Reassignment and Modification Termination - Alternatives to Dismissal during Organizational Changes

Reassignment and termination modification represent important alternatives to ordinary termination during restructuring processes. These tools provide companies with the opportunity to retain valuable expertise while implementing necessary organizational changes. Especially for older employees with long tenure, such solutions can be both more appropriate and legally defensible than full termination.

Basic Concepts

Reassignment as an Alternative

Reassignment of an employee to a new position, or changes in an employee's position, are viable alternatives to termination during restructuring processes. This is particularly considered for older employees with long tenure. Reassignment typically involves moving an employee to a new position, at the same or lower level, and possibly with a lower salary.

Position changes in an employee's existing position may include a reduction in position percentage, change in job content, lower salary, altered position in the organizational hierarchy, or similar changes.

Delimitation and Classification

Sometimes it can be difficult to determine whether it is a new position or a change in an existing position. This distinction is not crucial. The central issue is whether the change can be implemented under the right to manage, or whether the employer must use termination modification.

Framework of the Right to Manage

Definition and Content

The employer's right to manage is traditionally defined as the right to organize, lead, control, and allocate work, and is established in case law. Thus, a number of changes and reassignments fall within the employer's right to organize the business rationally.

The right to manage must be exercised within the framework of the concrete employment relationship. In determining the boundaries of the right to manage, the job title, circumstances surrounding employment, industry customs, practices in the current employment relationship, and what is considered reasonable in light of societal development are relevant.

Core Features Standard

If it involves a transfer within the "core features" of the position, the employer can do so under the right to manage. Within the core features means that the changes are not considered substantial, and the essence of the position remains intact.

The core features standard was formulated by Professor Kristen Andersen: "It should be beyond doubt that an employer cannot regulate an employee's work area in such a way that its core character becomes significantly different from what the employment contract, directly or indirectly, operates with."

Reasonableness Requirement

The right to manage is limited by general standards of reasonableness. The Supreme Court stated in the Kårstø judgment that the exercise of the employer's management right requires certain standards of procedural handling - there must be a sound basis for the decision, which must not be arbitrary or based on irrelevant considerations.

A certain requirement for fair justification exists in reassignments considered within the employment relationship agreed upon by the parties, but this is not the same standard as for terminations.

Termination Modification

When Termination Modification is Required

Changes that are so significant that they cannot be implemented under the right to manage must be carried out through termination modification if the employee does not consent to the change. Changes that fall outside the "core features" of the position require termination modification if the employee does not consent.

Legal Requirements

A termination modification must, like other terminations, satisfy the requirements of the Working Environment Act to be justifiably reasoned, cf. Working Environment Act § 15-7. The threshold for termination may be somewhat lower since other work is offered. The Court of Appeal has stated that the threshold for accepting termination modification as justifiably reasoned in many cases may be somewhat lower than termination where the employee is left without work.

Procedural Requirements

The procedural rules of the law must be followed, meaning a consultation meeting should be conducted according to the Working Environment Act § 15-1. The termination modification letter must comply with the requirements in the Working Environment Act § 15-4, including informing about the right to remain in the position.

Case Law

The Storebrand Case

An example of inadequate procedural handling is the Storebrand case from 2002. An employee in Kristiansand was immediately relieved from the position during reorganization and transferred to a pool of temporary workers. The Court of Appeal deemed the case compensable due to inadequate procedural handling.

The Court of Appeal emphasized the combination of a lack of clear advance notification and immediate effect with a lack of time for understanding and adjustment. The judgment shows that in the case of substantial changes, it is important that the procedural rules of the Working Environment Act are followed.

Lower Threshold for Termination Modification

The Supreme Court handled a case in 2019 where a chief officer was demoted to first officer due to gross errors. The Supreme Court stated that since the reasonableness assessment includes balancing the interests of the employer and the employee, it can be emphasized whether the employee continues in the enterprise, as the consequences are "far less severe".

Case law indicates that the threshold for termination modification is lower than for ordinary dismissal, provided that the consequences are less severe.

Practical Example

An example is a company that wants to shut down its central marketing department and instead use its regional sales apparatus. The marketing director, aged 60, who has been with the company for 30 years, is offered a regular sales job at the nearest regional office with a 30% lower salary.

If he does not consent, he is called to a consultation meeting according to the Working Environment Act § 15-1 and, after the consultation meeting, receives a properly formatted dismissal letter with the requirement to transition to a regular sales position at the end of the notice period.

Special Considerations for Older Employees

Older employees with long tenure have special protection during downsizing, and it is difficult to use dismissals on this group, depending on the company's situation. For older employees with long tenure, termination modifications are particularly relevant.

After discussions, an alternative lower position with lower pay may be offered as an alternative to full termination with the intent of resignation. Companies should consider this if they do not have strong reasons for dismissal and have opportunities to accommodate employees in other parts of the organization.

Practical Recommendations

Information and Consultation

In all reassignments and termination modifications, information and consultation with the employee are central. The individual must be consulted, and minutes from the meeting should be taken unless the employer initially has an informal meeting about the matter.

Involvement of Union Representatives

If major changes are to be made to the employee's position, union representatives should be invited to the meeting if the employee desires it. This is also a requirement for termination modifications, cf. Working Environment Act § 15-1.

Assessment of the Right to Manage Boundaries

If the company considers making changes to an employee's position in connection with downsizing, a prior investigation should determine whether the change exceeds the boundaries of the right to manage and thus constitutes termination modification.

Documentation and Process

Proper procedural handling reduces the risk of employer mistakes and ensures that all aspects of the case are considered. A structured process with proper documentation and adherence to procedural rules protects both employer and employee.

Strategic Advantages

If it is possible to avoid ordinary termination by changing an employee's position through termination modification, this will be advantageous, as the threshold for termination modification is somewhat lower in practice than for full termination. This provides companies flexibility to retain valuable expertise while implementing necessary organizational changes.

For employees, it offers the opportunity to remain in the company, albeit under changed conditions, often preferable to full termination and uncertainty about future employment.