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New rules for group companies are on the way

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Legal news
calendar 11 December 2022
globus Norway

The Norwegian government recently introduced a new draft bill, which will implement several new responsibilities for companies if adopted. Among other things, the proposed changes include increased rights for employees in group companies.

In Norway, most companies’ and employees’ rights and obligations are regulated by the Norwegian Working Environment Act. For the Norwegian government, it is therefore important that the Act is renewed and strengthened in line with new developments and changes in Norwegian working life. Based on this, the Norwegian government has proposed significant changes to the Act.

No one will be left out of the group

Adopting the proposed changes will significantly increase employee rights and company obligations when the company is part of a group. The proposed changes will also increase the companies’ obligations regarding working environment responsibilities and the duty to discuss. The proposed changes include:

  • Group companies will be required to establish a framework for information, cooperation and discussion within the group.
  • Group companies will be required to discuss any changes that significantly affect more than one of the subsidiary companies in the group with the employee representatives.
  • Today, companies must offer other suitable work within the company before an employee is terminated due to redundancy. Going forward, subsidiary companies will be required to offer other suitable work within all the entities in the group.
  • Today, employees terminated due to redundancy have a preferential right to any new, suitable positions in the company. Going forward, employees will have a preferential right to any new, suitable positions within all entities in the group.
  • The company’s safety representative’s responsibility will be increased. Going forward, the safety representative will be responsible for ensuring the interest of temporary agency workers and contractors as well as the employees.
  • Companies must establish a working environment committee when the company regularly employs 30 or more employees. Today this is a requirement with 50 or more employees.
  • Going forward, companies will be required to discuss the need for contractors once a year with the employee representatives, in addition to the need for temporary agency workers and part-time- and temporary employment.
  • Today, temporary employees will be entitled to permanent employment after 4 or 3 years, depending on the reason for temporary employment. Going forward, temporary employees will be entitled to permanent employment after three years, regardless of the reason.
  • The legal difference between employees and contractors are already established by practice. Together with a legal assumption of employee status, the employee concept will be established in law going forward.

IUNO’s opinion

Several of the proposed changes will significantly affect group companies. However, the draft bill does provide an important exception. Only companies in Norway will be subject to the proposed obligations. As such, group companies will only have to offer other suitable positions within the group company’s entities in Norway and not for potential companies in other countries.

If adopted, the changes will impact companies in several ways. IUNO recommends that companies consider updating their routines on employee representative discussions and assess whether contractors are in fact employees. Group companies may also need to update standard documents to reflect the new employee rights. For example, the new preferential rights in the notice of termination.

[Proposal L 14 of 18 November 2022 amending the Norwegian Working Environment Act]

In Norway, most companies’ and employees’ rights and obligations are regulated by the Norwegian Working Environment Act. For the Norwegian government, it is therefore important that the Act is renewed and strengthened in line with new developments and changes in Norwegian working life. Based on this, the Norwegian government has proposed significant changes to the Act.

No one will be left out of the group

Adopting the proposed changes will significantly increase employee rights and company obligations when the company is part of a group. The proposed changes will also increase the companies’ obligations regarding working environment responsibilities and the duty to discuss. The proposed changes include:

  • Group companies will be required to establish a framework for information, cooperation and discussion within the group.
  • Group companies will be required to discuss any changes that significantly affect more than one of the subsidiary companies in the group with the employee representatives.
  • Today, companies must offer other suitable work within the company before an employee is terminated due to redundancy. Going forward, subsidiary companies will be required to offer other suitable work within all the entities in the group.
  • Today, employees terminated due to redundancy have a preferential right to any new, suitable positions in the company. Going forward, employees will have a preferential right to any new, suitable positions within all entities in the group.
  • The company’s safety representative’s responsibility will be increased. Going forward, the safety representative will be responsible for ensuring the interest of temporary agency workers and contractors as well as the employees.
  • Companies must establish a working environment committee when the company regularly employs 30 or more employees. Today this is a requirement with 50 or more employees.
  • Going forward, companies will be required to discuss the need for contractors once a year with the employee representatives, in addition to the need for temporary agency workers and part-time- and temporary employment.
  • Today, temporary employees will be entitled to permanent employment after 4 or 3 years, depending on the reason for temporary employment. Going forward, temporary employees will be entitled to permanent employment after three years, regardless of the reason.
  • The legal difference between employees and contractors are already established by practice. Together with a legal assumption of employee status, the employee concept will be established in law going forward.

IUNO’s opinion

Several of the proposed changes will significantly affect group companies. However, the draft bill does provide an important exception. Only companies in Norway will be subject to the proposed obligations. As such, group companies will only have to offer other suitable positions within the group company’s entities in Norway and not for potential companies in other countries.

If adopted, the changes will impact companies in several ways. IUNO recommends that companies consider updating their routines on employee representative discussions and assess whether contractors are in fact employees. Group companies may also need to update standard documents to reflect the new employee rights. For example, the new preferential rights in the notice of termination.

[Proposal L 14 of 18 November 2022 amending the Norwegian Working Environment Act]

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Anders

Etgen Reitz

Partner

Sofie

Aurora Braut Bache

Senior associate

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