New rules on the employee term and the employer liability in groups come into force 1 January 2024

The employee term

The employee term in the Working Environment Act is now being clarified to make it easier to distinguish between what is to be considered an employee and a contractor. An employee is defined as “anyone performing work for and is subordinate to another”. In the assessment, the following will be emphasised, among other things:

• whether the person in question makes their personal labour available on an ongoing basis, and
• whether the person in question is subordinate through management, leadership, and control.

Note: A presumption is also introduced for employee relations. An employer must therefore substantiate that there is an independent assignment relation for this not to be classified as an employment relationship.

Employer liability and discussions in groups

The new rules will also strengthen employee protection and rights in connection with restructuring and downsizing in cases where the employer is a part of a group:

• Dismissals will not be factually justified if there is other suitable work to offer the employee in other businesses in the group.
• An employee who has been dismissed has a preferential right to new employment in the same business or other businesses in the group, unless it concerns a position for which the employee is not qualified.

Based on the employees’ strengthened rights, rules relating to information and discussion in group relations are also introduced. The rules apply to groups with businesses that jointly regularly employ at least 50 employees and:

• The parent company shall establish frameworks for collaboration, information and discussion between the companies in the group and the employees in the group. The form of collaboration shall be established in consultation with a majority of the employees in the group, or one or more local unions representing a majority of the employees in the group.
• If plans for expansions, reductions or changes could have a significant impact on employment in several businesses in the group, this must be informed as soon as possible and discussed in collaboration.

Did you know?

• The duty to offer other suitable work in all businesses in the group shall be a “secondary” right which will only be relevant in those cases where the employer itself has no other work to offer.
• As before, the preferential right is lost if the employee has not accepted an offer of employment in a suitable position no later than 14 days after the offer was received. However, an employee’s rejection of an offer of a suitable position in other businesses in the group does not mean that the employee’s preferential right with the employer company is lost.
• If the employer belongs to a group, a dismissal that is based on the circumstances of the business shall state which companies are part of the group at the time of dismissal.
• In the event of a dispute about preferential rights in other businesses in the group, demands for negotiations shall be directed against the company that has the position the employee considers to be entitled to preferential treatment for.

Other changes worth noting

Please note that the following changes also come into force on 1 January 2024:

• Changes to the rules for safety representatives: Pursuant to current rules, businesses with fewer than 10 employees can agree in writing that there will not be a safety representative in the business. This limit is adjusted down to five employees. Furthermore, a clarification will be included in the Working Environment Act that states that the safety representative’s duty to maintain the employees’ interests and ensure that the work is carried out in a manner that ensures the employees’ safety, health and welfare shall also apply to hired employees and independent contractors who carry out work in close connection with the business.
• Shorter accrual period for permanent employment: Employees who have been temporarily employed on the basis that the work is of a “temporary nature” shall, according to the new rules, be considered permanent employees after three years (compared to the current rule of four years). The accrual period will therefore be the same, regardless of the basis for temporary employment.
• Expanded duty to discuss the use of different forms of employment: The employer’s duty to discuss the use of part-time, temporary employment and hired labour with the union representatives at least once a year in accordance with Sections 14-1 a, 19-2 second paragraph and 14-12 third paragraph of the Working Environment Act is repealed. The employer’s duty to discuss is moved to the new Section 14-14 a, which additionally requires that the employer shall annually discuss the use of independent contractors and purchase of services from other businesses that have an impact on the staff.