A Municipal Chief Executive was required to step down from her position pursuant to a severance arrangement under Section 15-16(2) of the Norwegian Working Environment Act. She argued that the municipality had handled the matter improperly and that the decision was based on incorrect facts. She therefore brought a claim for damages.
The Supreme Court considered the legal framework applicable when an employer decides that its chief executive officer must step down pursuant to a contractual severance arrangement.
The Supreme Court held that an agreed departure in exchange for severance pay is not the same as a “dismissal” in the employment law sense. Accordingly, a decision requiring departure under such an arrangement is not subject to the procedural rules governing administrative decisions under Section 2(2) of the Public Administration Act.
The courts may, however, review whether a decision requiring departure with severance pay constitutes an abuse of the employer’s managerial prerogative, including whether the decision appears arbitrary or based on irrelevant considerations. Where the decision is supported by specific reasons, the courts may also examine whether it is based on materially incorrect facts.
In the case at hand, the Supreme Court found that the municipality had not abused its managerial prerogative and that the decision was not based on any materially incorrect factual assumptions.
The judgment clarifies the legal position regarding an employer’s right to terminate an employment relationship through a contractual severance arrangement providing for departure with severance pay.
Source: Supreme Court
Martin Edelsteen Woll
mwoll@melo.no
+47 414 87 832
