The Ministry of Labour and Social Inclusion proposes that the duty to offer other suitable work in a downsizing situation should be extended to apply to vacant positions throughout the group. A corresponding extension is proposed for preferential rights. The proposal thus requires an overview and coordination of the staffing situation in group companies. For many group companies, this will entail a need to change routines and that reorganisations and restructuring processes will become more time- and resource-consuming.
The current scheme
According to the current regulations, the duty to offer an employee other suitable work is limited to the company the employee is employed in. A dismissal due to the circumstances of a company will not be justified if the company has another suitable position or unmet work need for which the employee is qualified. Under the current rules, the right to other suitable work does not apply to available positions in other group companies.
Employees who have been subject to downsizing have a preferential right to new employment for one year from the end of the notice period. Pursuant to the current rules, the preferential right only applies to new employment in the company from which the employee was dismissed.
Read more about downsizing here.
Strengthening employee rights in the event of downsizing
The proposal aims to strengthen employee rights in groups in the event of downsizing. Employees affected by downsizing will not only have rights against their own employer, but also against all other Norwegian companies in the group. The rights that are proposed to be strengthened are:
- Right to other suitable work
- Preferential right to new position
Note that the rights will be secondary to group companies. This means that the employer shall first clarify whether there is other suitable work in the employer’s company before this is assessed in the group companies. The same applies to preferential rights.
Are any exceptions proposed?
The Ministry has made it possible for the employer to have the opportunity to limit the circle of companies. Such limitation shall be based on factual criteria such as geographical conditions or limited parts of the group. Note that the limitations must be discussed with the employees’ representatives.
Which criteria are factual will depend on a discretionary assessment. Note that the use of unfair criteria could result in a dismissal being unjustified.
What does the proposal mean for group companies?
The Ministry’s proposal prerequires that companies in groups have routines and systems that ensure an overview of the staffing situation and available positions in all group companies. For group companies that do not have joint HR functions and systems, the proposal could entail practical challenges. Many groups will therefore have to establish new routines that ensure information exchange across the companies.
For many group companies, the Ministry’s proposal will lead to an increased use of time and resources when downsizing. The employer must first assess the fairness of the dismissals at a general level. Selection criteria and potentially a selection circle must be determined, and it must be assessed whether the company has other suitable work to offer. If the exception rule is to be used, the company also has to assess and justify relevant criteria for the limitation, before they need to be discussed with the employees’ representatives. After assessing which employees are redundant, the employer must then assess whether the other group companies that are part of the company circle have other suitable work to offer.
In order for the group companies to be able to comply with the proposed law, it is therefore required that the parent company organises extensive collaboration between the group companies. A consequence of this could in reality be that each individual company is not able to choose its own employees, but is required by the parent company to hire redundant employees.
Other proposals
The Ministry has also proposed a number of other changes to the Working Environment Act. The main features of these are:
- Duty to establish a discussion arena in groups that collectively employ at least 50 employees.
- Clarifying the employee term and legislating factors in the distinction between employee and contractor.
- Rule of presumption that a person who performs work is to be considered an employee.
- Duty to discuss the use of independent contractors and service purchases.
- Equal maximum limit for temporary employment of 3 years.
- Lowered threshold for when there is a requirement for a safety representative and working environment committee for 5 and 30 employees respectively.
Did you know:
- There is no requirement that the employee must be the best qualified for the duty to offer other suitable work or new employment to apply.
- The employee must have been employed for a total of 12 months in the last two years to have preferential right.
- The preferential right does not entail a duty for the employer to actively inform each individual about available positions.
- Information on available positions must be available to employees with preferential rights in a suitable manner.
- Dismissal templates must also be updated with information on preferential rights in group companies.
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Feel free to contact SANDS’ employment law team if you want to hear more about the proposals and how your business can adapt.