Norway: Changes to the Working Environment Act enter into force on 1 January 2024

Changes to the Working Environment Act enter into force on 1 January 2024

In Norway’s Law Tracker of January 2023, we pointed out several proposed amendments to the Working Environment Act. On 9 March 2023, the Norwegian Parliament adopted proposals related to the notion of “employee” and the scope of an employer’s responsibility in a group. These changes will enter into force on 1 January 2024, and entail as follows:

• The notion of an “employee” in the Working Environment Act is clarified. Furthermore, a person is presumed to be an employee unless the employer makes it highly probable that the person is an individual contractor.
• The scope of an employer’s responsibility in a group is expanded. The obligation to offer other suitable work in the event of downsizing is extended to the entire group, not just the company in which the employee is employed. The same applies to employees’ preferential right to new employment. Additionally, groups with more than 50 employees must establish frameworks for cooperation, information, and consultation between the group and the employees.
• More companies must establish working environment committees and safety representatives.
• All temporarily employed employees shall be deemed to be permanently employed after three years.
• Requirements for annual discussion for all forms of staffing other than permanent full-time employment

(For further information, see Norway’s law tracker of January 2023).

The Supreme Court: Employers cannot make deductions in employees’ tip

The Supreme Court has in a judgment of April 2023 held that an employer cannot make deductions for imposed employer contributions and administrative costs from the employees’ tip.

Starting from fiscal year 2019, employers are required to report, withhold, and pay payroll tax on tips accruing to employees. Consequently, employers must pay employers’ National Insurance contributions and administrative costs on employees’ tip.

Two hotels in Oslo therefore decided to make deductions from the employees’ tips to cover these costs. The employees at the hotels filed a lawsuit against their employers, demanding that they stopped making deductions from the tip. Additionally, they claimed compensation for deductions already made.

The Supreme Court held that the employees have a legal right to be paid the tips. Consequently, employers cannot make deductions from the employee’s tips. Some now argue that many businesses will ban tip, as they are unable to cover their costs through the tip scheme.

Proposed bill: Clarification of the prohibition of sexual harassment in the Working Environment Act and more

Although Norway has extensive regulations to protect employees against violence and harassment in employment, it is reported that 117 000 employees have been exposed to unwanted sexual attention once a month or more often. Young women are particularly exposed.

To strengthen the prohibition against harassment and sexual harassment, the Government proposes to:

• Clarify in the Working Environment Act that the prohibition against harassment also applies to sexual harassment.
• Include definitions of harassment and sexual harassment in the Working Environment Act, corresponding to the definitions in the Equality and Anti-Discrimination Act. The Government argues that clarifying the content of “harassment” and “sexual harassment” will help employers prevent and deal with this matter.
• Clarify in the Working Environment Act that the safety representatives shall ensure that the employees’ psychosocial working environment is safeguarded.
• Ratify ILO Convention No. 190 concerning the elimination of violence and harassment in the world of work. The Convention is the first international agreement to address violence and harassment at work. The Government argues that broad ratification of the Convention will contribute to a regulated working life worldwide and strengthen the position of women and vulnerable groups.

The Government points out that the proposed bill is only a clarification of existing law. Consequently, this will not impose employers’ new obligations.

The Labour Court: Employer had reasonable grounds to depart from seniority as criterion in temporary lay-off

In 2021, an electrician company temporarily laid off an employee with 23 years of seniority, in favour of other employees with much shorter seniority. The Labour Court held that the employer had reasonable grounds to depart from seniority as a criterion in selecting who should be temporarily laid off. The Labour Court emphasized that the employer had chosen a rolling lay-off, which means that several employees are partially laid off. In a case of a rolling lay-off, great emphasis must be placed on what the local parties had agreed on. The Labour Court considered that the agreement between the local parties allowed the employer to deviate seniority as a criterion in the selection of who should be laid off, and to rather emphasize the employee’s competence and completion of projects.

Proposed bill: New rules for employee representation in financial undertakings

Furthermore, a proposal has been submitted for new rules for employee representation specifically in financial undertakings. The Financial Institutions Act and the Financial Institutions Regulations do not contain rules on the procedure for electing the employee representatives to the governing bodies. For banks, the old Banking regulations rules for electing employee representatives still apply. However, the Government argues that some of the sections in the Banking regulations are outdated, while others conflict with the Financial Institutions Act.

The Representation Regulations contain rules on the election process for private limited companies and public companies but do not apply to financial undertakings. The Government proposes to amend the scope of the representation regulations so that it applies correspondingly to financial undertakings in so far as it is appropriate. Additionally, it is proposed to repeal the banking regulations and to adopt certain particular regulation for financial undertakings in the Financial Institutions Regulations.

 

Key action points

Key action points for human resources and in-house counsel can be summarized in these bullet points:

• Employers must ensure that they as of 1 January 2024 comply with the amended rules in the Working Environment Act. Employers in a group should already start establishing systems across all companies, including systems that show vacant posts in the entire group.
• Employers who have individual contractors should assess whether they in fact may be viewed as employees. In that case, the workers are covered by the Working Environment Act, which cannot be deviated to the detriment of the employee.