate the employment for cause with immediate effect without observing a notice period. Criminal acts against the employer are examples of circumstances that will often constitute valid grounds for immediate termination.
There is no statutory right to severance pay in Norway. The only payment that the employee is entitled to is ordinary salary payment and additional contractual benefits during the notice period in accordance with the terms of employment. If the notice is disputed and the employee makes use of his right to remain in position while the case is pending a judgment, he will also retain his terms during this period. This sometimes prompts the use of severance agreement. In downsizing, some collective agreements contains a duty to offer employees severance pay. In addition, employers who are not bound by any collective agreement may choose to offer some kind of severance package including, for instance, job-training, education, release from the duty to work, severance pay, etc. The right to such benefits is normally conditional upon the employee entering into a severance agreement whereby the employee, inter alia, waives the right to institute legal proceedings pursuant to the Employment Act. Severance agreements may be entered into before the employee receives notice, or the parties may reach an agreement after notice is given.
Is a Severance Agreement required or considered best practice?
A severance agreement is an agreement between the employer and the employee that regulates the terms for the termination of the employment relationship. The severance agreement may include provisions regarding financial compensation, the rights and obligations of both parties upon the termination of the employment, as well as other details such as confidentiality, non-compete clauses, or any obligations after the termination.
There is not a requirement for the parties to enter into a severance agreement, nor is it considered best practice. However, if the parties have agreed an alternative to formal notice pursuant to the WEA, it is considered best practice to formalise this to obtain clarity between the parties. Regularly, the parties will consider what serves them best in each case.
What are the standard provisions of a Severance Agreement?
Two key points in a standard severance agreement are provisions on termination date and on payments from the employer. The latter includes provisions on salary during the period of notice, any severance pay or damages the parties agree on, holiday pay, pensions, and any financial contributions for outplacement or coverage of legal assistance. Furthermore, a severance agreement should include provisions on the employer’s duty to delete the employees e-mail account and any personal data stored with the employer, and the employee’s duty to return assets belonging to the employer. Furthermore, a severance agreement should provide for any confidentiality clauses or competition clauses common to the relevant industry. Finally, a severance agreement should include a clause whereby the employee waives the right to institute legal proceedings pursuant to the WEA.
Does the age of the employee make a difference?
No, there is no formal difference between entering into a severance agreement with either a young or old employee. The employee’s age may however be a factor in determining any severance pay, damages etc. In addition, age may call for a longer period of notice period.
Are there additional provisions to consider?
When framing a severance agreement, the parties should keep in mind the consequences the agreement might have on the employee’s future rights to social benefits and pensions.
An employee is entitled to a negotiation meeting with the employer, but only if the employee has been notified within two weeks after the dismissal. The employee can accept or challenge the termination decision within eight weeks from the conclusion of negotiations, or if a negotiation meeting was not held, within eight weeks from the date when notice of dismissal was received.
If the employee challenges the notice of dismissal, the employee will be entitled to remain in his or her position until a court has settled the case, provided that the employee has finished his or her trial period. This, in worst-case scenario, may take two to three years. During this period, the employee has the right to keep working as usual and to keep receiving a salary as usual.
The WEA regulates the employee’s right to notify the employer, public authorities, the media or others in whistleblowing cases. According to Section 2-A-1 an employee has a right to report issues of concern in the employer’s undertaking. The same applies to workers hired from temporary-work agencies.
Issues of concern include breaches of legislation, written ethical guidelines in the undertaking or ethical norms on which there is broad agreement in society, for example, circumstances that may involve a danger to life or health, a danger to climate and the environment, corruption or other economic crime, the abuse of authority, an unsatisfactory working environment, breach of personal data security.
An employee may always report such issues to the employer or a representative of the employer, in accordance with the undertaking’s whistleblowing routines and with the duty to report issues of concern, via a safety representative, union representative or lawyer and to a public supervisory authority or other public authority.
An employee may only report issues of concern externally to the media or public at large if (i) the employee is in non-negligent good faith regarding the content of the report, (ii) the report concerns issues of concern of public interest, and (iii) the employee has first reported the matter internally or has reason to believe that internal whistleblowing would not be appropriate.
When a report concerning issues of concern in the undertaking is submitted, the employer shall ensure that the matter is adequately investigated within a reasonable time. The employer shall particularly ensure that the whistleblower has a fully satisfactory working environment.
Undertakings that regularly employ at least five employees are obliged to have routines for internal whistleblowing. Undertakings with fewer employees shall also have such routines if the conditions at the undertaking so indicate.
Retaliation against an employee who notifies pursuant to Section 2A-4 is prohibited. The same applies for workers hired from temporary-work agencies. The prohibition applies for both employers and hirers. The Working Environment Act Section 2 A-4 defines retaliation as any unfavourable act, practice or omission that is a consequence of or a reaction to the fact that the employee has reported issues of concern, for example threats, harassment, arbitrary discrimination, social exclusion or other improper conduct, warnings, change of duties, relocation or demotion, suspension, dismissal, summary discharge or disciplinary action. If necessary, the employer shall ensure that measures are taken to prevent retaliation.
Anyone who has been subject to unlawful retaliation may claim compensation without regard to the fault of the employer or hirer.
