Employee unlawfully terminated due to unjustified selection pool

A sales consultant in a telecommunications company was terminated due to downsizing. At the time of termination, she had been employed for 32 years. The termination was a direct consequence of the criteria used by the company to determine the selection pool. According to the company, the selection pool was justified based on the applied criteria division and geographical location which limited the selection pool to 11 employees.

Pursuant to the company, the criteria division and geographical location had been consistently applied during previous downsizings to reduce employee concerns. If the company had not reapplied these criteria, the process would have resulted in a disproportionate burden. In addition, the company emphasized that the industry’s constant development and competition supported the applied approach. Oppositely, the employee maintained that as the company was subject to a collective bargaining agreement, it was also bound by a special requirement to comply with seniority rules. The employee also argued that the criteria applied were contrary to the condition that a specific individual assessment was required from the company’s side.

It was, thereafter, for the Supreme Court to determine whether selection pool could be justified considering the criteria applied by the company.

Principle of seniority lost significance

The Supreme Court agreed with the company’s arguments and referred to established case law which confirmed that the criteria applied to determine the selection pool, including seniority, should not be given weight for the purpose of determining whether the criteria applied for the selection pool were just. However, in another decision, the Norwegian Labour Court had previously emphasized that for the selection pool to be justified, the criteria applied had to be based on a specific individual assessment.

The company was subject to a collective bargaining agreement which stipulated a strict requirement for seniority to be used an applied criterion when determining the selection pool. The criteria could only be exempted by the company on a justified basis. In this specific case, the Supreme Court emphasized that the employee was the only employee in the selection pool from her job category. Consequently, as she could not be compared to the other employees, she was terminated despite her 32 years of seniority. Although division and geographical location as a main rule were justified and objective criteria for the purpose of determining the selection pool, the Supreme Court found that the company had not considered the number of employees the selection pool would contain, including the potential disadvantages the criteria would cause. It would not have been unreasonable for a company of its size and with its resources to conduct such an assessment.

Based on the number of employees and the composition of job categories, the Supreme Court found that the principle of seniority as a result of the applied criteria had been substantially weakened to such an extent that 32 years of seniority lost significance. Consequently, the Supreme Court found the delineation of the selection unit to be unjust.

IUNO’s opinion

The judgement of the Supreme Court demonstrates companies bound by collective bargaining agreements may be subject to stricter requirements as to which criteria must be applied for the selection pool to be justified, such as the seniority principle. At the same time, the judgement confirms that division and geographical location are as a main rule justified criteria for the purpose of determining the selection pool.

IUNO recommends that companies bound by collective bargaining agreements consider how the seniority principle will be affected by the criteria applied for the purpose of determining the selection pool before proceeding to terminations.