Disputes Regarding the Legality of Dismissal - Employees' Rights and Employers' Risks During Downsizing

Knowledge of employees' rights in disputes over the legality of dismissals is crucial for companies planning downsizing. The right to remain in position while the case is being processed in the courts can entail significant economic and practical challenges for employers, and such processes can often take a long time. This guide provides a comprehensive review of dispute resolution in dismissals – from employees' rights to employers' opportunities to reduce risk and costs.

Basics of Dispute Rights

Strategic Importance for Companies

Familiarity with employees' rights is essential for calculating the risk and costs in a downsizing process, but also for the employer to assess whether it is commercially sensible to offer severance packages. If an employee disputes the fairness of the dismissal, several extensive rights are triggered, which can have significant impact on the company's operations.

Practical Consequences

The right to remain in position is of great practical significance, as such disputes can take a long time to resolve, and the employee is initially expected to work and receive wages as normal throughout this period. This can cause internal disruption at the workplace and naturally require both financial and human resources from the employer.

Right to Demand Negotiations

Legal Basis and Deadlines

The Working Environment Act § 17-3, first paragraph, stipulates that an employee who wants to claim that a dismissal is unlawful, can demand negotiations with the employer. The same applies if the employee wants to claim compensation due to such circumstances. The provision also applies to unlawful dismissals.

An employee who wants to demand negotiations must notify the employer in writing within two weeks, unless the parties have agreed on a longer deadline. In case of dismissal, the deadline is counted from the time the dismissal occurred, i.e., when it was received by the employee. For the employee to meet the two-week deadline, the demand for negotiations must have reached the employer before the two weeks have passed.

Employer's Obligations

The obligation to hold a negotiation meeting rests with the employer, who must ensure that the negotiation meeting takes place as soon as possible, and no later than two weeks after the demand for negotiations is received. The rule that the negotiation meeting must be held within two weeks is a procedural rule that takes into account the parties' need for a quick resolution.

The law does not specify what should be considered "negotiations." The most appropriate and common is to hold a meeting, either physically or digitally. There are no specific requirements for the content of the negotiations. If both parties meet, present their views on possible solutions, and quickly determine that the parties are too far apart for the matter to be resolved amicably, this will generally be sufficient.

Employer's Right to Negotiations

The employer may also, in some cases, demand that negotiations be held. This right applies in cases where the employee initiates a lawsuit or notifies the employer that a lawsuit will be filed without negotiations being held. The employer must then inform the employee of the demand within two weeks from the notification that a lawsuit is or will be initiated.

Documentation

From the negotiations, a protocol must be drawn up, which is to be signed by the parties and their advisors. This is only a procedural rule. In practice, a short summary is sometimes used, as the parties have difficulty agreeing on a protocol to be signed by both. The most important thing is to be able to document that the meeting took place and from what date the lawsuit deadline runs.

Deadlines for Lawsuits

Special Rules in the Working Environment Act

The Working Environment Act regulates lawsuit deadlines in disputes over employee dismissals in particular in § 17-4. It is important for employers to be aware of the lawsuit deadlines because they differ from the ordinary legal system. Furthermore, the employer has an obligation to inform the employee of the deadlines in the dismissal letter.

The standard is that the employee has eight weeks to file a lawsuit in disputes over the validity of the dismissal. If the employee only wants to claim compensation for the received dismissal, the deadline is extended to six months. The parties can also agree on longer lawsuit deadlines, for instance, if negotiations are ongoing and both parties wish to continue to try to find a solution.

Calculation of Deadlines

If negotiations have been held, the deadline for filing a lawsuit—whether regarding the validity of the dismissal or a claim for compensation—is counted from the conclusion of the negotiations. If negotiations have not been held, the deadline is counted from the dismissal date.

Special Rules for the Right to Remain in Position

It is a prerequisite for having the right to remain in position while the dispute is ongoing that a lawsuit is initiated or notified in writing within both the dismissal notice period and eight weeks from the conclusion of the negotiations or from the dismissal date if no negotiations have been held. This means that an employee with a notice period of one month must initiate or notify the lawsuit before the end of this month, even if the eight-week deadline has not expired.

Implications of Formal Errors

The Working Environment Act § 17-4, fourth and sixth paragraphs, show how important it is for the employer to adhere to the formal rules in § 15-4, first and second paragraphs: Violation of these provisions means that the lawsuit deadlines and the deadline for claiming the right to remain in position can no longer be enforced.

The Right to Remain in Position

Distinctive Norwegian Rule

Employees who file a lawsuit concerning the legality of the dismissal within the legal lawsuit deadlines generally have the right to remain in position until the case is decided by the judiciary. This is quite a distinctive Norwegian rule. The idea is that the right to remain in position ensures continuity in the employment relationship and makes it easier for the employee to continue in position if the dismissal proves invalid.

Exceptions to the Right

The right to continue in position does not apply in the event of a dispute over dismissal, dismissal during the trial period, for hired employees, or temporary employees, cf. Working Environment Act § 15-11 (3).

Practical Content

The right to remain in position means that the employee generally continues in their usual position, with ordinary work tasks, and receives salary and benefits for this as usual. The employer generally cannot deny the employee access to the workplace or refuse the employee to work.

The right to remain in position naturally assumes that the employee is actually capable of continuing in the position, or that the employee has a lawful absence reason such as medical leave. The employee can be on medical leave during the period they remain in position just like otherwise in an employment relationship.

Application of Employer's Right to Manage

The general right to manage also applies as usual during the time the employee remains in position, allowing the employer to make changes and give instructions/orders falling within the bounds of managerial prerogative, as well as making minor changes in job tasks and areas of responsibility. The requirement of reasonableness for decisions taken under the right to manage means, however, that changes made solely to circumvent or undermine the right to remain in position will not stand.

Exceptional Cases

An employee who remains in position generally has the right to work, not just receive pay. However, there are a few exceptions. In the Investment Advisor ruling (Rt-2009-1183), the Supreme Court held that an investment advisor did not have the right to work during the notice period.

The Supreme Court stated that it must exceptionally be possible to deprive a dismissed employee of their work tasks, but that there must be particularly compelling reasons for depriving them of their work tasks during the notice period.

Prohibition of Evasion

The employer cannot evade the right to remain in position by laying off the employee during the notice period. The Supreme Court's appeal committee has stated that an employer cannot circumvent this by laying off the employee during the notice period, and that if the employee is to be ordered to leave, it must be decided by the courts.