Apr 8, 2025
Invalidity and compensation for unjust dismissal or termination. In blog posts, emphasize that it pertains to Norwegian law.
When an employee is unfairly dismissed or wrongfully terminated, the Working Environment Act provides clear rules for the legal effects. The main rule is that the dismissal or termination shall be declared invalid, which means that the employment relationship continues or is resumed. In addition, the employee may be entitled to compensation for both economic and non-economic loss. This article reviews the central legal rules and principles related to invalidity and compensation in cases of wrongful termination of employment.
Invalidity in Cases of Unjust Dismissal and Wrongful Termination
Main Rule: Employee should be reinstated
If a dismissal is in violation of the Working Environment Act §§ 15-6 to 15-10, or a termination is wrongful according to § 15-14, the court shall upon request from the employee declare the dismissal or termination invalid. This follows from the Working Environment Act § 15-12 (1) for dismissals and § 15-14 (3) for terminations.
Invalidity means that the employment relationship remains, and the employee shall either continue in the position or be reinstated if the person has been absent. As the Supreme Court stated in Rt. 2009 p. 685 (the Web Editor Case): "When an unjust dismissal is declared invalid, the main rule (...) is that the employment relationship remains, and the employee shall continue in the position. If the employee has not remained in the position during the handling of the case, invalidity means that the employer is obliged to reinstate the employee in their position."
Complicating Factor: Position Filled by Another
A complicated situation arises when the position has in the meantime been filled by another employee. This can create a conflict between the rights of the unjustly dismissed employee (A) and the newly hired employee (B).
The following principles are relevant:
Reservation at New Hiring: The significance of whether a reservation has been made with the newly hired regarding possible dismissal is unclear, but such a reservation cannot automatically lead to the end of the newly hired’s employment.
Entitlement to Equivalent Position: The dismissed employee does not necessarily have the right to return to the exact same position, but may have the right to an "equivalent" position.
Employer’s Obligation: If there is no equivalent position, the employer is generally obliged to create one. Any situation of redundancy must be resolved according to the rules in the Working Environment Act § 15-7.
Procedural Issues: The newly hired employee normally does not need to be involved in the lawsuit, as the employer may be obliged to allow the dismissed to continue regardless of whether the newly hired also continues.
Exception: Termination in Special Cases
Although the main rule is invalidity, the court may "in special cases" decide that the employment relationship shall terminate. The condition is that, after weighing the parties’ interests, it would be "manifestly unreasonable" for the employment relationship to continue. This is a narrow exception rule with a high threshold.
In the case of a wrongful termination, the court may additionally decide that the employment should end when it finds that the conditions for a justified dismissal are present, cf. § 15-14 (3) last sentence.
Example: The Web Editor Case (Rt. 2009 p. 685)
In this case, an employee was dismissed from the position of web editor because he was convicted of sexually offensive behavior towards a minor girl through chatting over the internet. The Supreme Court concluded that the dismissal had to be declared invalid because the employee no longer held the position of web editor but had been reassigned to an advisor position within ICT.
The employer alternatively argued that it would be manifestly unreasonable for the employment relationship to continue. The Supreme Court rejected this and emphasized:
That the county was a large employer with good opportunities to find suitable tasks
That the county could be blamed for the employee having been away from work for a long time
That the criminal offenses had already led to a change in position
The employer's duty to ensure an inclusive working life and counteract exclusion
Compensation for Wrongful Termination
Basis and Determination Principles
An employee who is wrongfully dismissed or terminated can claim compensation according to the Working Environment Act § 15-12 (2) and § 15-14 (4). The compensation shall be set at an amount the court finds "reasonable," based on broad discretion.
In determining this, the court should consider:
The employee's economic loss
The employer's conduct
The employee's conduct
The circumstances otherwise
Compensation covers both economic loss and non-economic damage (redress). It does not require fault from the employer's side – it is sufficient that the dismissal or termination was wrongful.
Compensation for Economic Loss
The economic loss typically includes:
Loss of salary in the absence period (if the employee has not remained in the position)
Future income loss (particularly relevant if the employment ends)
Case law indicates that compensation for future income loss is often limited to two years.
Deductions for Other Income
An important question is whether deductions should be made for other benefits the employee has received during the absence period:
Other Employment Income: The starting point is that no deduction should be made unless the employee has been "relatively long out of the position" and has entered into "a stable and organized work situation" for "a large part" of the absence period.
Social Security Benefits: Normally, there should be no deduction for received social security benefits such as unemployment benefits or work assessment allowance, because the employee has a repayment obligation to the social security authorities to the extent the income loss is covered by the employer.
The Importance of the Parties' Conduct
The parties' conduct is particularly significant for whether – and to what extent – compensation for non-economic damage will be awarded:
Employer’s Conduct: A tidy process from the employer’s side may argue against compensation, while unfair treatment may argue in favor of compensation. Large employers with professional competence are often judged more strictly.
Employee’s Conduct: Blameworthy behavior from the employee’s side may lead to no compensation being awarded, even if the dismissal or termination was wrongful.
Conclusion
The Working Environment Act provides strong protection against unjust dismissals and wrongful terminations through the rules on invalidity and compensation. The main rule is that invalidity means that the employment relationship continues or is resumed. At the same time, the employee may be entitled to compensation based on a broad reasonableness assessment, taking into account both economic loss and non-economic damage.
