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Money speaks louder than words

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calendar 25 February 2024
globus Norway

An employee was entitled to choose whether or not to receive six months' severance pay. The reason was that the severance pay agreement was not invalid when it was in the employee's favour.

An employee in a marine, offshore and wind company had waived his employment protection rights in exchange for six months' severance pay. The agreement was entered even though the employee was not the company's CEO.

When the company was going through a redundancy process, the employee was called in for a discussion meeting. The employee was informed that the agreement was illegal and therefore invalid and that he had general employment protection rights. When the employee was later terminated, he was not paid the six months of severance pay.

An easy choice

The court concluded that the employee was entitled to severance pay, which would be in the employee's favour.

The rules on employment protection are mandatory, and the employee cannot waive these unless the agreement is in his favour. In that case, the employee can choose whether or not to invoke the agreement. The court held that employees have such a right of choice in such situations. Companies must ensure compliance with the rules of the Norwegian Working Environment Act, and it was not reasonable to protect the company.

IUNO’s opinion

This case provides important guidance on the consequences of invalid agreements entered before the termination.

IUNO recommends that companies exercise caution when drafting employment contracts. It is typically the company alone that draws up the employment contract, and because the company will be the stronger party, any disputes about the understanding of the contract will typically be in the employee's favour.

[The Frostating Court of Appeal’s judgement of 12 January 2024 in case LF-2023-134601]

An employee in a marine, offshore and wind company had waived his employment protection rights in exchange for six months' severance pay. The agreement was entered even though the employee was not the company's CEO.

When the company was going through a redundancy process, the employee was called in for a discussion meeting. The employee was informed that the agreement was illegal and therefore invalid and that he had general employment protection rights. When the employee was later terminated, he was not paid the six months of severance pay.

An easy choice

The court concluded that the employee was entitled to severance pay, which would be in the employee's favour.

The rules on employment protection are mandatory, and the employee cannot waive these unless the agreement is in his favour. In that case, the employee can choose whether or not to invoke the agreement. The court held that employees have such a right of choice in such situations. Companies must ensure compliance with the rules of the Norwegian Working Environment Act, and it was not reasonable to protect the company.

IUNO’s opinion

This case provides important guidance on the consequences of invalid agreements entered before the termination.

IUNO recommends that companies exercise caution when drafting employment contracts. It is typically the company alone that draws up the employment contract, and because the company will be the stronger party, any disputes about the understanding of the contract will typically be in the employee's favour.

[The Frostating Court of Appeal’s judgement of 12 January 2024 in case LF-2023-134601]

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Anders

Etgen Reitz

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Sofie

Aurora Braut Bache

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Etgen Reitz

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