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End of employment in Norway

Employee Termination Procedures & Guidelines in Norway

Termination procedure

Norway has strict laws when it comes to the employer’s ability to terminate an employment relationship.
Norway doesn’t recognize termination at will. In fact, its very strict laws make the termination process more bureaucratic than that in most countries. There are a few situations, always with the requirement of a serious and real cause for termination, when an employer can compliantly dismiss an employee:
  • economic reasons (redundancy)
  • personal reasons (poor performance, gross misconduct)
  • mutual consent upon signing a termination contract

Economic reasons

The most common reason for termination due to the company’s circumstances is economic reasons. The company’s financial situation doesn’t have to be precarious. It may be sufficient for the company to believe in the necessity to adjust its further operations. However, dismissal due to curtailed operations or rationalisation measures isn’t objectively justified if the employer has other suitable work to offer its employees. When deciding whether dismissal is objectively justified by curtailed operations or rationalisation measures, the business needs shall be weighed against the individual employee’s disadvantage caused by dismissal.

Reasons based on conduct

Employers may terminate employees for disrespecting company’s rules, conducting serious misconduct, or showing gross negligence. This type of dismissal requires proof of the employee’s culpable behaviour. If the employee’s termination is based on the employee’s poor performance, the employer must document addressing the problems in question, giving the employee guidance, and providing a fair chance to succeed before terminating the employee.
Employers may not choose to let employees go without serving them notice. On the contrary, employees who receive a notice of termination have the right to object and to keep their positions until the matter is legally decided by the courts.

Formal requirements for termination

Before the employer decides to dismiss the employee, the employer must discuss the situation with the employee unless the employee doesn’t want the discussion. Lack of a discussion meeting is an important factor in assessing whether dismissal is objectively justified; however, this factor alone cannot lead to concluding that dismissal is invalid.
The termination must (1) be in writing and (2) meet the formal requirements.
The notice of termination must be (1) delivered to the employee in person or (2) sent by registered mail to the employee’s postal address.
The notice period begins on the first day of the calendar month immediately after the employee receives the notice.
If the employee so requires, the employer must state the circumstances constituting the reason for dismissal.
If the employer’s notice of termination isn’t given in writing or doesn’t meet the formal requirements, and the employee files a lawsuit within four months after dismissal, dismissal shall automatically be deemed invalid unless special circumstances make this unreasonable. If dismissal is invalid, the employee can claim compensation.

Lay-offs

In case of a need to reduce the workforce — typically, a drop in the demand for the employer’s products or services — the employer may temporarily impose lay-offs. Such measure must be discussed with the employees’ elected representatives.
In case of lay-offs, the employer must still be objective when picking whom to lay off.
The employer must notify the employees 14 days (2 days in force majeure cases) in advance of the lay-off. Once the lay-off is in effect, the employer must pay ordinary salary for 15 working days (three weeks). After the first 15 days, employees are entitled to unemployment funds from NAV, provided that the lay-off is a result of circumstances beyond the employer’s control. Hence, if NAV regards the reason for the lay-off to be within the employer’s control (and not a result of external factors), then unemployment funds may be declined.
Lay-offs may be invoked only if the employer has a fair reason to believe that the business will pick up again within reasonable time (normally, within six months’ time). If the employer has no such reason to believe that the business will improve, then the employer has to choose a redundancy (permanent termination) process instead.
When an employee has been laid-off for 26 weeks, the employer’s obligation to pay salary resumes.

Summary dismissal

The employer may summarily dismiss an employee if the employee is guilty of a gross duty breach or other serious employment contract breach. In such case, the employment is terminated immediately without a notice period.

Unfair Dismissal Guidelines in Norway

Employee termination protection

Certain employees benefit from additional dismissal protection, making it even more difficult to terminate their employment during the protection period:
  • employees on maternity leave or pregnant
  • employees on sick leave
  • employees on military duty

Consequences if termination is deemed unlawful

If the court finds that termination has been unlawful, then the employee may be awarded the right to either get the job back or receive compensation based on the claim put forward by the employee.
The compensation would be based on the employee’s economic loss. If the employee has actually left the position, the court will normally award (1) an amount equal to the salary that the employee would be entitled to for the period leading up to the court case and (2) additional compensation for future loss. If the employee hasn’t yet got a new job, the court will assess and predict how long it may take until the employee has new earnings. Examples exist when employees were awarded future loss of up to the two years’ salary. In addition, the court may award tort damages in an amount of up to NOK 200,000.

Employees’ right to remain in their posts

In the event of a dispute concerning whether an employment relationship has been legally terminated, employees may remain in their posts until the matter has been legally decided by the courts. Although employees have an automatic right to remain in their posts, employers may ask the courts to render a decision on the employees’ having to leave by the end of the notice period. The court may render such a decision if the court finds it unreasonable that the employment should continue while the case is in progress. Normally, courts don’t render such decisions in the employer’s favour if the termination is based on the employer’s circumstances — e.g., a need for redundancies. However, if the termination is based on neglect or disloyal behaviour by the employee, and this is well documented, then the court may agree that the employee is to leave the post.
Employees’ right to remain in their posts doesn’t apply to disputes concerning summary dismissal, dismissal during a trial period, workers hired from temporary-work agencies or other companies, or other temporary employees. If so demanded by an employee, the court may nevertheless decide that the employment shall continue until the matter is legally decided by the courts.

Grievance Procedure in Norway

Employers must follow a standard grievance procedure, and the goal should never be to dismiss an employee:
  1. The employer is to invite the employee to a preliminary interview.
  2. During the interview, the employer is to give the employee a chance for self-defence while talking through the issue and negotiating.
  3. Following the interview, the employer can decide to either proceed with or drop the intention to terminate the employee.
  4. If the employer decides to proceed with the termination, the employer must explain each reason behind the decision.
  5. Once the employee receives the dismissal letter, the notice period begins.

Resignation Procedure in Norway

Employees who would like to resign either during or after their probation period must inform the employer of their clear and unequivocal desire to resign by letter or email. The notice period in the employment contract or applicable collective agreement must be respected. Employees who resign at their own will aren’t entitled to 18 weeks’ unemployment benefits from NAV.

Redundancy Pay and Entitlement in Norway

Before any collective economic dismissal, the employer must consult with the employees’ elected representatives on the reasons and conditions of dismissals. The purpose is to reach an agreement to avoid redundancies or to reduce the number.
Whatever the size of the company, the employer must implement all measures to avoid redundancy. It must therefore (1) provide for the adaptation of employees to their jobs and, if possible, (2) reclassify them to another job.
Board decision
If the employer has identified a need to reduce its workforce, this must be laid out and implemented by a board decision.
Consultations with employee representatives
In accordance with WEA section 15-2, the employer has to carry out consultations with employees’ elected representatives before starting the termination process in the case of terminating 10 or more employees.
The pick-out
In a workforce-reduction process, the employer isn’t completely free to pick out employees at its own discretion. The pick-out must be based on a combination of reasonable criteria, such as competence, seniority, and relevant social aspects (old age, single parenthood, etc.).
The employer must compare all employees when deciding which ones are to be given notice. If one employee can easily perform other tasks, another employee must be given notice instead (e.g., if the first employee has much longer seniority). The employer must define the criteria and present them to the employee in the consultation meeting (or before).
Protection against unfair dismissals
By law, the employer must have a “fair reason” for termination. The employer must be able to document the importance of restructuring and reducing its workforce.
Notice of termination
Notice of termination shall be given in writing.
Notice given by the employer shall be delivered to the employee in person or be forwarded by registered mail to the address given by the employee. The notice shall be deemed to have been given when it’s received by the employee. The notice shall inform of the following:
  • the employee’s right to demand negotiations and to institute legal proceedings
  • the employee’s right to remain in the employee’s post pursuant to the provisions of WEA sections 17-3, 17-4, and 15-11
  • the time limits applicable for requesting negotiations, instituting legal proceedings, and remaining in a post
  • the name of the employer and the appropriate defendant in the event of legal proceedings
If the employee has been dismissed owing to circumstances relating to the undertaking, the notice shall also contain information concerning preferential rights pursuant to WEA section 14-2.
If the employee so demands, the employer shall state the circumstances and reasons claimed as grounds for dismissal. The employee may demand that such information be given in writing.

Other End of Employment Guidelines in Norway

Severance

Norwegian law doesn’t include legislation on severance pay.
In termination processes, it’s normal for Norwegian employers to offer severance pay to relevant employees as part of termination agreement as an alternative to unilateral termination. One reason for this is employees’ automatic right to remain in their posts until the court decides the matter and the employer’s obligation to continue paying salary to the employee during this period regardless of whether the termination is lawful.

Notice period

The mandatory minimum notice period is one month; however, a three months’ notice period is considered a standard.
Employees with 5 years’ seniority have a minimum notice period of two months; those with 10 years’ seniority have a minimum notice period of three months. If an employee has 10 years’ seniority, the notice period is at least four months when given to the employee who is 50–54 years old, at least five months when given to the employee who is 55–59 years old, and at least 6 months when to give to the employee who is 60 years of age and older. On the other hand, the employee may must give at least a three months’ notice in order to resign.

Unemployment funds

When a person has lost a job, the person may be entitled to unemployment pay from NAV.
To receive the unemployment pay (No.: “dagpenger”), the person must meet the following criteria:
  • Income is reduced due to the reduction of working hours by at least 50 percent.
  • Income must have been at least 1.5 G during the last 12 months, or 3 G during the last 36 months.
  • The person must have signed up as an active jobseeker.
  • The person must live in Norway and be a member of the National Insurance Scheme.
  • In the case of a lay-off, the lay-off must be due to circumstances beyond the employer’s control.
  • The person must be under 67 years old.
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