Termination of Employment Contracts in Norway

1. Grounds for Termination

  • Dismissal of an employee due to business related reasons.
  • Dismissal of an employee due to reasons related to the individual employee.
  • Collective dismissal based on objective grounds.
  • Resignation by the employee.
  • Expiration of the contract term or end of the specific job.
  • Employer’s death, retirement or permanent illness.

2. Collective Dismissals

Terminations based on economic, technical, organizational or productivity grounds are deemed collective when at least 10 employees have been given notice of dismissal within a period of 30 days. When an employer considers dismissing a number of employees at the same time, the employer must follow a strict procedure.

3. Individual Dismissals

The Working Environment Act provides that a dismissal must be objectively justified due to circumstances relating to the operation of the business, the employer or the employee. This applies to both individual and collective dismissals. The notice of termination itself needs to be in writing and shall fulfill certain minimum requirements.

In case of severe breach of obligation, either party can also terminate the employment for cause with immediate effect without observing a notice period. Among the valid reasons for immediate termination are crimes against the employer.

a. Is severance pay required?

There is no statutory right to severance pay in Norway. The only payment that the employee is entitled to is payment during the period of notice in accordance with the terms of employment.

4. Separation Agreements

a. Is a Separation Agreement required or considered best practice?

It is not required for the parties to enter into a Separation Agreement. To obtain clarity between the parties it is, however, considered best practice.

b. What are the standard provisions of a Separation Agreement?

Two key points in a standard Separation Agreement are provisions on termination date and on payments from the employer. The latter includes provisions on salary during the period of notice, any severance pay or damages the parties agree on, holiday money, pensions, and any financial contributions for outplacement or coverage of legal assistance.

c. Does the age of the employee make a difference?

No, there is no formal difference between entering into separation agreement with a young or an old employee. The employee’s age may however be a factor in determining any severance pay, damages etc.

d. Are there additional provisions to consider?

When framing a Separation Agreement, the parties should keep in mind the consequences the agreement might have on the employee’s future rights to social benefits and pensions.

5. Remedies for employee seeking to challenge wrongful termination

An employee is entitled to a negotiation meeting with the employer, but only if the employee has been notified within two weeks after the dismissal. The employee can accept or challenge the termination decision within eight weeks from the conclusion of negotiations, or if a negotiation meeting was not held, within eight weeks from the date when notice of dismissal was received. If the employee challenges the notice of termination, the employee will be entitled to remain in his or her position until a court has settled the case, provided that the employee has finished his or her trial period.

For more information on these articles or any other issues involving labour and employment matters in Norway, please contact Storeng, Beck & Due Lund (SBDL)
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