A written employment contract must be entered into in all employment relationships. The employer must prepare a draft employment contract in accordance with Section 14-6 of the Working Environment Act. The employee is entitled to be assisted by a union representative or other advisor both during the preparation and when amendments are made to the contract.

For employment relationships lasting more than one month, a written contract must be in place as soon as possible and no later than one month after the employment commenced. For shorter employment relationships, or in cases of temporary agency work, a written contract must be entered into immediately.

The employment contract must contain information on all material terms of the employment relationship. The detailed requirements are set out in Section 14-6 of the Working Environment Act. Read more in our here.

An employee who leaves employment following lawful termination is entitled to a written reference from the employer. The reference must state the employee’s name, date of birth, the nature of the work performed, and the duration of the employment.

Employees who are dismissed are also entitled to a reference, but the employer may state, without further explanation, that the employee was dismissed.

An employer may summarily dismiss an employee with immediate effect if the employee has committed a serious breach of duty or other material breach of the employment contract. The provisions of Sections 15-1 and 15-4 of the Working Environment Act apply correspondingly.

Before making a decision on termination, the issue must, as far as practically possible, be discussed with the employee and the employee’s representative, unless the employee does not wish to do so. Both the grounds for termination and any selection among employees in redundancy situations must be discussed.

An employer who is considering collective redundancies shall, as early as possible, enter into consultations with the employees’ elected representatives with a view to reaching an agreement to avoid collective redundancies or to reduce the number of employees being dismissed. If the employer is considering closing down the business or an independent part of it, and the closure involves collective redundancies, the possibility of continued operation shall also be discussed, including the potential for employee takeovers of the business. If redundancies cannot be avoided, efforts shall be made to reduce their adverse effects. The consultations shall include possible social measures aimed, among other things, at supporting redeployment or retraining of the employees who are made redundant.

Read more about the rules relating to discussion meetings in our here.

An employee may claim compensation if a termination is in breach of Sections 15-6 to 15-11 of the Working Environment Act. Compensation is determined based on what the court considers reasonable, taking into account financial loss, the conduct of the parties, and the circumstances of the case.

An employee may also claim compensation if a summary dismissal is unlawful. The compensation is determined in the same manner as in cases of an invalid termination.

An employee who wishes to assert that a termination or summary dismissal is unlawful, that there has been a breach of the rules in the Working Environment Act regarding preferential rights, or that an unlawful temporary employment, hiring-in of labour, or suspension has occurred, may demand negotiations with the employer. The same applies if the employee seeks to claim compensation.

An employee who wishes to demand negotiations must notify the employer in writing within two weeks. In disputes concerning whether hiring-in of labour, temporary employment, or suspension is lawful, there is no deadline for requesting negotiations.

The employer shall ensure that a negotiation meeting is held as soon as possible and no later than two weeks after the request has been received.

If the employee initiates legal proceedings or notifies the employer that legal proceedings will be initiated without negotiations having been held, the employer may demand negotiations with the employee. A request for negotiations must be submitted in writing as soon as possible and no later than two weeks after the employer has been notified that legal proceedings have been or will be initiated. If legal proceedings have been initiated, the employer shall notify the court in writing that negotiations will be held. The employee is obliged to attend the negotiations.

Both the employee and the employer have the right to be assisted by an advisor during the negotiations. The negotiations shall be concluded no later than two weeks after the date of the first negotiation meeting, unless the parties agree to continue the negotiations.

A written record (minutes) shall be prepared from the negotiations and must be signed by both parties and their advisors.

A termination issued by the employer must be made in writing and delivered to the employee in person or sent by registered mail to the employee’s stated address. The termination shall include information on:

– the employee’s right to demand negotiations and to initiate legal proceedings,
– the right to remain in the position pursuant to Sections 17-3, 17-4 and 15-11,
– the applicable deadlines for requesting negotiations, initiating legal proceedings, and remaining in the position, and
– who is the employer and the correct defendant in any potential dispute.

If the termination is based on circumstances relating to the undertaking, it must also include information on preferential rights under Section 14-2 of the Working Environment Act.

If the employee so requests, the employer must provide the circumstances relied upon as grounds for the termination. The employee may request that this information be provided in writing.

Read more about the formal requirements for termination in our here.

An employee who has been dismissed due to circumstances relating to the undertaking has a preferential right to new employment in the same undertaking, unless the position requires qualifications the employee does not have.

The preferential right also applies to employees who are temporarily employed and who, due to circumstances relating to the undertaking, are not offered continued employment. However, this does not apply to employees employed on a temporary basis as substitutes pursuant to Section 14-9, second paragraph, letter b of the Working Environment Act. The preferential right also applies to employees who have accepted an offer of reduced working hours instead of dismissal.

The preferential right applies to employees who have been employed by the undertaking for a total of at least 12 months during the last two years.

The preferential right applies from the time notice of termination is given and for one year from the expiry of the notice period. However, it applies for two years from the expiry of the notice period if the employment relationship was terminated between 1 July 2021 and 31 December 2021 due to the effects of the COVID-19 pandemic.

The preferential right lapses if the employee does not accept an offer of suitable employment within 14 days of receiving the offer.

If there are several employees with preferential rights to a position, the employer is obliged to apply the same selection criteria as those used in redundancies due to downsizing or rationalisation measures.

Part-time employees have a preferential right to an expanded position over new hiring or the use of temporary agency workers in the undertaking. The preferential right may also apply to parts of a position.

Part-time employees also have a preferential right to extra shifts and similar work in the undertaking, rather than the employer hiring or engaging workers for such work. After consultations with employee representatives, the employer may limit the scope of the preferential right to one or more organisational units with a total of at least 30 employees. By agreement with employee representatives, a different or narrower scope may be established. The preferential right also applies to temporarily employed part-time workers.

The preferential right for part-time employees is conditional on the employee being qualified and on the exercise of the preferential right not causing significant inconvenience to the undertaking.

An employer may wish to offer employees an incentive scheme in addition to ordinary salary. In companies where employees represent the greatest value, such an incentive scheme may be particularly desirable. Many employees also expect an incentive arrangement in addition to their regular salary.

The main purpose of incentives in employment relationships is generally to stimulate increased value creation and/or to attract and retain key personnel within the business over a longer period. Through the incentive scheme, employees are given a shared financial interest with the company’s shareholders. In some cases, incentives may also be regarded as pure compensation instruments, for example in start-up companies that may wish to use an equity-based incentive scheme to compensate for salaries that are below market level.

The type of scheme to be chosen should be determined based on a specific assessment, taking into account the different consequences of various arrangements, the company’s position, and the individual employee or groups of employees. The best solution may differ between start-ups and well-established companies, and some employees will have both the financial means and interest to invest in the employer company, while others will not.

In addition to choosing the type of incentive scheme, it is necessary to assess the criteria for participation or allocation, for example whether the scheme should apply to all employees or a group of employees, and whether the size of bonuses, number of options and/or shares should depend on job category, salary, or other criteria. In order to achieve the company’s objectives with the scheme, conditions may be set for allocation/participation, such as requiring that an employee has been employed for a certain period before, for example, stock options are granted or the employee becomes part of the company’s bonus scheme.

It is also necessary to assess which criteria should be used for the payment of bonuses, exercise of stock options, or ownership of shares. The criteria may be linked to the company’s financial targets, such as profit, cost reductions, increased turnover, or other performance indicators. The criteria may also be non-financial, such as customer satisfaction or factors related to the working environment. The criteria may be linked to collective goals or individual goals and specific job performance.

A non-compete clause is an agreement between an employer and an employee that restricts the employee’s ability to take a position with another employer or to start, operate, or participate in another business after the termination of the employment relationship.

A non-compete clause may only be enforced to the extent necessary to protect the employer’s specific need for protection against competition. In any event, the clause may not be enforced for more than one year from the termination of the employment relationship.

A non-compete clause must be entered into in writing in order to be valid.

A non-compete clause may not be enforced in the event of termination by the employer, unless the termination is objectively justified by the employee’s conduct. The same applies if the employer, due to the employee’s breach of obligations in the employment relationship, has given the employee reasonable grounds to terminate the employment.

The rules on non-compete clauses do not apply to the company’s chief executive officer if, in a written agreement, the CEO has waived such rights in exchange for severance pay prior to resignation.

Further rules on non-compete clauses are set out in Chapter 14 A of the Working Environment Act. Read more about non-compete clauses in employment relationships in our here.

An employer may implement monitoring or control measures in relation to employees where such measures are objectively justified by the circumstances of the undertaking and do not impose a disproportionate burden on the employee.

The employer is required, as early as possible, to discuss the need for, design, implementation of, and any significant changes to monitoring or control measures within the undertaking with the employees’ elected representatives.

Before the measure is implemented, the employer shall provide the affected employees with information regarding:

– the purpose of the monitoring or control measure,
– the practical consequences of the measure, including how it will be carried out, and
– the anticipated duration of the measure.

The employer shall, together with the employees’ elected representatives, regularly evaluate the need for any monitoring or control measures that have been implemented.

Further provisions regarding monitoring and control measures in the workplace are set out in Chapter 9 of the Working Environment Act.

The main rule under the Working Environment Act is that employees shall be employed on a permanent basis. Permanent employment means that the employment relationship is ongoing and of indefinite duration, that the Act’s provisions governing the termination of employment apply, and that the employee is provided with predictability of work through a genuine and defined position percentage or scope of employment.

However, an agreement on temporary employment may be entered into:

– where the work is of a temporary nature,
– where the employee is hired to replace another employee or employees (temporary substitute position),
– for trainee or work placement positions,
– with participants in labour market programmes administered by or in cooperation with the Norwegian Labour and Welfare Administration (NAV), and
– with athletes, coaches, referees, and other leaders within organised sports.

A termination may be objectively justified by circumstances relating to the undertaking. However, where the termination is due to downsizing or rationalisation measures, it will not be considered objectively justified if the employer has other suitable work within the undertaking to offer the employee. When determining whether a termination is objectively justified on the grounds of downsizing or rationalisation measures, a balancing of interests must be carried out between the needs of the undertaking and the disadvantages that the termination imposes on the individual employee.

Read more about workforce reductions and redundancies in our here.

If an employee who has been employed subject to a written probationary period is dismissed, the dismissal must be justified by the employee’s adaptation to the work, professional competence, or reliability.

A probationary period may be agreed for a period of up to six months. If the employee has been absent from work during the probationary period, the employer may extend the agreed probationary period by a period corresponding to the length of the absence. Such an extension may only be made if the employee was informed in writing at the time of employment of the possibility of an extension, and if the employer has notified the employee in writing of the extension before the probationary period expires. An extension is not permitted where the absence has been caused by the employer.

Read more about dismissal during a probationary period in our here.

An employee who is wholly or partially absent from work due to illness or injury may not be dismissed on those grounds during the first 12 months following the onset of the incapacity for work. Any dismissal that takes place within this period shall be presumed to be due to the employee’s sickness absence unless it is made substantially more probable that the dismissal is based on other grounds.

An employee who invokes protection against dismissal due to illness must, within a reasonable time, provide notice of the reason for the absence by means of a medical certificate or other appropriate documentation. If requested by the employer, the employee must document the total period of sickness absence by a medical certificate.

Unless otherwise agreed in writing or provided for in a collective bargaining agreement, a mutual notice period of one month applies. Before notice of termination has been given, an agreement on a shorter notice period may only be entered into between the employer and employee representatives in an undertaking bound by a collective bargaining agreement.

For an employee who has been continuously employed by the same undertaking for at least five years at the time notice is given, a mutual notice period of at least two months applies. If the employee has been continuously employed by the same undertaking for at least ten years, the mutual notice period is at least three months.

If an employee is dismissed after at least ten years of continuous employment with the same undertaking, the notice period shall be at least four months if the dismissal occurs after the employee has reached the age of 50, at least five months after the age of 55, and at least six months after the age of 60. The employee may terminate the employment agreement with a notice period of at least three months.

For employment contracts where the employee has been engaged subject to a written probationary period, a mutual notice period of 14 days applies, unless otherwise agreed in writing or provided for in a collective bargaining agreement.

A temporary layoff is a temporary arrangement under which the employee is relieved of the obligation to work, while the employer is simultaneously relieved of the obligation to pay wages. The employment relationship remains in force, and it is assumed that the cessation of work is only temporary. If it is clear or highly probable that the layoff will become permanent, termination of employment should be used instead.

The rules governing temporary layoffs are, to a very limited extent, based on statutory legislation, with the exception of the Act relating to the Employer’s Obligation to Pay Wages During Temporary Layoffs. The non-statutory rules are therefore largely based on collective agreements, such as the Basic Agreement between the Norwegian Confederation of Trade Unions (LO) and the Confederation of Norwegian Enterprise (NHO).

Read more about temporary layoffs in our here.

A severance agreement is an agreement between an employer and an employee whereby the employee, usually in exchange for some form of consideration, agrees to terminate the employment relationship. Severance agreements may arise in a variety of circumstances, but they are often used as an alternative to dismissal.

The Working Environment Act regulates an employer’s right to terminate employment or summarily dismiss an employee, but it does not regulate severance agreements. However, the Act provides that its provisions cannot be derogated from by agreement to the detriment of the employee unless expressly permitted. Consequently, an employee cannot enter into a prior agreement to leave employment, for example after three years, unless the conditions for temporary employment or a fixed-term appointment are satisfied. Once an actual termination situation has arisen, however—for example in connection with a workforce reduction—a severance agreement may be entered into.

Many severance agreements are concluded before the employer has made a final decision regarding termination, for example during restructuring discussions or consultation meetings. It is also not uncommon for the parties to agree on a severance agreement after notice of termination has been given. Such an agreement may, for example, involve the employer withdrawing the notice of termination and paying a severance package, in return for the employee accepting that the employment relationship will end. In both situations, the employee agrees to a voluntary termination of employment. The purpose of such agreements is generally to provide predictability for both parties, reduce the disadvantages associated with termination, and avoid subsequent disputes.

Under Norwegian law, there are no statutory provisions requiring an employer to offer severance pay in connection with the termination of employment. However, such obligations may arise under a collective bargaining agreement.

When drafting a severance agreement, the reason for the termination of the employment relationship will influence both the structure and content of the agreement. For example, the terms of the agreement will normally differ depending on whether the reason is a restructuring process or circumstances relating to the employee. The agreement may also vary depending on the type and level of the position involved.

An employer’s managerial prerogative is generally defined as the right to direct, allocate, and supervise work, as well as the right to enter into and terminate employment contracts. In this sense, the managerial prerogative is a necessary consequence of the employment contract itself and the relationship of authority and subordination that the contract establishes between employer and employee.

However, legislation, collective bargaining agreements, and the employment contract impose limits on the decisions that an employer may make pursuant to the managerial prerogative. For this reason, the managerial prerogative is often described as a residual authority.

The concept of residual authority means that the employer’s managerial prerogative is not unrestricted. It is subject to numerous and far-reaching limitations arising from statutory provisions, collective bargaining agreements, and the employment contract itself. Read more about the employer’s managerial prerogative in our here.

If there are reasonable grounds to believe that an employee has committed conduct that may justify summary dismissal pursuant to Section 15-14 of the Working Environment Act, and the needs of the undertaking so require, the employer may require the employee to leave their position while the matter is being investigated.

It must be continuously assessed whether the conditions for suspension remain satisfied. If they are no longer met, the suspension shall be lifted immediately. Any suspension extending beyond three months must be justified by the particular nature of the circumstances involved.

An employee may not be dismissed unless the dismissal is objectively justified by circumstances relating to the undertaking, the employer, or the employee.

Where the dismissal is due to downsizing or rationalisation measures, it will not be considered objectively justified if the employer has other suitable work within the undertaking to offer the employee. In determining whether a dismissal is objectively justified on the grounds of downsizing or rationalisation measures, a balancing of interests must be carried out between the needs of the undertaking and the disadvantages that the dismissal imposes on the individual employee.

A dismissal resulting from the employer outsourcing, or intending to outsource, the operation of the undertaking through the use of independent contractors is not objectively justified unless such outsourcing is necessary for the continued operation of the undertaking.

Read more about the requirement for objectively justified dismissal in our here.

A posted worker is an employee who, for a limited period of time, performs work in a country other than the one to which the employment relationship is ordinarily connected.

An employee is considered a posted worker when a foreign undertaking, in connection with the provision of services:

– sends an employee to Norway, under an agreement with a recipient of services in Norway, for the undertaking’s own account and risk and under its own direction and control; or
– sends an employee to a place of business or undertaking in Norway that is part of the same corporate group; or
– as a temporary work agency or other undertaking supplying labour, sends employees to an undertaking in Norway.

An employee is also considered a posted worker when a Norwegian undertaking, in connection with the provision of services, sends an employee to another country within the European Economic Area (EEA).

An employee has the right to report wrongdoing or other censurable conditions within the employer’s undertaking. A hired-in worker also has the right to report wrongdoing or other censurable conditions in the undertaking of the hiring entity.

“Censurable conditions” means circumstances that are in breach of legal rules, the undertaking’s written ethical guidelines, or ethical standards that enjoy broad support in society, for example circumstances involving:

– danger to life or health,
– danger to the climate or the environment,
– corruption or other financial crime,
– abuse of authority,
– an unsafe or unacceptable working environment, or
– breaches of personal data security.

An employee may always report internally:

– to the employer or a representative of the employer,
– in accordance with the undertaking’s whistleblowing procedures,
– in accordance with a statutory duty to report, or
– through a safety representative, employee representative, or lawyer.

An employee may also always report externally to a public supervisory authority or another public authority.

An employee may report externally to the media or the public at large if:

– the employee has reasonable grounds and acts in good faith regarding the content of the report,
– the report concerns censurable conditions of public interest, and
– the employee has first reported internally, or has reason to believe that internal reporting would not be appropriate.

When a report concerning censurable conditions in the undertaking has been made, the employer must ensure that the report is adequately investigated within a reasonable period of time. The employer must, in particular, ensure that the whistleblower has a fully satisfactory working environment. Where necessary, the employer shall implement measures appropriate to prevent retaliation.

Retaliation against an employee who reports wrongdoing is prohibited. For hired-in workers, the prohibition applies both to the employer and to the hiring entity. Retaliation means any adverse action, practice, or omission that is a consequence of, or response to, the employee having made a report, including:

– threats, harassment, unjustified differential treatment, social exclusion, or other improper conduct,
– warnings, changes in work duties, reassignment, or demotion, or
– suspension, termination of employment, summary dismissal, or disciplinary sanctions.

In the event of a breach of the prohibition against retaliation, the employee may claim compensation for non-economic loss and damages regardless of whether the employer or hiring entity is at fault. Compensation for non-economic loss shall be determined based on what is reasonable in light of the relationship between the parties, the nature and seriousness of the retaliation, and the circumstances as a whole. Damages shall cover any financial loss resulting from the retaliation.

Undertakings that regularly employ at least five employees are required to establish procedures for internal whistleblowing. Undertakings with fewer employees must also establish such procedures where the circumstances of the undertaking so require. The procedures shall be developed as part of the undertaking’s systematic health, safety, and environmental (HSE) work, in cooperation with employees and their representatives. The procedures must not restrict the employee’s right to report wrongdoing. The procedures shall be in writing and must contain at least:

– an encouragement to report censurable conditions,
– procedures for making a report, and
– procedures for the employer’s handling, investigation, and follow-up of reports.

The procedures must be easily accessible to all employees in the undertaking.

Read more about the employer’s duty to act upon whistleblowing reports in our here.

The rules on termination set out in Chapter 15 of the Working Environment Act do not apply to the undertaking’s chief executive officer, provided that the CEO has, in a prior agreement, waived such rights in exchange for severance pay upon resignation.

The employer may enter into a written agreement with the undertaking’s chief executive officer that disputes in connection with the termination of the employment relationship shall be resolved by arbitration.