International Newsletter

Norway’s Supreme Court Rules on Employment Terminations

October 30, 2019
Norway

In a recent decision, the Supreme Court of Norway ruled that the threshold for justified termination of employment is lower if the employee is offered an alternative position in the company. This decision provides an important clarification for employers.

Under Norwegian law, employees can be dismissed due to low performance only if the dismissal is “objectively justified.” The Supreme Court previously ruled that the threshold for termination of employment is high and requires reasonable grounds. If the termination is objectively justified, the employer is not, at the outset, obliged to offer the employee an alternative position in the company, even if there are positions for which the employee is qualified.

The Supreme Court assessed, for the first time, whether the threshold for termination is lower if the employee is offered a new position in the company. In this case, which involved Norwegian shipping company Hurtigruten, a chief officer was degraded to first mate after the ship ran aground while he was deck officer in charge. The reason for termination of his original role was lack of trust, as Hurtigruten alleged the chief officer had committed several fundamental mistakes on the voyage, resulting in the ship, with more than 500 passengers on board, running aground.

The Supreme Court concluded that the termination, in combination with an offer of an alternative position as first mate, was objectively justified and lawful. It noted that the consequences of dismissal are normally less severe if the employee is offered continuous employment in the company. In our view, a lower threshold for lawful termination in cases where the employee is offered an alternative position is a natural consequence of the balancing of interests following from the criteria of objective termination.

The Supreme Court’s premises do not imply that an employer is “free” to demote an employee. This will be subject to a concrete assessment, which requires reasonable grounds. In the assessment, the new position will need to be compared with the previous one, including relevant factors such as salary and responsibilities.

A consequence of the judgement is that in cases where a “full” termination is not lawful, a termination combined with an offer of an alternative position may be lawful.

Comment

The takeaway from the Supreme Court’s decision is that an employer may want to consider both the employer’s and the employee’s interests before any dismissal, including assessing whether the employer can, should, or, in some cases, must offer the employee an alternative position in the company.

Written by Pål Kvernaas of Haavind and Roger James of Ogletree Deakins

© 2019 Haavind and Ogletree, Deakins, Nash, Smoak & Stewart, P.C.