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Temporary layoffs: selection criterions and leased employees

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Legal news
calendar 28 May 2020
globus Norway

During a temporary layoff process in 2017, a drilling company was bound by collective agreement to choose seniority as the criterion. The company included leased employees, which resulted in a dispute. The Labour Court did not find the inclusion to be in breach with the collective agreement.

During the temporary lay off process, the unions opposed to the drilling company including the leased, Italian employees on the seniority list. A special agreement had been established with the leased employees, as a conflict with the Italian unions prevented the company from ensuring the leased employees Norwegian pay- and working conditions through employment. The agreement further secured the leased employees’ seniority from the time of employment at the company’s Italian headquarters.

The unions argued that the seniority list could only apply to permanent employees in the company, and that an inclusion of leased employees would be in breach of the collective agreement. The company argued that this was not an ordinary leasing agreement, but that the company was in fact the employer as the authority to make decisions in questions regarding the Working Environment Act laid with the company.

The main question for The Labour Court was whether the inclusion was in breach with the collective agreement.

The selection is a specific assessment

The court found the collective agreement to set selection based on seniority amongst the company’s permanent employees to be the main rule.

Nonetheless, the court found the provision to be discretionary as the provision could be derogated from with just cause. Therefore, the company could make a specific assessment during the selection. Based on this, the court found that the inclusion of leased employees in the selection would in principle be possible.

The court further added weight to the fact that the agreement was long term and was based on a specific, situational background. The agreement was made, as it was impossible to hire the employees in the Norwegian department. It was further emphasized that the agreement stressed the fact that this was a unique case, due the special circumstances and that the aim of the agreement was to set the leased employees as if they were employed in the Norwegian department.

Based on this, the court concluded that the inclusion of the leased employees on the seniority list was not in breach of the collective agreement.

IUNO’s opinion

Many companies are currently laying off employees temporarily. Even though the reason for temporary layoffs was not due to the coronavirus, the rules on selection criterions and selection units are the same. Both for companies that are bound by collective agreements and companies who are not, the main rule will often be that the selection will be based on seniority. The exception to the provision in this case is not uncommon, and the judgement illustrates the importance of a specific assessment in each case.

IUNO recommends companies to make a specific assessment, both with regards to the selection criterions and the selection unit. At the same time, we recommend companies to communicate with potential unions prior to making any decisions.

[The Labour Court of Norway’s judgement of the 20th of April 2020 in case AR-2020-8]

During the temporary lay off process, the unions opposed to the drilling company including the leased, Italian employees on the seniority list. A special agreement had been established with the leased employees, as a conflict with the Italian unions prevented the company from ensuring the leased employees Norwegian pay- and working conditions through employment. The agreement further secured the leased employees’ seniority from the time of employment at the company’s Italian headquarters.

The unions argued that the seniority list could only apply to permanent employees in the company, and that an inclusion of leased employees would be in breach of the collective agreement. The company argued that this was not an ordinary leasing agreement, but that the company was in fact the employer as the authority to make decisions in questions regarding the Working Environment Act laid with the company.

The main question for The Labour Court was whether the inclusion was in breach with the collective agreement.

The selection is a specific assessment

The court found the collective agreement to set selection based on seniority amongst the company’s permanent employees to be the main rule.

Nonetheless, the court found the provision to be discretionary as the provision could be derogated from with just cause. Therefore, the company could make a specific assessment during the selection. Based on this, the court found that the inclusion of leased employees in the selection would in principle be possible.

The court further added weight to the fact that the agreement was long term and was based on a specific, situational background. The agreement was made, as it was impossible to hire the employees in the Norwegian department. It was further emphasized that the agreement stressed the fact that this was a unique case, due the special circumstances and that the aim of the agreement was to set the leased employees as if they were employed in the Norwegian department.

Based on this, the court concluded that the inclusion of the leased employees on the seniority list was not in breach of the collective agreement.

IUNO’s opinion

Many companies are currently laying off employees temporarily. Even though the reason for temporary layoffs was not due to the coronavirus, the rules on selection criterions and selection units are the same. Both for companies that are bound by collective agreements and companies who are not, the main rule will often be that the selection will be based on seniority. The exception to the provision in this case is not uncommon, and the judgement illustrates the importance of a specific assessment in each case.

IUNO recommends companies to make a specific assessment, both with regards to the selection criterions and the selection unit. At the same time, we recommend companies to communicate with potential unions prior to making any decisions.

[The Labour Court of Norway’s judgement of the 20th of April 2020 in case AR-2020-8]

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Anders

Etgen Reitz

Partner

Sofie

Aurora Braut Bache

Associate

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