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HR Legal

A salary freeze is not always a breeze in the Nordics

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Legal news
calendar 25 February 2024
globus Denmark, Norway, Sweden

Many companies are looking at ways to cut costs and adapt their organization with the current economic situation. As one of many cost-cutting measures, some companies introduce salary freezes for some time. We take a closer look at whether it is possible to implement such a measure within the Nordics.

Before introducing a salary freeze, it is necessary to consider what is agreed upon regarding salary. Employment contracts might guarantee that the salary will increase annually. A salary freeze is a material change if an annual increase is guaranteed individually. We have described that more detailed, here.

Other salary terms may also follow from collective bargaining agreements.

Collective agreements and salary freezes

If there is no collective bargaining agreement and a salary increase is not guaranteed individually, companies can freely impose salary freezes in the Nordics.

A salary freeze will be impossible if companies are bound by collective bargaining agreements with a fixed salary increase.

In Sweden and Norway, salaries are often set through collective bargaining agreements. However, if the salary is set individually or above the agreed thresholds, companies can impose salary freezes in the Nordics.

In all countries, annual salary discussions can be required irrespective of the salary freeze.

IUNOs opinion

The procedure for implementing salary freezes in the Nordics can differ, especially if the company is bound by a collective agreement. Companies must be careful of underlying agreements – otherwise, a salary freeze may become an unintended termination.

IUNO recommends that companies thoroughly investigate what is agreed with each employee regarding salary before implementing salary freezes. If companies are bound by a collective agreement, it is especially necessary to keep any fixed salary increases or salary discussions in mind.

Before introducing a salary freeze, it is necessary to consider what is agreed upon regarding salary. Employment contracts might guarantee that the salary will increase annually. A salary freeze is a material change if an annual increase is guaranteed individually. We have described that more detailed, here.

Other salary terms may also follow from collective bargaining agreements.

Collective agreements and salary freezes

If there is no collective bargaining agreement and a salary increase is not guaranteed individually, companies can freely impose salary freezes in the Nordics.

A salary freeze will be impossible if companies are bound by collective bargaining agreements with a fixed salary increase.

In Sweden and Norway, salaries are often set through collective bargaining agreements. However, if the salary is set individually or above the agreed thresholds, companies can impose salary freezes in the Nordics.

In all countries, annual salary discussions can be required irrespective of the salary freeze.

IUNOs opinion

The procedure for implementing salary freezes in the Nordics can differ, especially if the company is bound by a collective agreement. Companies must be careful of underlying agreements – otherwise, a salary freeze may become an unintended termination.

IUNO recommends that companies thoroughly investigate what is agreed with each employee regarding salary before implementing salary freezes. If companies are bound by a collective agreement, it is especially necessary to keep any fixed salary increases or salary discussions in mind.

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Anders

Etgen Reitz

Partner

Søren

Hessellund Klausen

Partner

Kirsten

Astrup

Managing associate (on leave)

Sofie

Aurora Braut Bache

Managing associate

Cecillie

Groth Henriksen

Senior associate

Johan

Gustav Dein

Associate

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The team

Alexandra

Jensen

Legal advisor

Anders

Etgen Reitz

Partner

Caroline

Thorsen

Junior legal assistant

Cecillie

Groth Henriksen

Senior associate

Johan

Gustav Dein

Associate

Julie

Meyer

Senior legal assistant

Kirsten

Astrup

Managing associate (on leave)

Maria

Kjærsgaard Juhl

Legal advisor

Sofie

Aurora Braut Bache

Managing associate

Søren

Hessellund Klausen

Partner