A municipality and a director had agreed to waive the director’s protection against termination in exchange for six months’ severance pay. Three months after the director was appointed, the parties had a performance review, which was generally positive.
Three months later, the parties had another performance review, at which no minutes were taken, and they disagreed about what was discussed. Shortly after, the municipality invited the director to a formal consultation meeting to discuss her termination, even though they had agreed that she was not covered by these rules.
A few days later, the parties met again but failed to reach an agreement. Later that day, the municipality informed the director that they had invoked the severance pay agreement and that she should resign immediately. The director did not agree and claimed compensation.
The Supreme Court found that the director was lawfully terminated. Although the protection against termination did not apply, the decision to invoke the severance pay agreement should be reasonable, which is subject to a high threshold. The company should also inform the director before invoking the severance pay agreement, but this is only a procedural rule that does not affect the agreement’s validity.
iuno's opinion
The case is the first of its kind and shows that although a director has waived their right to protection against termination, the decision to invoke the severance pay agreement must be reasonable. Although the threshold is high, a decision could, for example, be considered unreasonable if it is based on incorrect facts
iuno recommends that companies document their reasons for invoking the severance pay agreement to avoid disputes. Companies should also notify directors before invoking a severance pay agreement, even if it does not affect the agreement’s validity.
[The Norwegian Supreme Court’s judgment of 30 January 2026 in case HR-2026-221-A]