Other Suitable Work in Downsizing - Employer's Obligation to Offer and Legal Framework

The duty to offer alternative suitable work constitutes a central protection for employees during downsizing. The Working Environment Act § 15-7 second paragraph stipulates that dismissal is not justified if the employer has other suitable work within the organization to offer the employee. This provision requires businesses to thoroughly consider alternative job tasks before executing dismissals and represents an important safety valve.

Legal Basis and Scope

Legal Requirement to Offer

Alternative suitable work means that employees must be offered alternative job tasks within the organization before considering dismissal, provided there are available positions that the employee can fill. The Working Environment Act requires that businesses be "generous" in this assessment and not overly fixated on the legal term "suitable work". If the employee can fill another vacant position, they should be offered this as an alternative to dismissal, even if the position is lower in the hierarchy.

The Concept of Organization

The term "organization" refers to the entire legal entity, such as the limited company where the employee is employed. If the organization has applied a limited pool in the selection of surplus employees, the employee must still be considered for available positions throughout the entire legal entity.

From January 1, 2024, the duty to offer other suitable work is expanded to also include positions in other companies within the group. This represents a significant expansion of the employer's duty to offer compared to previous law, where there was normally no obligation to offer vacant positions outside the legal entity in which the employee was employed.

Group Duty

The new provision, which is referred to in professional circles as "lex Steen" after LO attorney Karen Sophie Steen, requires the employer to identify and assess suitable positions throughout the group. The provision applies regardless of the size of the group, and the larger the group, the more extensive the employer's requirements for identifying other suitable positions and processing cases will be.

If the employee is not offered another suitable position in a subsidiary or other company within the group, the dismissal will be invalid. This places significant demands on systematic identification and coordination between the companies in the group during downsizing.

Interpretation of "Suitable Work"

Non-Strict Interpretation

The duty to offer requires that the position should be "suitable", but this requirement should not be interpreted strictly. Suitable work also includes more subordinate, heavier, and lower-paid positions. The main objective is to offer other vacant positions if the organization has them, regardless of the type of position.

Holistic Assessment

The preparatory works to the Working Environment Act call for a holistic assessment of what can be considered suitable. It was stated that the rule does not imply that the employer must create a new position that there is no need for, but that there is a duty to reallocate if there is a suitable vacant position or unmet work need.

As a starting point, the employer will not be free from responsibility if they offer the employee a job with less favorable terms in terms of salary or job content than before. In such cases, the employee must be able to choose whether to accept the offer or take legal action to have the dismissal deemed unjustified. However, employees will often prefer a slightly inferior job to being completely without work.

Employee's Attitude

The employee's attitude towards what is "suitable" may be significant. It is often advisable to ask the employee what they themselves consider suitable. Such discussions may reveal that the employee wishes to be placed in positions that may not initially seem suitable, such as being offered a secretary or janitorial position to a former office manager.

Hierarchy and Prioritization

"Suitable" implies a requirement that the organization should first seek positions closely related to the original position before offering any vacant positions the employee can fill. For a suitable position, it is logical to offer the surplus marketing director a caseworker position in the administration before offering a warehouse position, because the caseworker position is closer to the original position.

Supreme Court Clarification

In the Posten II case, it was stated that the work offered must be as similar as possible to the original work in terms of content and pay. If such work does not exist, the employer is obliged to offer vacant work at a lower position and salary level.

The duty to offer does not require that there is a vacant position to offer - it is sufficient that there is an unmet work need. It would be pointless to offer a position the employee cannot fulfill for health reasons.

Timing and Concurrent Processes

If it can be demonstrated that there is an unmet need for labor that the employee is qualified for, the organization should offer this to the surplus employee. This can also apply to positions that become vacant around the same time as downsizing is considered, even if dismissal has not yet been decided.

The Linjebygg Case

In HR-2018-880-A ("Linjebygg"), the employer had increased staffing in one department shortly before downsizing in another department. At the time of the increase, downsizing had been decided for the other department. The Supreme Court stated that the company had no justified reason to treat the two processes separately, and that the dismissal protection was significantly weakened by the employer's chosen approach.

Position Size and Qualification Requirements

There is no requirement for a 100% position for the duty to offer other suitable work to apply. Lower work fractions must also be offered if they exist, such as a 20% position.

The organization is not obligated to create or tailor a position for the employee, or to offer work the employee is not qualified for. There is no point in offering positions the employee cannot perform, but it is better to offer one position too many than too few.

Particular Consideration of Seniority

The organization must go further for employees of higher age and long seniority. A practical consideration for older employees with long seniority is to evaluate whether contracts with subcontractors for cleaning, cafeteria, janitorial services, etc., can be terminated and offered to the employee. Although there is no legal obligation to consider dismissal of subcontractors to assist surplus employees, such considerations will favor the organization.

Training and Retraining

Obligation to Train

It is commonly assumed that there is an obligation to offer training in a new position, at least where it involves only a few weeks or months of training. The organization has this obligation towards new hires and must then also have it to the same or greater extent towards employees being transferred from other positions.

There is a greater duty for training and retraining where the employee is of higher age and long seniority. This is justified by considerations of an inclusive work environment as well as loyalty in contractual relationships, which suggests that the employer should contribute to enabling surplus employees, especially those who have been with the company for a long time, to transition into other positions.

Organization's Resources

The size and resources of the organization matter: A small organization with limited resources has fewer obligations concerning training costs than a larger organization with extensive resources.

As with transferring employees to other positions, there will be an outer limit to what is practical and feasible for the organization. The boundaries of this are narrower depending on how severe the organization's situation is. If the organization is in a difficult financial situation, considerations of efficiency and a practical organization must carry significant weight in the balance of interests.

Procedure and Evidence

Written Documentation

For reasons of evidence, an offer of other suitable work should always be made in writing. This ensures that the organization can document that it has fulfilled its obligations if a dispute arises later over the justification of the dismissal.

Response Deadlines

The employee must respond to the offer within a reasonable time, and the employer can set a deadline for this. As a rule, conditions of probation in the new position cannot be set, as this would undermine the protection the provision is meant to provide.

Practical Recommendations

Organizations should be proactive in evaluating alternative job tasks and not limit themselves to an obvious match between the vacant position and the employee's skills. A thorough review of all job tasks and future needs can reveal opportunities that are not immediately apparent.

Group Survey

From 2024, groups must establish systematic routines for identifying suitable positions across all companies in the group. This requires coordinated HR systems and communication routines to ensure that downsizing in one company is coordinated with the vacancy situation in other parts of the group.

Larger groups must particularly ensure that identification and case processing routines are sufficiently comprehensive to cover the expanded obligation. Failure to offer a suitable position in other group companies can render the entire dismissal invalid.

Especially for experienced employees with long seniority, organizations should consider creative solutions, including internal training programs or reorganization of job tasks to create room for alternative placements both within the legal entity and in other parts of the group.